Rooftop Solar Plants a Viable Business Opportunity.

Rooftop Solar Plants a Viable Business Opportunity.

Solar rooftop installations are a good investment option considering both tangible and intangible benefits.

  For organisations planning to shift from conventional energy to solar power use, a rooftop solar photovoltaic (PV) power plant can not only be a money saver but also money spinner with excess power supplied to the utility grid. While the Ministry of New and Renewable Energy (MNRE) is still in the process of laying down specificationsfor incentives, experts feel that with the right policies and execution, solar rooftop installations can be a hot trend in green technology. It is a profitabl business concept, and hence a viable investment option.

Installation and Requirements
When solar PV modules are installed on a building’s rooftop to generate solar power, it is called a rooftop power plant. Rooftop PV installation can either be done for standalone use or to feed into the grid.

Some of the factors to consider before installing a solar power plant on your building’s rooftop include electrical load, current rate, roof size, load capacity and geographic location of the building. The subsidy given by the central and state governments, local utilities, and local community regulations and incentives are also some key determinants in the evaluation.

Rooftop solar arrays are best installed on a large and flatroof where direct sunlight without shadow from the surrounding structures is available. If there is shadow on a part of the terrace during the day, PV solar panels are unable to harvest the sun’s energy for that period of time. Let us look at the key considerations while evaluating solar rooftop options.

First, it is important to have a basic understanding of the components of a solar power system and how these generate electricity. PV solar power systems are very simple electric power generating systems comprising the following basic components:

1. A set of PV panels that convert sunlight (photons) into direct-current (DC) electricity
2. A racking system that firml holds the panels to the roof, exposing these to the sun at an advantageous angle
3. Inverters that convert DC electricity into alternating current (AC) electricity
4. Wiring that connects everything
5. A storage battery (in the case of a grid-fed power plant, a large-sized battery is not necessary to store and use that power after sunset)
6. A variety of means to tilt the panels toward the sun to generate more electricity
7. Energy meters to record the en-ergy that is supplied to the grid
8. Junction boxes
9. Earthing kits

Currently, commercially available silicon-based solar PV panels are made from solar cells encased in a special type of toughened glass. Silicon solar modules have been in the fieldfor more than 50 years and perform quite predictably. These are guaranteed for 25 years of feld life but the power yield drops about 0.6 per cent a year. One can use monocrystalline (made from a single crystal) or polycrystalline (made from multiple crystals) panels. Monocrystalline panels are a little more efficientbut the cost per watt is almost the same.

How to supply solar power to the grid?

If the solar power generated from a rooftop installation is to be injected into the grid, one needs to enter into a power purchase agreement (PPA) with the local distribution utility in whose area the solar system is located. Under this agreement, a tariff is determined by the appropriate State Electricity Regulatory Commission (SERC). However, the issues related to grid integration, metering, measurement and energy accounting for projects are under consideration with the government. There is no cost involved in the transmission of energy unless the power is transmitted at high tension (HT) levels (11 kV or 33 kV), and special monitoring and metering hardware are deployed at HT levels. In the current scenario, metering arrangements for rooftop grid-interactive power plants are under active consideration by the government. While no special arrangements are required to inject power into the grid, there is a safety aspect that needs to be factored in while transmitting energy. There is always a risk involved, as when the grid fails the solar power system automatically stops injecting power into the grid. This is called islanding, where the inverter isolates itself. This is a standard feature built into solar power inverters, making these safe for residential and commercial applications. A standalone feature in the inverter would enable captive consumption of the solar power generated in the event of any grid outage.

Copper-indium gallium-diselenide (CIGS) panels may become the preferred type for commercial rooftop projects in another fiveyears. These have the potential to deliver reasonable efficienciesat a lower cost than traditional crystalline panels. However, the cost per watt may not necessarily go down, only the panel size per watt may drop. Today, solar panels (depending on the brand) are bankable, that is, banks loan capital for their purchase.

The solar energy can be used for captive consumption or exported to the grid. The electrical energy (DC) or the solar power generated by the solar PV modules during the sunshine hours is stored in the batteries for use, as and when required. The energy stored in the batteries is converted into 230V AC mains using an inverter. This energy automatically synchronises with the grid and gets injected into it.

Installation by integrators
Many solar system installers and owners have had good experience in anchoring the panel structures. This has to be done scientificallyand with care. It is possible to have non-anchored installation systems but these need to be very carefully designed to with-stand heavy winds. Such systems are designed to connect the solar power system to a roof using weights, rather than fasteners that must be anchored to the roof.

Solar installation companies, often called integrators, can complete a small rooftop project within a few weeks. Before signing a contract with an integrator, evaluate the roof for solar installation with respect to:

Roof condition. The roof should be in a good state prior to solar installation. If it needs significantrepair or replacement, get this done before installing the solar array.

Space availability. Solar power projects work best on flat roofs without obstructions.

