When we talk about Solar Rooftop Power Systems, the first thing that most of our prospects ask about is the cost and the benefits thereabout. Ask the average homeowner in Bengaluru, who’s done some amount of research online, and obtained some quotes, he or she would definitely narrow down on the options, based on Cost per kW. Or, better still, he or she would have considered the ROI or Payback period promised by the vendor. If you go beyond all of that, it all boils down to the monthly electricity bill that you are paying, the overall load sanctioned and the billing mechanism that you opt for – Netmetering vs. Gross Metering. And, yes, there’s the additional GST amount that you need to consider.

With so many things to look for, it is natural that homeowners tend to get confused and look everywhere for answers. At Synergize Solar, we’re very mindful of that. We want to make the pricing part extremely transparent and detailed enough, so that you make the right call. In fact, we thought about it even before we started building our company, when we did a quick survey amongst homeowners around us. Here’s what came out of that survey:

While we make sure that we take our prospects through each and every detail, we also understand that we need to put this out in the open so that many of you who are in the early stages of considering Solar Rooftop solutions can take stock and decide for yourselves. So, let’s get started. Here’s a quick walk through of all that you have to know with respect to the cost of a Solar Rooftop System and the economic benefits that you derive from it.

The very first thing that you have to know about is how many units of electricity can a typical Solar Rooftop Power System produce. This would help you determine the size or the capacity of the system required to reduce monthly electricity bills to zero. For a place like Bengaluru, given the amount of sunlight available, it is safe to assume that, on an average,

1KW of Solar Rooftop System produces 4kWh (4 units) of Electricity per day.

Note that this is an annualized average. The numbers that we have seen, in about 35+ installations that we have done across Bengaluru, suggest that this number drops by ~15% during July / August – the rainiest months of the year, and could go up by ~20% during Apr/May – the hottest months of the year with longer days. We will do a detailed analysis with real world numbers in a later post, but for now, 4 units per day, per kW is a safe estimate to consider. Note that the use of good quality Panels and Inverters can help you stay as close to this number as possible, even during the rainy months.

The simplest way to decide the size of the system required, is to divide the current monthly consumption by 30, and then divide that number by 4. Here’s an example:

Monthly consumption of a sample household

Size of the Solar Rooftop System Required to offset consumption

= 360 kWh (i.e., 360 units)

= 360 / 30 / 4 = 2 kW

Note that the recommended size also needs to factor in:

Day time consumption vs. night time consumption; this determines the amount of power that can be consumed in-house vs. the amount of power that can be exported.
Sanctioned Load: The size of the system cannot be more than the sanctioned load.
Fixed Cost – typically around Rs. 110 per kW in Bengaluru at the moment – this can be offset by having some excess kW

To make things simple for you, we have created a Solar Power Estimator; do give it a shot and find out the size of the Solar Rooftop System recommended for your household. Considering the above factors, and as recommended by our calculator, the size of the recommended system is 3.2kW to bring the monthly electricity bill close to zero for this sample household. Also, let us assume that the sanctioned load availed is 5kW.

Now that we have narrowed down on size of the Solar Rooftop System required; the next logical thing is to figure out how much it costs, per kW, which depends on the following factors (Types mentioned in brackets are in order of increasing cost):

Type of system (Ongrid vs. Offgrid vs. Hybrid);
Type of Panels (Polycrystalline vs. Monocrystalline vs. Bifacial vs. HJT)
Type of Inverters (String Inverter, String Inverter with Optimizer, Microinverter)
Type of mounting structure (floor mounted stand, ballasts, elevated)
Balance of System (BoS) : We recommend the entire suite of materials procured from reputed brands and complying to the standards specified by respective DISCOMs)

At Synergize Solar, we usually recommend Ongrid systems, with a tier 1 brand of monocrystalline, half-cut (twin-cell) panels along with Enphase microinverters. The call on the structure totally depends on the homeowner. If you want a functional space which can be utilized for other activities, and if it is feasible to build an elevated metal structure to house the panels, we usually recommend that. Here’s how the cost pans out, given these specifications:

Small Systems (1kW to 5kW)	Mid-Sized Systems (5kW to 10kW)	Large-Sized Systems (>10Kw)
Rs. 1,00,000 per kW	Rs. 95,000 per kW	Rs. 90,000 per kW

GST applicable to Solar Projects works out to 13.88% effectively. This is because we consider 70% of the total cost to be calculated under the 12% slab and 30% to be calculated under the 18% slab.

