Solar Power industry in India is gaining more and more prominence with each passing day. The domestic/off-grid industry is picking up speed too. Owing to the queries we are receiving regarding the various issues pertaining to Solar Power Plant setup, we thought it would be a great idea to put together a bunch of questions and answer the same. We shall keeping adding to the list as we keep receiving more queries. So, here are the most Frequently Asked Questions and our answers for the same. Do let us know in case you would like us to answer any more questions. Also, kindly point out any inaccuracies/mistakes that you may find here so that we can correct the same for the benefit of everyone.
We have tried our best to provide the best and most accurate information. However, inputs or responses to questions from other industry experts are encouraged and extremely appreciated.
How much land is required to setup a 1MW solar power generation Unit?
What is the life-time of a typical Solar Power plant?
What is the annual energy generated from a 1 MW Solar Power plant?
The usual benchmark for energy generated from a 1 MW Solar Power plant is considered as 1.5 Million units. This is only a benchmark and should not be considered as the actual output for a given location. The amount of actual energy generated from a Solar Power Plant in a year depends on both internal and external factors. External factors which are beyond the control of a solar developer can include the following:
- Number of sunny days
- Solar Irradiation
- Day Temperatures
- Air Mass
The output also depends on the following internal factors all of which are within the control of a Solar Developer:
- Plant Location
- Usage of Solar Tracking systems
- Quality of equipment used
- Workmanship of the EPC contractor
- O&M activities
What are the various modes under which we can setup a Solar Power plant?
The various modes under which a Solar Power plant can be setup depends on the specific requirement. All the following are valid modes and the costs for each kind of system varies based on various factors:
- Off-Grid Captive Consumption for domestic premises.
- Off-Grid Captive Consumption for commercial premises
- Grid Connected (Net Metered) Captive Consumption for domestic premises
- Grid Connected (Net Metered) Captive Consumption for commercial premises
- Sale of Power generated to local Distribution Company (DISCOM)
- Sale of Power generated to 3rd Party consumer (Industry or Commercial entity)
What is the cost of setting up a Rooftop Solar Power plant for domestic or commercial use?
What size Solar Power plant is required for domestic or commercial use?
Identifying the Solar Power plant size for your domestic or commercial premises depends on the following factors:
- In case when you need to shift your solar power system one location to another, we are happy to assist you.
- We will do free site inspection in your new location and propose our recommendations for smooth transition.
Insufficient After Sales Service
Typical problems of an insufficient after sales service are
- Wattage of appliances to be run on Solar
- Monthly energy consumption from these appliances
- Energy Backup or Days of Autonomy required
- Roof space available for plant setup
Based on these factors, the power plant sizing can be accordingly done at your end.
Setup Costs and Power Sale Tariff
What would be the per unit expected sale price?
This depends on the mode of sale of power and the consumer of power.
- In the case of sale of power to DISCOM, the prevailing Average Pooled Power Purchase Cost (APPC) will be applicable.
- Solar Irradiation
- In the case of sale of power to 3rd Party consumer, a mutually agreed price can be agreed upon and accordingly a PPA can be signed.
It is to be kept in mind that several additional charges such as Wheeling Charges, Distribution Charges, Open-Access Charges, Cross-Subsidy Charges are applicable in the case of sale of power to 3rd party. These charges vary from State-to-State and DISCOM-to-DISCOM and even based on voltage levels.
What would be the total project cost excluding the cost of land?
Total project cost per MW would be in the range of Rs.5.5 Crores-Rs.7.0 Crores depending on the kind of technology you are using, whether or not you are using tracking systems, the kind of EPC Contractor you choose for power plant system etc. CERC recently announced the benchmark tariff for setup of Solar PV and Thermal Plants in India. Here are the links to the documents containing more details:
Which kinds of Solar Power plants are eligible for REC benefits?
Solar Power Plants need to be Grid-Connected on order to avail REC benefits. Though there have been recommendations on multiple occasions that Off-Grid Solar Power plants be made eligible for RECs, the proposal is still under discussion. Solar Power plants setup under the following 3 modes are eligible for REC benefits.
