Yash
You can save over Rs. 19,00,000 in lifetime using solar in India.
With an NPV of over Rs. 5,00,000
That is a good amount of money giving you a 17 % annual return.
How do you figure out this value?
I will do this by using the following steps.
- First: We will find the units produced by the solar power system during its lifetime.
- Second: We will figure out the monetary value of these units.
- Third: Finally, we will discount the monetary value to the present.
Don’t worry, I have done it for you.
Let us find it out in this amazing post.
The system output is not the same
The output from the solar power system varies every month.
In some months, your system generates more current while in other months the production is less.
It depends on multiple factors such as:
- Location and Sunlight
- Humidity
- Temperature
- Losses in the system
Let us understand the effect of the above factors on the output of the solar power system.
The output from the system is directly proportional to the sunlight
The places near the equator receive the most sunlight.
Because the sun is overhead at the equator.
As we move away from it, the sunrays become shallow and grazing.
Hence, the sunlight intensity decreases.
India is a vast country with the following coordinates:
- Latitude: 804′ North to 3706′ North
- Longitude: 6807′ East to 97025′ East
The southern part of the country is closer to the equator compared to the northern part.
Let us look at the location and the average PSH of New Delhi
A comparison table
| Place | New Delhi | Kerala |
| Latitude | 28.610 North (Far from the equator) | 8.500 North (Near to the equator) |
| Peak Sun Hours | 5.35 (Less Sunlight) | 5.64 (More Sunlight) |
It is clear that people living in the southern part of the country, receive more sunlight.
Water vapors block the sunlight reaching the surface
The moisture present in the atmosphere reflects and bends the path of the sunlight.
Hence, the place with more humidity receives less sunlight.
Although Kerala is near the equator, it is humid too.
That reduces the sunlight intensity.
Any place that is slightly away from the equator than Kerala but dry may have more PSH.
Let us compare the statistics of Kerala with Gujarat:
| Place | Kerala | Gujarat |
| Latitude | 8.50 North (Near to the equator) | 23.210 North (Far from the equator) |
| Humidity | 78% (More Humid) | 55% (Less Humid) |
| Peak Sun Hours | 5.64 (Less Peak Sun Hours) | 6.18 (More Peak Sun Hours) |
Despite Gujarat being far from the equator than Kerala.
Its dry climate (less humid) makes it receive more sunlight than Kerala.
Cell Temperature beyond 250 decreases panel output, affecting your solar saving
The power rating that we see on solar panels is measured in Standard Test Conditions.
When:
- Sunlight = 1000 W/m2
- Air Mass Index = 1.5
- Cell temperature = 250 C
Let me talk about the effect of temperature on solar panels’ output.
The solar panels are made by joining solar cells.
When solar cell temperature increases beyond 25 degrees, its internal resistance increases.
And it produces less current.
*(The solar cells perform 20 to 25 degrees higher than the ambient temperature)
Therefore, in hot climate regions, the solar cells are performing at high temperatures.
| Month | Average Ambient Temperature | Average cell temperature | % Loss in Power |
| January | 140 | 340 | – 3.6% |
| February | 180 | 380 | – 5.2% |
| March | 230 | 430 | – 7.2% |
| April | 280 | 480 | – 9.2% |
| May | 330 | 530 | – 11.2% |
| June | 330 | 530 | – 11.2% |
| July | 320 | 520 | – 10.8% |
| August | 310 | 510 | – 10.4% |
| September | 300 | 500 | – 10% |
| October | 270 | 470 | – 8.8% |
| November | 210 | 410 | – 6.4% |
| December | 160 | 360 | – 4.4% |
The losses in the solar power system decreases your solar saving
No system is ideal.
Like other systems, the solar power system does have various losses.
These losses are:
- Shading loss: The shade of a nearby building or a tree on the panel’s surface affects its output.
- Temperature related losses (we discussed above)
- Age of the system: The system losses increase as it gets old with time.
- Dirt losses: The dirt accumulated on solar panels results in less current production.
- Transfer losses: Energy is lost when it is transferred through the wires to other equipment in the system.
- Conversion losses: Losses occur due to the conversion of energy from one form to another
All these losses can reduce the solar system output by 20%-30%.
Units produced by 5 kW solar power system
After considering all the factors like sunlight, location, humidity, temperature, and other losses.
A 5 kW solar power system in India produces 20 units per day.
Or
600 units in a month.
If the present grid price is Rs. 6.6 per unit.
Then in 1 day, a 5 kW solar power system will save you 20 units x Rs. 6 = Rs. 132.
But the savings will not remain the same because the system performance will reduce and the grid price will increase.
The system is feasible when the reduction in system performance is less than the grid escalation.
The output of the system will decrease with time (solar saving decrease)
With time the system performance will decrease.
The output of the solar panels reduces to 80% of its Pmax in the 25th year.
For example, a 320 watts solar panel will produce (80% of 320 watts) 256 watts in the 25th year.
As the system grows old, its maintenance cost increases.
Hence, you would be paying more every passing year for its maintenance.
These two factors negatively affect the financial feasibility of the solar power system.
Electricity prices will rise in the future (solar saving increases)
The average cost of electricity is growing at 8% annually (2009-2019).
Although your system’s performance is gradually declining.
And it is producing fewer units with every passing year.
Still, it is saving you more.
Because the rise in future grid prices is steeper than the decline in the system’s performance.
You can see that despite a decrease in power output and an increase in maintenance cost, the savings are increasing.
Because the grid prices are increasing more sharply.
Hence your saving is increasing.
Cost of 5 kW solar power system
The cost of the solar power system is a major factor that affects your savings.
A costly system can reduce your lifetime savings, increasing the payback period.
While a rightly priced system improves your solar return.
The cost of a 5 kW grid-tied solar power system (without battery backup) in India is Rs. 3,10,000.
Net saving from 5 kW solar power system in India
After combining the effects of all the variables we discussed above, the savings can be shown below:
| Particulars | Values |
| Cost of the system | Rs. 3,10,000 |
| Internal Rate of Return (IRR) | 17% |
| Discount rate | 7% |
| Net Savings in 25 years | Rs. 19,58,471 |
| Net Present Value (NPV) | Rs. 5,05,078 |
| Payback Period | 8.5 years |
| Solar Electricity cost/unit | 2.8 |
| Units generated in lifetime | 1,60,707 |
Online Solar Course: Learn to design, size and find the financial feasibility of the solar power system
Key Takeaways
1) The output from a solar power system varies. In some months, it produces more while in other months, the output is low.
2) The monetary savings from the system depends on various factors such as:
- Sunlight
- Location
- Humidity
- Losses in the system
- Grid prices
- Cost of the system and more
3) The savings are more when the growth in grid prices is steeper than the decline in the system’s performance.
4) A 5 kW solar power system (without battery backup) in India costs you Rs. 3,10,000/-
5) A 5 kW system in India can save up to Rs. 19,00,000 in 25 years.
