Solar Rooftop System as An Investment Alternative: A Review
lubi solar       September 20, 2019
Classically, investment is an asset or item acquired with an ultimate goal of generating an appreciation. In financial terms, an investment is a monetary transaction with an intention of generating future cash flows or generating and appreciation on future sale. Investment may involve purchase of real estate, treasury bonds etc.
Solar Rooftop To Power Your House And Your Wallet
As the name suggests, a solar rooftop system involves a solar power plant being erected and commissioned on the free roof space of the house. Typically, a 1 KW system shall require 10 Sq mtr of shadow free space with enough load bearing capacity to bear the weight of the system.
The rooftop solar system can be a grid connected system or an off-grid system. An on-grid system takes a grid reference and has no facility to store the energy generated while an off-grid system stores the energy generated for use at a later time in the day. While the off-grid system allows flexibility of use, it also entails a cost in the form of maintainance and replacement of batteries, which will add-on to the cost of ownership.
Solar rooftop systems have slowly started to gain market acceptance. However, there is still an air of skepticism that surrounds it, thereby hindering a widespread adoption.
The recently concluded tendering process by PGVCL in Gujarat for empanelment of vendors for solar rooftop systems under the capital subsidy scheme, saw participation by over 300 vendors.
As per particulars of the subsidy scheme rolled out by the government, solar rooftop systems from 1KW to 3 KW were eligible for 40% subsidy on the system cost and all incremental KW installations above 3 KW were eligible for 20% subsidy.
Going by the financials of the project, considering a 3 KW system, the total invested money in a rooftop system will be recovered in 4-5 years. All power generated over the 5 year period, shall be available free and considering a system lifetime of 25 years, the project shall realise an average rate of return of around 16%.
|Cost /watt (Rs)||47||PRODUCT LIFE OF 25 YEARS- FREE POWER SUPPLY AFTER 4 YEARS|
|KWH Generated per year||4928|
|Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8||Year 9||Year 10|
|Subsidy(As per PGVCL Rooftop Project)||56124||0||0||0||0||0||0||0||0||0|
|Monetory return by means of power saved(Rs)||24638||24638||24638||24638||24638||24638||24638||24638||24638||24638|
|Cost of Money@9.5% pa||7998||6417||4686||2791||715||0||0||0||0||0|
|BREAK EVEN POINT||-67546||-49326||-29374||-7527||16395||24638||24638||24638||24638||24638|
Installation of a solar rooftop system can be considered as a renovation to the property and thereby qualifies for financial assistance from banks under LAP. Going by the fundamentals, installing a solar rooftop system thus enhances the future saleability and realizable value for the house. A proposition of free power is a very compelling, as it directly impacts the cost of ownership of households.
Things to Take Care Before Investing in Solar Rooftop
Track Record of Installer: It is always advisable to invite quotations from different solar system installers, even though the prices are fixed for government subsidized installations, to compare bill of materials and installations track record of the installer. Faulty engineering practices in installations and low quality components can significantly push down the system performance and effect the payback cycle for the solar panels. The payback is effectively dependent on the units generated by the system.
Quality Of Solar Panels: There are a hundred solar panel manufacturing companies in India, that manufacture frameless to high efficiency solar panels that can withstand high winds and point loads. It is always advisable to compare information about the major solar panel manufacturer and compare them. Solar panels make up almost 60% of the entire system cost and hence are bound to aggressive cost cut tactics by installers by using cheaper modules from unreliable manufacturers.
The output of the solar panel directly affects the overall system performance thereby impacting the payback. Also the system needs to be fit enough to run a lifecycle of 25 years. So it is always advisable to take special cognizance in the make of solar panels being utilized by the installers and even go and ask for a trusted make. The prominent manufacturers of solar panels in Gujarat are LUBI, Waree, Adani etc.