This is the second article in a series that explains all you need to know before installing a solar system on your rooftop. The first article focused on the specifics of rooftop design, quality, size, and system life. This article will get into the financial benefits of installing a solar system.
Mercom spoke to several rooftop solar installers to understand an average residential rooftop solar system’s financial implications. This article will get into the financial benefits of installing a solar system.
Savings on monthly electricity bills
“Homeowners can save approximately 600 units of electricity monthly that can reduce their electricity bills by around ₹5,500 (~$75.2) with the installation of a 5 kW rooftop solar system in their homes,” said Arshi Chadha, Chief Operating Officer of Sunson Energy.
Here is the breakdown of numbers for a 5 kW rooftop solar system. Assuming that a 1 kW system would generate 4 units (kWh) per day on an average, a 5 kW system would generate about 20 kWh/day or 600 units per month. Considering a tariff per unit of ₹5.50 (~$0.0739)/kWh, the solar system will be able to generate power amounting to approximately ₹3,300 (~$44.37)/month. This amount can be more if the tariff in that region is more than ₹5.50 (~$0.0739)/kWh.
If your electricity bills are generally around ₹3,000(~$40.33)/month, your power bills will be zero by installing a 5 kW rooftop solar system. And if your monthly bill is about ₹7,000 (~$94.12)/month, then with the system installed, your bills will be reduced to just ₹4,000 (~$53.78)/month. And if your monthly bill is around ₹1,500/month, after the installation of the rooftop solar system with net metering, instead of paying ₹1,500 (~$20.16)/month, you could be earning ₹1,800 (~$24.20)/month from the distribution licensee (DISCOM). Net metering is a form of billing that enables consumers to be compensated for the surplus power generated at a price determined by the state. Net Metering is vital if you have to sell excess electricity to the grid and get paid for it in return. A net metering connection is not easy to get, and availability depends on where you live.
The numbers in the table above will vary based on factors like units of electricity generated every month by the rooftop solar system. A good quality rooftop solar system maintained well can produce more than the average units mentioned above.
The savings will depend on the units generated and the electricity tariff in the city. An average tariff of ₹5.50 (~$0.0739)/kWh has been considered to calculate scenarios, but this could be more or less based on the location.
The other critical element is to have a net metering facility to supply electricity to the grid and get paid for it. The net metering topic will be addressed in our future series.
According to Jayant Mhetar, co-founder and chief executive officer of Ztric India, the breakeven period for a 5 kW solar system installed with a government subsidy are between two and a half to three years. However, the breakeven period for a 5 kW rooftop solar system is approximately four to five years without any government incentives.
Breakeven is a point at which the system’s cost is fully made up for by the savings or income you have earned from it. This article discussed the savings or the income you can earn from your rooftop solar system. In the next article, we will discuss the investment needed to set up a rooftop system.
How does it help the environment?
A rooftop solar system can help reduce the toxic carbon dioxide from the air. Chada explained that a 5 kW solar system could reduce nearly 7.3 tons of carbon dioxide emissions annually. She added, “A rooftop solar system on top of a household can save two trees every week while generating clean energy to meet the needs of homeowners.”
“The majority of energy generation in India happens through coal-based facilities. Every time a homeowner generates solar power through a rooftop solar system, it reduces dependence on coal, eventually decreasing carbon dioxide emissions to achieve climate change targets,” said Mhetar.
Climate change is affecting all individuals on a global scale, and its effects have been especially severe in India. “Climate change is not just the government’s responsibility. Everybody must contribute to the cause,” said Mhetar.
Mhetar added, “We are part of the reason for the negative impact of climate change because we are using vehicles and air conditioners, and are heavy electricity consumers.” He further explained that the government’s steps towards having a better future would be more impactful if every individual starts to contribute by offsetting some of their consumption with renewable energy like installing a solar system on their roof.
Chada also echoed the same thoughts. She said, “Shifting from coal-based energy to solar energy; homeowners will contribute towards a better environment while saving money on power bills monthly.”
According to Mercom India Research’s Q2 2020 India Solar Market Update, residential solar installations made up for just about 3% of the total rooftop solar installed in India during the quarter. Mercom expects the growth in this segment to be two-fold year-over-year.
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Harsh is a staff reporter at Mercom India. Previously with Indian Express, he has covered general interest stories. He holds a Masters Degree in Journalism from Symbiosis Institute of Media and Communication, Pune.