Weight load. Some roofs are not designed to hold much additional weight. Ascertain the acceptable weight you can add to your roof before signing a contract.

Investments involved
Of all the components of a solar PV plant, solar module accounts for the biggest cost—it can be 70 per cent of the total project cost. The cost per watt is currently Rs 130-150 ex-factory. The investment primarily depends upon the size of the power plant, which varies from a small kilowatt to multi-megawatt plant. At present, good-quality off-grid rooftop solar power plants can be installed at a cost of Rs 250,000 per kW.

Under the National Solar Mission policy, the benchmark price for an off-grid system is Rs 270,000 per kW peak. For a grid-connected system, it is Rs 190,000 per kW peak. The government also provides a 30 per cent subsidy on the benchmark price. Installation costs would differ in case of remote installations and poor site conditions.

Economic advantages
The total investment per kW in a small power plant, for example, 10kW, will be the same if not less than in a large 5MW plant. It is therefore viable to go for small grid-fed plants owned by small privately-owned utilities. A buying rate of Rs 17 or 18 per unit of electricity from such plants will attract thousands of small investors like a magnet. In most areas in India, solar power can then be a fiscallysound investment that reduces electricity payments immediately, as well as hedges the small solar plant owners against local utility price increases.

If solar power is fed into a small city grid like Miraj, Ratnagiri or Ratlam, all consumers in that area will get cleaner uninterrupted power from the local copper grid. The high impedance of the local grid helps power to remain local, improving the local power quality. That’s why all other countries in the world allow solar plant owners to feed power into the local grid at the low voltage end.

It therefore makes sense to set up a solar rooftop plant in cities or towns facing severe electricity shortages. Today, the cost of generating electricity using a diesel generation (DG) set is in the range of Rs 20-22 per unit, whereas generating solar power costs only Rs 13-15 per unit.

Based on the current prices and assuming that one takes advantage of the 80 per cent depreciation permitted on such investments, in the firstyear the cost of power per unit (kWh) from a well-maintained solar plant will be less than Rs 8 per watt for a plant of any capacity between 5 kW and 1 MW. Thus solar rooftop installation is a good investment option considering both tangible and intangible benefits.

Eligibility criteria for project proponent

While the government is yet to announce the policy for rooftop grid-connected power plants, it has laid down certain guidelines for rooftop PV and other small solar power plants connected to distribution networks at voltage levels below 33 kV. Hereinafter, the programme is referred to as Rooftop PV & Small Solar Power Generation Programme (RPSSGP). Technical criteria. The project schemes that propose to deploy PV modules and inverter systems are considered to be technically qualified and eligible for participation in the RPSSGP scheme only if these comply with relevant IEC/BIS standards and/or applicable standards as specified by the Central Electricity Authority (CEA). For solar PV projects to be selected under this scheme, it is mandatory that these are based on crystalline silicon technology and use modules manufactured in India. There will be no mandatory domestic content requirement for projects based on other technologies. For solar thermal technology, it is mandatory that the technology is demonstrated and such projects should be operational for one year. Project proponents should submit documentary evidence and an undertaking in this regard along with their applications to the competent authority in the state. Metering arrangements. Metering arrangements should be made by the project proponents in consultation with the distribution utility keeping in view the guidelines or regulations notified by the respective state electricity regulatory commissions, if any. Meters should comply with the requirements of CEA regulations on the meter installation and operation. Financial criteria. The project proponents should submit their letters of commitment along with board resolution for equity investments in the project, calculated on the basis of Rs 40 million per megawatt on a pro-rata basis. Infrastructure criteria for land requirement. The project proponents should make arrangements for land required for the project as per conditions outlined by respective state competent authority. Infrastructure criteria for grid connectivity requirement. The plant should be designed for interconnection with the grid at the distribution network at the voltage level depending on the installed capacity of the rooftop PV or small solar system generator. (For the complete requirement list please visit www.mnre.gov.in)

The government is also encouraging the use of rooftop power plants as a substitute for diesel-consuming and polluting DG sets. Most commercial buildings are dependent on diesel generators during power cuts. Investing in a rooftop solar power plant can offset diesel consumption and make the returns attractive. Added to this, the 30 per cent central finance assistance (CFA) in the form of capital subsidy would encourage investors. With a rooftop installation, one can recover the project’s cost within five t six years. Also, typically, a solar power plant has a life of 25 years with proper maintenance.

The return on investment (ROI) completely depends on the power purchase agreement signed by the project developer. While earlier the buying rate for power was Rs 17 per unit, today companies are ready to sell it at Rs 11 per unit, making only a marginal profit.Considering the current trend, the power purchase price can be estimated at Rs 13-14, so one can expect ROI within six to seven years.

More benefits for commercial units
Rooftop installation makes more sense for commercial establishments as these can utilise the solar power during peak-load daytime periods, thus saving the money required to set up battery banks. Any amount of power not used can be stored in a battery bank for use at night when energy consumption is the least (about 10 per cent compared to the day).