So here’s the likely cost of a 3.7kW system :

= 3.7*100000 + 13.88*(3.2*100000)

= 370000 + (13.88*370000)

= 370000 + 51356

= INR 4,21,356

While it is possible to get sub-optimal systems at lesser price, given that it is an investment for 25 years, and given that the quality of materials used has a direct impact on the yield, we recommend going ahead with the above specifications. This is the actual cost of going Solar, still overlooking the environmental costs incurred during the manufacturing process and those of logistics.

And now, to the question most asked for : Subsidies!

Here’s a quick snapshot of the MNRE guideline for Subsidies applicable to Residential Rooftop Solar Power Projects:

1 to 3kW	3kW to 10kW	> 10kW
Rs. 14,588 per kW	Rs. 14,588 for first 3 kW and Rs. 7,294 for the rest	Rs. 94,822

You can deduct the applicable subsidy based on the above table, however, we at Synergize Solar, don’t recommend availing subsidies, squarely for economic reasons as illustrated in the subsequent section.

What are the benefits?

As mentioned earlier, the benefits that you derive from a Rooftop Solar Power System is directly dependent on the amount of electricity bill that you can save on a monthly basis. To understand how much you can save, one needs to first understand the following billing options available:

Gross Metering:

Under this mechanism, all the power that is generated by the Rooftop Solar Power System is exported to the grid directly, while you continue importing the power required for your household, based on the various tariff slabs. The DISCOM then pays based on the prevalent rate. At the time of writing this blogpost, BESCOM has fixed the tariff for export of power to Rs. 4.02 per unit while the tariff for import varies between 4.2 to 8.2 per unit, subject to various slabs. The billing is then done at the end of every month.

For the sample household mentioned above, here’s how the monthly savings would look like:

Total Units Exported

= Total Units Generated

= 4*3.7*30 = 444 kWh

Amount Payable by BESCOM

= 444 *4.02 = Rs. 1,785

Total Units Imported

= Monthly Consumption = 360 kWh

Amount Payable to BESCOM

= (50*4.2) + (50*5.6) + (100*7.15) + (160*8.2) = Rs. 2,512

Fixed Cost for 5kW sanctioned load

= (1*100)+(4*110) = Rs. 540

Effective Monthly Bill

= (Amount to BESCOM) + Fixed Cost – (Amount by BESCOM)

= (2512 + 540) – 1785

= Rs. 1267

Monthly Electricity Bill without Solar

= 2512 + 540 = Rs. 3052

Effective Monthly Savings

= 3052 – 1267 = Rs. 1785

Net Metering:

Under this mechanism, the power generated by your Rooftop Solar Power System is first used to meet your instantaneous requirements while the excess is then exported to the grid. The calculation here is not very straightforward. Let us assume that out of the power that you consume daily:

70% consumption during sunlight hours (9:00 AM to 6:00 PM) = 70%*(360/30) = 8.4 kWh

30% is consumed during non-sunlight hours (6:01 PM to 8:59 AM) = 30% * (250/30) = 3.6 kWh

Here’s how the calculation would look like for the same household:

Power Generated Daily

= 3.7 * 4

= 14.8 kWh

Power Exported Daily

= Power Generated – Consumption in sunlight hours

= 14.8 – 8.4 = 6.4 kWh

Power Imported Daily

= Consumption during non-sunlight hours = 3.6 kWh

Net Export at the end of the month

= Total Export – Total Import

= (30*6.4) – (30*3.6)

= 84 kWh

Amount Payable by BESCOM

= 84*4.02 = Rs. 338

Effective Monthly Bill Payable to BESCOM

= Fixed Cost – Amount Payable by BESCOM = 540 – 338 = Rs. 202

Monthly Electricity Bill without Solar

= 2512 + 540 = Rs. 3052

Effective Monthly Savings

= 3052 – 202 = Rs. 2850

Note that if Net Export was negative, the amount payable to BESCOM is calculated based on the respective tariff slab.

