Solar PV technology for generating electricity from solar energy has been in India since quite some time now, but for a long time, it was not economically feasible for most Indians to take benefits of. But due to a drop in the prices of solar PV in the last few years coupled with significant policy-level implementations by Government in India, now, in 2016, Solar PV technology looks quite lucrative. Who would not want to use solar energy, a free renewable resource readily available at their disposal, to effectively reduce their electricity bills and increase green footprint! With this post, we would try to make you aware of the step-by-step procedure to implement Solar PV system for your house, office or any commercial complex.
What brought in the big change?
As we discussed in one of our older posts (link), there are two ways of implementing Solar PV: “Grid Connected” and “Off Grid”. In an “Off Grid” system, your PV system is completely independent and is disconnected from your electricity supply (or your electricity distribution company), but in a “Grid Connected” system, your PV system is connected to your electricity supply (or your electricity distribution company).
The main difference between the two is storage. In an “Off Grid” system, you need batteries to store electricity. But in a “Grid Connected” system, you do not need batteries as whatever electricity is produced through the system, it can be sold to your electricity distribution company (or electricity-supply company). Batteries are a big cost component in the “Off Grid” system which makes the latter expensive. And not just expensive, but inefficient as well (because batteries inherently loose electricity/energy).
Now, you might wonder – why would your electricity distribution company (a company that makes money by selling you electricity) want to buy electricity from you? Well, this is where the government comes in and the policy introduced by the government helps. India has severe electricity shortage in several parts of the country. We need electricity not only to cover the shortage, but also for a number of other infrastructural requirements. Sunlight is a free resource, and fortunately, it’s plentiful in our country. Thus, to make good use of the free resource, i.e. solar energy, the Government has started implementing policies which allow each and every individual house or building that has plenty of open space to become a producer of electricity. So, it’s due to the Government’s mandate that your electricity distribution company has to buy electricity produced by your own system.
Because of such policy implementations, you can now have “Grid Connected” Solar PV systems that are quite economical (no battery costs).
How does the new policy work?
In every discussion related to “Grid Connected” Solar PV system, you shall hear a lot of these two terms: “Net-Metering” or “Gross Metering”. Let’s take look at both of these:
Net-Metering: In this system, you have a single new bi-directional meter. When you consume electricity from the grid (or your electricity supply), the meter readings will move forward; but, when you produce electricity and send it to the grid, the meter readings shall move backward. Suppose you use 10 units of electricity in a day and produce 8 units, your meter will show a reading of 2 units. And if you use 10 units of electricity and produce 12 units, then your meter will show -2 units. Your bill at the end of month will be based on net units consumed/produced. If you generate extra electricity in any month, the surplus is carried over to the next month and netted. At the end of a year, if your total production is more that what you consumed, then you will get paid for the next surplus electricity produced at the cost decided by your state’s electricity regulatory commission.
Gross-Metering: In this system, there are two meters: one measures your electricity consumption and the other measures your electricity production. Consequently, you get two different bills: one for consumption and other for production. There is no change in the way your consumption is billed (as it happens today), but you get paid separately for the electricity you produce. Again, the cost of electricity that you are paid is decided by the state’s electricity regulatory commission.
How do the two differ? If you look at the way electricity is priced (check domestic tariff slabs), the price of electricity is lower when consumption is less and it is higher when the consumption is more. When you ‘net’ your consumption, you don’t get a fixed cost for your electricity production. The price that you get varies, based on your consumption/production, whereas in case of Gross Metering, you get a fixed price for all the electricity you produce.
Is Grid Connected System good for everyone?
Although the policy is now available in most states in India, but if you reside in a location which experiences a lot of power cuts, then a “Grid Connected” system is NOT good for you. The reason is – when you have a “Grid Connected” system, you have to put all the electricity that you produce onto the grid. But, during power cuts, you essentially get disconnected from the grid, which is why your system should NOT put electricity on the grid. On such occasions, you need a battery backup to store the electricity that you generate.
Before implementing a solution, you need to assess your power cuts and accordingly decide if putting a “Grid Connected” system works for you or not. Because if power cuts are long and frequent, you would either waste electricity or you would have to figure out a way to store it in batteries.
Which states/UTs have this policy implemented?
As of date, 30 states and UTs in India have implemented the policy to support “Grid Connected” Solar PV. For now, we’ve just put in the links to their policy and tariff documents (as sourced from MNRE website) in the following table, but we will try to explain each of them in our future posts.
How do you size the Solar PV system?
Now that you have figured out whether your state has a Net-Metering or Gross Metering policy, the next thing is to figure out the size of the Solar PV system that you can put.
One of the biggest challenges with an “Off Grid” system is that your appliances are connected to the solar PV system. So, you have to figure out your appliances wattages, daily usage etc. to calculate the right size of your Solar PV system. This entire calculation can be somewhat complex and confusing.
