Is it financially viable in the long run?
In the financial year of 2019-20, the number of apartment associations looking at installing solar rooftop systems as part of their go-green initiatives has dramatically increased. It also helps in cost cutting opportunity for apartment communities.
This blog tries to answer a few of those questions by presenting a cost benefit analysis for a 50 kWp system for an apartment association. The assumptions considered in these calculations has been mentioned at the end of the blog.
Example :
Let us consider an apartment “X” in Bangalore. Which has 200 houses and has one common area meter. Common area meter is powering their common area loads: STP, Pumps, Lifts, basement lights etc. The apartment consumes 90000 units from BESCOM in a year or ~7500 units per month.
The apartment pays ~Rs.8.78 per Unit for each unit consumed from BESCOM. Apartments pays ~7.8 Lakh Rupees per year as Electricity bills to BESCOM.
BESCOM Tariff rates for apartments is mentioned in the table below:
Table 1 : BESCOM Electricity Bill Slab Rates for Residentials
Considering that the BESCOM tariffs are increasing every year at a rate of 5%. The apartment association reaches out to EcoSoch for understanding the cost-benefit analysis.
EcoSoch team does a site survey of the rooftop area of the apartment. Concludes that ~3500 sq ft of shade free rooftop area is available. A 50 kWp system can be installed on 3500 sq ft of rooftop area.
EcoSoch submits a formal proposal to the apartment with the following cost benefit analysis:
Graph : Units consumed before and after solar
Graph : Bescom Bill before and after solar
From the above graphs it is clear that a 50 kWp system is expected to bring a savings of ~6.3 Lakhs in the first year of operation.
Parameter considered :
For the calculations in this blog following parameters are considered:
Table : Project details considered for financial Analysis
Considering the details mentioned in the above details. And considering that a solar power plant lifetime is 25 years, EcoSoch submits the following financial analysis data to customer:
Table : Financial Calculations over 25 years
The payback rate for the table above is 4.2 years. The above table does not take into account the discount rate.
If we consider a discount rate of 5%. The internal rate of return of the project over the lifetime of solar power plant is 20%. The NPV (Net Present Value) of the total savings over the lifetime of the project comes to 1.5 Crores.
Table : Summary of Financial Analysis for 50 kWp solar system
FD vs Solar Comparison :
Normally the associations\housing societies have corpus funds in Fixed Deposits earning 7-7.5% interest rates. For instance, here is a simple 10-year calculation of FD vs 10 year returns from solar gives us the following table.
Table : FD vs Solar Comparison for 10 years
In conclusion clearly, over a 10 year period solar has a benefit over FD investments.
Graph : Solar vs FD comparison
The points above do show that Solar Rooftop Systems is a financially viable investment for apartments\housing societies.
In addition, considering the environmental benefits and economic benefits after installing a solar rooftop system. I think that a jump in solar rooftop systems is due and in the next 2 financial years. We can see more and more apartments adopting solar for their needs. The risk of investment on solar rooftops is also very less due to the higher warranties. Warranties of 12-25 years for Solar Panels & Inverters.
Read more on our apartment projects:
- Adarsh Residency : Click here
- Renaissance Park 3 : Click here
- Millennium Habitat : Click here
- ARK Serene County : Click here
- Sundale Apartments : Click here
- Hemalatha Heights : Click here
And many more are under way.
Assumptions used for Financial Calculations:
- Type of System that the apartment will be installing is an On-Grid System
- 1 kWp of Solar Rooftop System generation 4 units in Bangalore per day
- Generation depends upon the power availability, cleaning of solar panels, voltage fluctuations.
- 1 kWp of Solar Rooftop System needs ~70sqft of Rooftop Area
- The project cost mentioned is an indicative all-inclusive costing for 50 kWp solar rooftop system.
- Costings have been made using the following considerations:
- Monocrystalline Solar Panels manufactured by Indian Companies
- SolarEdge Inverter is the On-Grid Inverter use for the project
- Installation of Solar Panels will be on Flat RCC Roof. Using non penetrating solution with Aluminium Structures
- Site is in Bangalore District
Note: The actual costs will vary based on site conditions
Note 2: Table 2 projects an undiscounted cash flow analysis
