Solar Electricity Generation in One Year

Our 12.24 kW rooftop solar PV system in Pune, India, recently completed one year of operation. This blog-post reports the total electricity generation as well as the monthly numbers. It also compares the generation with theoretical estimates for each month. The total generation from July 1, 2018 to June 30, 2019 was 17,791 kWh. The average daily generation was 48.7 kWh/day. Since this generation was for a 12.24 kW system, the efficiency is calculated to be 3.98 kWh/kW/day. The estimated values based on insolation data for Pune are, 18,276 kWh for yearly generation and an estimated efficiency of 4.09 kWh/kW/day.

Monthly Generation Statistics

Month	Actual and (expected) Generation (kWh)	Efficiency (kWh/kW/Day)
July 2018	800 (993)	2.11
August 2018	953 (1031)	2.51
September 2018	1330 (1283)	3.65
October 2018	1473 (1632)	3.88
November 2018	1375 (1681)	3.74
December 2018	1249 (1643)	3.29
January 2019	1629 (1796)	4.29
February 2019	1728 (1615)	5.04
March 2019	2052 (1913)	5.41
April 2019	1868 (1805)	5.09
May 2019	1925 (1713)	5.07
June 2019	1399 (1171)	3.69

Observations:

• March, April, and May are predictably the best months for electricity generation with ideal conditions: almost no cloud cover, low humidity, and good number of daylight hours with sun rising almost to the zenith point.
• July and August, with monsoon at its peak, are the worst months, in spite of long daylight hours.
• Generation  in October, November and December was worse than expected. The primary reason for this was a lack of proper cleaning. In the preceding months, rainy season had ensured that the panels remained clean. The dust accumulating on the panels reduced generation significantly. In December, the generation was 24% lower than the theoretically expected value. This was corrected in mid January with a strict, biweekly, cleaning schedule.

Return on Investment (ROI)

During this period, the savings in electricity bill amounted to ₹ 2,88,525/-. The system cost was ₹ 7,63,000/-. There were no maintenance expense. The ROI is calculated to be 37.8%. This implies a payback period of less that 3 years. We did not use any subsidy from the government while purchasing the system. An installation that makes use of subsidy can enjoy an even shorter payback period.

Conclusion

An average generation of about 4 kWh/kW/day is close to the theoretical value of 4.09 for Pune. This slight reduction (3%) is primarily due to the accumulation of dust and a lack of cleaning. A strict biweekly cleaning schedule is necessary to ensure efficient generation. In any case, a generation of 4kWh/kW/day can be used as a reference to estimate generation of a solar PV system in Pune. This number will be valid for most regions in India, except the far north, north east and some hill-stations in the western ghats. Generation will be slightly higher in the desert region of Rajasthan and at many locations in the northern Maharashtra and parts of Gujarat. The payback period and ROI for this system is one of the best that I have seen reported. This is thanks to optimal sizing of the system in a region with high tariff for electricity.

Reference: Solar Generation Calculator

Solar Electric Power from Rooftop Reaches Tipping Point

Executive Summary

Falling prices of solar panels and rising electricity rates have profoundly changed the economics of solar power. In India, solar photovoltaic electricity has reached a tipping point as the return on investment has become very attractive for many applications. It has become extremely economical to install rooftop solar panels with net-metering. This has the potential to start a revolution where most buildings in cities will install solar panels to generate electricity. This change can potentially happen faster than the proliferation of television and the Internet.

Introduction

Most states in India now allow net-metering. It is now possible for a home, housing-society, commercial establishment, or an industrial unit to feed power to the grid and get paid for it. A net-metering system will charge the consumer only for the net consumption of electricity. For instance, a home can feed power to the grid during day-time when household requirement for electricity is low and consume power from grid during evening and night when solar generation is zero. The consumer gets charged only for the consumption that is more than the energy delivered to the grid. This blog-post presents calculations to prove that it is much better to invest in solar power than a bank deposit or a debt mutual fund. Such an attractive investment option can result in a rapid change in the way electricity is generated in the country from a completely centralised generation to a more distributed generation architecture.

Calculation for Return on Investment (ROI) for Solar Power

System Sizes and Cost

The investment in a roof-top solar, grid-connected PV system is expressed in terms of Rupees per kilowatt (₹/kW). These rooftop systems are available in various power ratings, ranging from 1 kW to about 25 kW. Largest systems have the lowest price per kW and smaller systems are more expensive. A 1 kW system is expected to cost almost ₹100,000/- while a 10 kW system costs about ₹70,000/kW. A 25 kW system may cost only ₹60,000/kW. These prices include solar panels, synchronous inverter, cabling, accessories, installation, and taxes.

Electricity Generation by Solar Panels

The electricity generated per year varies based on system size and location. For the purpose of this blog, I am only considering the major parts of India that have ample sunshine. Please refer to my earlier blog-post for calculation of electricity generation by a solar panel. Based on that blog-post, a 1 kW panel in India will generate about 4.24 kWh of electricity per day, or about 155 kWh per year. There will be some variation from city to city. For instance, Pune is expected to generate about 4.19 kWh/day and New Delhi will generate about 4.25 kWh, while Jaisalmer in Rajasthan will generate 4.46 kWh per day. These are numbers averaged over a year. For calculating the return on investment, I will use the number for Pune since it is slightly lower than average and will provide a safety factor.