With a “Grid Connected” system, the calculation is extremely simple. You just have to take your electricity bill and look up the value called: “Sanctioned Load” or “Connected Load”. Depending on your state’s policy, you can install a system equivalent to 100% to 150% of the connected load value that you have on your bill. So, for instance, if your connected load is 10 kW, then in some places you can install a maximum of 10 kW solar PV system whereas in other places you can install upto 15 kW. But, in no case can you exceed 150% of the connected load for a “Grid Connected” system.
Shadow Analysis: The next challenge that you have to tackle is: shadow analysis. To get the optimum output from a Solar PV system, you need to ensure that you have enough shadow-free area that can hold the system. Typically (based on current levels of efficiency of solar panels), you need a shadow-free area of 90-100 sq ft to install 1 kW of Solar Panels. The panels have to face south and should be inclined at 15-18 degrees (depending on the city).
You have to make sure that:
- There is no external body (like buildings, trees) that casts shadow on panels during the day.
- Panels are placed in such a way that they get maximum sunshine throughout the day at the right angles.
Shadow Analysis can help you calculate the rooftop area that can be utilized and based on that (using 90-100 sq ft per 1 kWp) you can calculate the maximum size solar PV system that you can install. As mentioned earlier, you cannot exceed more than 100%-150% (depending on state) of the sanctioned load. Please take help of your Solar PV installer to get the shadow analysis done accurately. There are software available that can be used to do this analysis too (they can predict shadows depending on seasons and location). Do not go blindly by what an installer says; you may have to pay some money upfront to get this done, but then it will have better outcomes in the long run. Here is a video showing impact of shadow on power generation:
Can your roof hold the panels?
Typically solar panels are quite light, but once you have decided the place to install solar PV, you need to make sure that the roof should be able to handle the solar PV system. If you have asbestos sheets that are old, you may want to change them with tin sheets that are long-lasting. Your roof should be sturdy enough to hold the panels. If your roof is quite high and there is a lot of wind, you need to understand the setup with your installer to make sure that the installation is safe enough. If needed, you shall have to take permissions from your municipal corporation to make sure you do not miss any safety parameters.
How to Choose the right brand for the Panel?
Now that you have figured out the right size of your solar PV, you have to start selecting individual components of your Solar PV system. When you contact a company for Solar PV system installation, in most cases you won’t find them to be manufacturers of the components of the system, they would just be installers who help you select the right components. But then it’s important to be aware of the various brands that are available for those components.
Consider this for an analogy: just like cars have dealers and manufacturers, where a dealer can have dealership of one or many brands of cars, a system installer for Solar PV will have tie-ups with various brands of equipment and they will just bring in and install the system in your premise depending on what you choose.
The first thing to choose is the panels. Just like while buying a car, you get European (BMW, Audi, Volkswagen), Japanese (Honda, Toyota), Indian (Tata, Mahindra) and Chinese products, similarly, in Solar Panels, you can get various brands from various countries. In case of Solar PV, the global market leaders are the brands of China.
As per the data available on Wikipedia, top international brands based on capacity of installation, and based on our information from the industry are:
- First Solar (Malaysia)
- Trina (China)
- Canadian Solar (Canada)
- Sharp (Japan)
If you are looking for familiar brands (names) then you can look at the likes of:
However, if you are looking for Subsidy on your solar PV installation, then you will have to go for panels that are Made in India. Based on information from MNRE (link), manufacturers/brands that lead the solar PV manufacturing market are:
- Vikram Solar
- Waaree Solar
- Goldi Green Technologies
- Tata Power Solar
Please note that among the Indian brands, Vikram Solar is the only one that appears in the global list on Wikipedia, and Waaree Solar has similar capacities.
What is the difference among these brands? Top international brands will have more efficient panels giving more output in less area. So, you can install, say, a 1 kWp system in 90 sq ft with an international top brand, whereas with a regular Indian brand you might get 1 kWp in 100 sq ft space. There may be some additional advantages of lower maintenance with international brands. But then you do not get subsidies if you go for an international brand.
Before buying a panel, make sure that either the brand is a top international brand, or it is an MNRE-approved channel partner. To get the list of MNRE-approved manufacturers, you can go on this link: Manufacturers.
Your panel manufacturer should give you a performance warranty on the output of the solar panels. Typically performance warranties are for 90% of the nominal power output in first 10 years and 80% for 25 years. This means that the panels will give at least 90% of the rated power output for first 10 years and at least 80% for 25 years. You should also get warranties on the workmanship.
How to choose the right brand for Inverter?