Clearly, we recommend homeowners to choose Net Metering anyday. Unless, of course, there are multiple systems in the same building when you’ll be mandated to choose Gross Metering. And here’s the big one – the reason why we don’t recommend opting for subsidies. Quite simply, the export tariff applicable, plummets from Rs. 4.02 to Rs. 2.67 when you opt for subsidies. This makes it economically less lucrative when you consider long term returns. It will help those who are short on capital or those who under-size their system, ruling out the chances of export.

So now, let’s put everything together. Here’s typically how we illustrate the savings potential in our proposals:

*Month of the year*	*Estimated Monthly Generation*	*Net Export*	*Monthly Bill to be paid*	*Monthly Savings*
Jan	492	132	7	3,045
Feb	467	107	108	2,944
Mar	530	170	-144	3,196
April	502	142	-30	3,082
May	499	139	-18	3,070
June	408	48	348	2,704
July	378	18	468	2,584
Aug	392	32	411	2,641
Sep	406	46	354	2,698
Oct	438	78	228	2,824
Nov	391	31	417	2,635
Dec	425	65	279	2,773

Estimated Annual Savings : Rs. 34,196

The life of a typical rooftop solar power system is 25 years, considering that most panels have a performance guarantee for 25 years. The inverter we have considered, Enphase Microinverter, has a warranty that can be extended up to 25 years. The cost we have considered is inclusive of this. Operations and Maintenance cost is very negligible since the only maintenance required is timely cleaning of the Solar Panels. And here’s how the lifetime savings table looks like:

Return of Investment considering 4% annual increase in tariff rate and consumption
*Year*	Annual Savings	Cumulative Savings	ROI
Year 1	34,196	34,196	-92%
Year 2	36,987	71,183	-83%
Year 3	40,005	111,187	-74%
Year 4	43,269	154,456	-63%
Year 5	46,800	201,256	-52%
Year 6	50,619	251,875	-40%
Year 7	54,749	306,624	-27%
Year 8	59,217	365,841	-13%
*Year 9*	64,049	429,890	2%
Year 10	69,275	499,165	18%
Year 11	74,928	574,093	36%
Year 12	81,042	655,135	55%
Year 13	87,655	742,790	76%
Year 14	94,808	837,598	99%
Year 15	102,544	940,142	123%
Year 16	110,912	1,051,054	149%
Year 17	119,962	1,171,016	178%
Year 18	129,751	1,300,767	209%
Year 19	140,339	1,441,106	242%
Year 20	151,790	1,592,896	278%
Year 21	164,176	1,757,072	317%
Year 22	177,573	1,934,646	359%
Year 23	192,063	2,126,709	405%
Year 24	207,736	2,334,445	454%
Year 25	224,687	2,559,131	507%

In this case, the payback period is about 9 years.

We have seen that usually, for residential projects, the payback period varies from 6 to 10 years. Households with monthly electricity bills in excess of Rs. 3000 per month, tend to have faster payback periods. Having said that, the returns are way higher than what you would expect with Bank FDs or average Mutual Fund investments. We’ll leave that for another discussion down the line.

Apart from the monetary benefits, do keep in mind that every kW of Solar Rooftop Power System installed, is equivalent to planting 49 Teak Trees over the lifetime. Every kW also amounts to mitigating 31 Tonnes of Carbon Dioxide from the Earth’s Atmosphere.

So, what do you think? Don’t the benefits outweigh the cost?

Do let us know your thoughts. And yes, we would love to visit your home to evaluate these details and provide a customized proposal. Don’t forget to Book a Site Visit today!

Residential Solar Rooftop System : Cost vs. Benefits

Net Metering:

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