Electricity Rate and Monthly Bill

I will use the electricity tariffs in Maharashtra for residential and commercial low tension (LT) supply for the purpose of these calculations. Residential electricity rates are organised in slabs:

Slab (kWh)	Total Tariff (₹/kWh)
0-100	4.88
100-300	9.21
300-500	12.66
500-1000	14.40
1000+	15.88

The tariff includes wheeling charges and taxes. Electricity rates for commercial consumers are arranged in slabs that depend on the maximum power rating (kW) for the connection:

Slab (kWh and/or kW)	Total Tariff ( ₹/kWh)
0-200 (< 20 kW Connection)	8.47
>200 (<20 kW Connection)	12.21
20 kW – 50 kW Connection	12.98
> 50 kW Connection	15.96

It can be observed that higher the consumption, higher the rate charged to the customer. Following table lists the typical monthly bills for different types of consumers:

Consumer/Rate	Monthly Consumption (kWh)	Bill (₹)
Residential	250	1,870
Residential (Uses AC)	500	4,862
Housing Society Water Pump/Resdential	1600	21,588
Housing Society Lifts and Lights/Residential	1000	12,059
Commercial (100 sq meters)/LT20kW	1500	17,567
Large Commercial (400 sq meters)/LT20-50kW	6000	77,880

Consumers with high consumption pay a higher rate per unit of electricity. Use of solar power with net-metering saves tremendously for such high consumers. For residential consumers and commercial consumers with a lower power connection (<20 kW), net-metering effectively brings down the slab under which the consumer gets billed.

Calculation for Return on Investment (ROI)

It is easy to calculate ROI, given all the preceding data. High consumers get the best ROI as they are being charged a high rate for their electric consumption. To calculate ROI, it is necessary to start with system size in kW and price/kW. The system size translates into average electricity generated per month. For the purpose of this blog, I am using the number for Pune of 4.19 kWh/kW/day. This implies that a 1 kW solar panel in Pune will generate on the average 4.19 kWh/day. This requires the solar panel to be installed at an optimal angle, pointing south. The generation for Pune is slightly less than the average for India. The daily generation is multiplied by 30 to calculate the monthly generation. To calculate ROI it is necessary to know the average monthly consumption and the corresponding tariff. The generated units are subtracted from average consumption to calculate the billable units and the monthly bill. This directly translates into monthly and yearly savings. For instance, water pumping in our housing society consumes 1600 units per month on the average. We are evaluating a 12 kW system with a price of ₹70,000/- per kW. This corresponds to a total investment of ₹8,40,000/-. The 12 kW system will generate 1508 kWh/month. This will result in a savings of ₹21,140/- per month and ₹2,53,683/- per year. The yearly savings correspond to a gross return of 30.2% on the investment. This ROI is excellent and corresponds to a payback period of a little over 3 years. Since the life of system is very long (25 years) and there is hardly any maintenance requirement apart from weekly cleaning of panels, the net return on investment is expected to be well over 20%.

The gross ROI will vary depending on the system installed and the average monthly consumption for the given application. The following table summarises the ROI values for various combinations:

Application	Monthly Consumption (kWh)	System Size (kW)	Price	Monthly Generation (kWh)	ROI %
Residential	250	1	₹1,00,000/-	126	13.89%
Residential	500	3	₹2,55,000/-	377	19.59%
Housing Society	1000	5	₹3,75,000/-	629	28.24%
Housing Society	1600	12	₹8,04,000/-	1508	31.55%
Commercial (<20 kW)	1500	10	₹7,00,000/-	1257	26.31%
Commercial (20-50 kW)	6000	25	₹15,00,000/-	3143	32.63%

Understanding the Impact of ROI Numbers

• For a residential customer consuming 500 units per month, it will be very attractive to get an ROI of 19.59% on investment. Even after subtracting 7% for depreciation and maintenance, the ROI works out to be 12.59%. This is much better than investment in a bank fixed deposit or a debt mutual fund, both of which typically yield 7% – 9% before income tax.
• For housing societies, electricity bills for pumping water, common lighting, and lifts are usually the major contributors in monthly expenses. These societies typically have fixed deposits in bank and the interest on the same is used to pay a part of the bills. An ROI in the range of 30% makes solar power so attractive that I don’t see any reason not to switch to solar power, unless there is no shadow-free rooftop space available.
• For a commercial establishment, an ROI in the range of 26 to 32% is extremely attractive. It is also possible to claim the benefit of accelerated depreciation, which will increase the ROI to more than 40%. It will be worth taking a loan to install such a system. It may even be worth paying for the space on terrace to install such a system.
• For smaller residential customers (250 kWh/month) the ROI of 13.89% is marginally better than a fixed deposit in bank. Electricity rates are expected to keep rising in the future and the ROI will only improve.

Conclusion

A revolution is now underway and I won’t be surprised if every building with a shadow-free rooftop space starts using solar electric power in the next 3 years.

Reference: Calculators for Solar Energy