Just like panels, there are multiple brands of Inverters (from various areas) available in India. However, in case of inverters, your subsidy does not depend on the make of the inverter; you can buy any inverter which meets MNRE specifications and get subsidy.
Top international brands of solar inverter (available in India) are:
- SMA Solar
Indian manufacturers of Inverters are also into manufacturing Solar Inverters, so you can also get:
While selecting an inverter, please make sure that the efficiency of the inverter (to convert DC to AC) is high. International brands have energy efficiency as high as 98%. Which means, almost all the DC energy that your PV panel generates gets converted to useful AC energy.
Inverters these days also have in-built software solutions to manage and monitor electricity generation from the solar panels. So. make sure that you get one that has the capability. If you go for subsidy, then most of the basic requirements (including the software) are covered in the requirements by MNRE.
Depending on the type of your connection, you also have to make sure that it is a single phase inverter or three phase inverter.
A good heat sink along with use of electrolytic capacitors can make a good inverter, almost a fit-and-forget kind of system which you need not worry about for years.
How to choose other accessories?
Other accessories needed for a Solar PV Grid Connected system are:
- AJB (Array Junction Boxes) – for protection as there is no earthing.
- AC and DC distribution boxes – for protection as there is no earthing.
- DC Cables
While buying these, just make sure that you go for good brands like Havells, Finolex, Polycab or any top Indian brand that makes products as per BIS standards.
How to choose the right implementation partner?
After you have chosen the right set of products that you need, choose an implementation partner or system integrator that can provide you with the kind of things you need. As of date, there are 9000 channel partners listed by MNRE that can do system implementation for you. A list of the same is available on this MNRE link. MNRE has categorized the channel partners into tiers based on their financial capability. So, if you look at the list in the link mentioned above, you will find categories like 1A, 1B, 2A, 2B, 3A, 3B written against the names of channel partners. This category is based on the financial strength of the company. Although, it is difficult to comment as to who can get the work done properly, this categorization can help you narrow your choices down a bit. Make sure that you ask the right questions to the system integrator to understand what you are getting. Also, understand the warranties that you get with the system integrator.
How to get Subsidies on Solar PV Rooftop?
As per the MNRE notice, CFA (Central Finance Assistance) or subsidy is available for Solar Rooftop PV implementations. The CFA is 30% of the benchmark cost for general category states/UTs and 70% of the benchmark cost for North Eastern states including Sikkim, Jammu and Kashmir, Uttarakhand, Himachal Pradesh, Lakshadweep and Andaman and Nicobar Islands. The benchmark cost and CFA levels are revised by MNRE periodically.
The present benchmark costs as fixed by MNRE are – Rs 100/Wp for projects upto 100 kWp and Rs 90/Wp for projects between 100 kWp – 500 kWp. Please note, this scheme is currently available only upto 500 kWp projects.
The subsidy is available only to these categories:
- Residential: All types of residential buildings.
- Institutional: Schools, health institutions including medical colleges and hospitals, educational institutes (both public and private), R&D institutions, etc.
- Government Buildings: Both Central and State Government Buildings.
- Social Sector: Community Center, Welfare homes, old age homes, orphanages, etc.
How do you apply for Subsidy? The process of application for subsidy is quite straightforward. First thing you need to do is contact your State Nodal Agency.
MNRE has set up a Nodal Agency (or Energy Development Agency) in every state, for instance, in Maharashtra, it is MEDA (Maharashtra Energy Development Agency), in Andhra Pradesh it is NEDCAP (Non-Conventional Energy Development Corporation of Andhra Pradesh (NEDCAP) Ltd.). The list of all State Nodal Agencies and their contact address/phone/website is available on this link on MNRE website: http://mnre.gov.in/related-links/contact-us/state-nodel-agencies/
To get subsidy, you have to apply for it with State Nodal Agency with all the relevant details about the project. The details include all technical and financial aspects of the project (a sample form available on this link). You must take help from your system integrator to fill in all the details (you will get all the technical data about panels, inverters, etc). Once you fill in appropriate details, you need to put in an application with the State Nodal Agency. The agency will evaluate the proposals and estimate the level of subsidy that can be provided to a project. After nodal agency evaluation, the project is forwarded to MNRE for final consideration and approval.
Note: If you are planning to get a subsidy, your project should not start execution till there is approval from nodal agency. But then you should also not wait for the final subsidy to be disbursed as it can take quite a lot of time. So your project execution starts after nodal agency approval and before MNRE makes final decision.
Few Important Points regarding Subsidy
There are a few important points that one should be aware of before thinking about subsidy:
- Although the CFA is stated as 30%, it keeps changing and for individual projects, the level of CFA is determined by State Nodal Agency and approved by MNRE. So it may not be 30% in reality.
