How solar can help you reduce your electricity costs

After the era of computers, the era of solar is here. The shining sector is on the rise with ambitious targets and policies driven to make those ambitions a reality. A lot of capital is coming in for solar projects through various investors and as well as government.

Solar is not just for industries and commercial consumers, but for residential consumers too. The initial mist of high cost of generation is now coming off with time. The tariff has decreased by more than 60 %. No-one ever thought that solar tariff will touch Rs.4 mark and make itself viable to the world, but it is happening none the less.

 At Rs.5 to Rs.6 unit of generation from solar, it has dived way below the conventional diesel and gas generators. With most of the SME’s, shopping malls, hotels and hospitals using diesel or gas based generators in the absence of conventional grid electricity, the viability for a solar setup is much higher.

Understanding the numbers:

Let’s take an example of any state that suffers from 3 hours a day of power cuts on an average. For a day, if we take 3 hours of power cut and the distribution tariff of Rs.6, we can calculate the realized tariff. The current diesel rate is approximately Rs.53. A diesel generator generates 3 to 4 units of electricity per liter. At the current diesel cost, it will come close to 16 to 18 rupees per unit. Similarly, for a gas based generator the cost is around 12 to 14 rupees per unit.

In such a scenario, net metering or even off grid solar can become a better option than diesel and gas generator set. 

In the above example, if a small industry uses approximately 2400 units in a month out of which 480 units are generated through diesel or gas based generators, the cost can be easily calculated. The tariff of normal distribution companies is Rs.8 per unit (including taxes and duties). 

In case 1, where a consumer uses grid electricity (80%) as well as diesel generator (20%), the effective rate comes up to Rs.9.61 per unit and similarly, with a gas based generator, the cost is Rs.8.81 per unit.

 On the other hand, solar can be the savior for many such consumers. With net metering policy in place, grid connected solar rooftop is the answer. Before going in depth lets understand that power purchase agreement (PPA) is the agreement that sets the commercials for units generated through solar generation. Here, we take two cases of Rs.6 (PPA-I) and Rs.5.5 per unit (PPA-II).

Let us compare and see how this can materialize:

A 20 KW solar rooftop plant would cost around Rs 1.2 lakhs. In PPA – I where the rate is Rs 6 per unit, the savings would be Rs.1.03 Lakhs annually, when the consumer is using a diesel generator and Rs.80 thousand when he is using a gas generator along with grid electricity. In PPA – II where rate of solar generation would be Rs.5.5 per unit, the saving would be around Rs.1.17 Lakhs for diesel and approximately Rs.1 Lakh for gas generators.

 For revisiting solar savings, the net metering policy allows consumer to generate units through solar and inject them into the grid. The net units consumed are billed by the discom (distribution companies). Understanding the same in above case the saving would be:

 1900 units (electricity grid) will save:  Rs 8 – Rs 6 = Rs 2

                              = 2 * 1900 = Rs 3800      

 480 units (Diesel) will save:         Rs 16- Rs 6 = Rs 10  

                              = 10 * 480 = Rs 4800

 480 units (Gas) will save:           Rs 12 – Rs 6 = Rs 6 

                              = 6 * 480 = Rs.2880

 Total savings when compared to using diesel and grid would be Rs.8600 per month and when compared to using gas and grid would be Rs.6680 per month.

 Similarly, in PPA – II, the savings would be more as shown in the table above.

Solar tariffs are crashing down to Rs.4 per unit. Solar has become the “Numero uno” choice for everyone and we should cash in on it right now. This choice is not only based on environmental benefits, but also on cost and tariff.   

The present of the present era is solar and it is time to embrace it. And the best thing is that this present is available to all and is within our reach.