- Captive Power plants.
- Sale of power to Govt. at APPC
- Sale of power to 3rd party at mutually agreed price.
Captive Power Plants are eligible for RECs subject to the condition that Concessional/Promotional Transmission or Wheeling Tariffs and/or banking facility benefit are not availed. Also, Solar Power plants setup under Preferential Tariff schemes are not eligible for RECs. Check out more information on RECs on REC page here –
Is there a minimum size for Solar Power plants to be eligible for RECs?
Can CDM benefits (Carbon Credits) be availed for a Solar Power plant?
Benefits for Solar Power plants
What kind of Central/State benefits are available for Solar Power plant setup?
Solar plants can be categorized into 2 broad categories – Grid Connected and Off-Grid plants. The usual Govt. support available for an On-Grid plant is a Capital Subsidy of 30% on the project cost. This can be claimed by the Supplier/EPC Contractor (should be an MNRE accredited supplier) on behalf of the customer but the subsidy will be transferred to the beneficiaries account only.
Is there any subsidy available for Solar Power plant setup?
Capital Subsidy of 30% is applicable only for Grid Connected Non Commercial Plants. Subsidy will not be applicable in case of sale of power.
I have land and some company posted that they are looking for people having land and ready to invest about Rs.10 lakhs. Can I go ahead with this investment?
It is difficult to comment much without more information about the company. However, it is advised to check the company’s track record to understand the company’s previous projects and the revenues/returns from such projects. A couple of things that you might have already understood from the info on this FAQs page is that a typical good quality Solar PV Power plant required Rs.6.5-8 Crores for setup. In line with this, the investment of Rs.10 lakhs you have been asked to make comes to around 1.5% of total project cost which is not much. If your land also has certain value, that can be factored into your equity contribution to the project. While we are not sure about the promise made by the company to you in terms of returns, kindly make sure that your investment has been duly considered in project equity and the associated returns. Also, it is possible that there are several other investors such as you who might be investing in the project. You might ask the company details regarding the same. Following are a few more things you can ask the company to provide:
- Is the entire project equity funded from investors such as you? If ‘Yes’, who are the other investors? If ‘No’, what is the debt portion, where is it coming from and what is the interest rate?
- Where is the project going to be setup?
- Who is the power sold to and at what price is it being sold?
- What are the yearly estimated revenues and returns?
- When would you as an investor start making money (important as payback period is reasonably high for Solar Projects)?
As an investor, you have every right to know the answers to these questions. Kindly evaluate all scenarios and clarify all you queries before making such an investment.
Permissions and Bank Loans
What permissions/clearances are required to setup a Solar PV Plant?
A certain set of permissions need to be obtained and documents need to be submitted in order to setup a Solar PV plant. While these may vary from state-to-state, in order to get a Solar PV Project Accredited by State Government Load Dispatch Center for REC mechanism, the following are the statutory clearances and environmental clearances to be furnished:
- Industrial Clearance
- Land conversion (Agricultural to Non-Agricultural)
- Environmental Clearance Certificate from Pollution Control Board
- Contract labor license from Labor Department
- Fire Safety certificate from Fire Department
- Latest tax receipt from the Municipal/Gram Panchayat for the factory land.
- Auditor compliance certificate regarding fossil fuel utilization
- Approval from Chief Electrical Inspector
- Clearance from Forest department
Also, all necessary approvals/agreements before start of Solar PV project construction are to be furnished as and when necessary. These include the following:
- Land purchase
- Power Evacuation arrangement permission letter from DISCOM
- Confirmation of Metering Arrangement and location
- ABT meter type, Manufacture, Model, Serial No. details for Energy Metering.
- Copy of PPA (important as Preferential PPA projects are not eligible for REC mechanism)
- Proposed Model and make of plant equipment
- Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE
- Details of Connectivity with DISCOM
- Connectivity Diagram and Single Line Diagram of Plant
- Details of pending court cases, Supreme Court of India, High Court or any other courts.
While these are the documents that generally requires for REC project accreditation, these are typically the clearances/documents required in general for a Solar PV project.