- There is a long queue for getting subsidy in almost every state. In fact in many states not even a single penny of subsidy has been disbursed for quite some time. MNRE specifically states that people should not wait for subsidy before implementing a project as you never know how long it will take.
- As there is a queue, in many places there are agents who claim that they can get you subsidy. Please deal with them at your own choice.
- Also as there is a long queue, MNRE uses a priority list to make final approval. All social sector projects, government projects and institutional projects may take priority over a project from a rich and affluent upper middle class residential society.
- As mentioned earlier, your panels have to be Made in India to get subsidy. You may compromise a bit on efficiency in such a case. You have to determine if taking a subsidy or getting more output works for you.
Is there any other financial assistance?
To provide financial support to Solar Rooftop projects, government has also initiated few programs that can be availed to fund their solar PV projects. Some of these programs include:
- IREDA (or Indian Renewable Energy Development Agency) can provide loans to system integrators at a concessional rate of 9.9% to 10.75%
- Banks can extend the same rate available for home loan as home improvement loan to help homeowners install a solar PV plant. Most of the Public Sector Banks have issued notices to their branches for the same.
How about Private, Commercial and Industrial Buildings?
If you have a private, commercial or industrial building and you want to set up a solar PV rooftop system, then you are not eligible for Subsidy. But, you are eligible for Accelerated Depreciation Benefits. The accelerated depreciation available currently is 80% in a year (there are talks about it coming down to 40%).
In general, for any industry, typically 15% depreciation can be claimed for any capital expense (like plants and machinery), which means if you make capital investment in any year, you can claim 15% depreciation in value to claim tax benefit. However, in case of Solar PV rooftop, the same is 80% in a year. Which means, in approx 4 years you completely depreciate the whole value of the project.
What is the maintenance required for such a system?
As batteries are eliminated, the maintenance required for such a system is quite less. The chief maintenance activity would be to clean the solar panels regularly so that dust does not accumulate on them. The other electrical components may have some wear and tear on regular basis (depending on the quality of the product) and would need fixes. To give a rough idea, maintenance cost is typically assumed to be 1%. In general, it is recommended to go for high quality components so that you just fit and forget the system and it keeps generating electricity for you.
Do I need approvals from my electricity distribution company?
You certainly need to take approvals from your electricity distribution company. This is because they are the ones who shall purchase electricity generated by your system. Before you start your project, you have to submit a form with your electricity distribution company (which can be done either online or offline). In the form, you will have to list out all the technical details of your PV project, along with your electricity bills and other relevant documents. The electricity distribution company will also do their feasibility study before you go ahead and install the system.
Once the system is installed, the electricity distribution company will sign an agreement with you which is called a “Power Purchase Agreement” or PPA. This agreement will lay out the terms and conditions at which the electricity distribution company will purchase electricity from you. This should be in line with the terms setup by the State Electricity Regulatory Commission and will lay down the terms of purchase.
Once everything is set up (from the system’s perspective) and the PPAs are signed, your electricity distribution company will install the “Net Meter” in your premise. Please note that your old meter may give way to this new meter (if you have a net-metering arrangement). If you have gross metering, then you will get an additional meter. Your system will start functioning once everything is set and connected.
How does the cost and economics work out?
Just like any other appliance, you will get products with varying costs in the market for Solar PV as well. But then just like any other appliance, you have to be aware of the quality of the product so that your expectations are matched with the product’s performance. Tier 1 manufacturers (the ones listed above on this page) would be expensive, but their products will perform better over a longer period, whereas the cheaper ones may not perform so well over time. The benchmark costs of Solar PV rooftop “Grid Connected” system has varied between Rs 75,000/kWp and Rs 1,00,000/kWp in the last few years. In fact, if you check the prices right now, the quotations that you would get would vary between Rs 60,000/kWp and Rs 90,000/kWp (for decent quality systems).
If your connected load is 5 kW and you have enough space to install a 5 kWp system, then it would cost roughly Rs 3,75,000. Typically a 1 kWp panel would generate about 1300-1400 units of electricity per year (it will be more on days with abundant light and less on days with low light). So a 5 kWp system would offset about 6500 units from your electricity bill every year. If your average per unit cost is Rs 7 then that works out to savings of Rs 45,500 per year. At Rs 7 per unit, you will recover cost of project in 8 years (without subsidy) and in 5 years (with 30% subsidy). If the cost per unit is more, then the cost recovery will be faster.
The option of Solar PV Rooftop “Grid Connected” system looks quite lucrative for places with fairly regular and continuous supply of electricity. A majority of such places in the country are cities with higher tariffs and reliable electricity supply. It can be a great method to not only reduce electricity bills, but also the generated power can be routed to places which have a shortage of electricity. If you do have one such place in mind where you can install the system, give solar PV rooftop “Grid Connected” system a thought.