Post By
Samarth Gara

Are Solar Panels worth it in India?

February 19, 2021

Solar power is fast emerging as an alternative to conventional sources of energy, especially in tropical and equatorial countries which receive a high amount of sunlight throughout the year. In India, the government, in recent years, has been putting a lot of effort into promoting solar power. India has the highest installed capacity of solar power in the world and is a key player in the manufacturing and installation of solar solutions. It has emerged as a growing market for solar energy. However, in spite of these achievements, people are still skeptical about its potential and get scared away by minor operational issues. Switching to solar energy also requires a considerably large initial investment, which is another major reason why people are afraid of transitioning to solar systems for their houses and commercial establishments. There are other kinds of challenges that come with solar panels. In India, migration is a common phenomenon since people living in cities live in small, rented spaces. These places do not have the required space to install a solar system. Besides, as pointed out, installing a solar system requires a huge initial investment, and people find it more convenient to pay electricity bills rather than spending a lot of money to transition to solar energy. The payback period for a solar system is extremely long. However, despite these problems, in recent years, our country has witnessed solar installations at an impressive rate. 

In this article, we will ponder the question of whether a solar investment is a viable option in a middle-income country like India. We will list down some of the challenges that one is expected to face while making the transition to solar energy for their home or commercial establishment. At the same time, we will also offer insights for making the transition to solar energy a viable option for both home and business owners. We would suggest you go through this article thoroughly so that you can make a firm decision on whether transitioning to solar panels would be worth the cost involved. 

Is Solar A Viable Investment Option?

Let us look at the requirements for both residential and commercial solar systems and some of the challenges and issues pertaining to both. 

Residential Solar System

A residential solar system is one that comes with a battery system of up to 10 kW capacity for installation in homes. A residential solar system requires an investment of around Rs. 1,00,000 per kW. Considering the electricity bill of the average house is around 1000 rupees per month, installation of a solar system can result in savings of Rs. 8400 per annum (inclusive of maintenance and operation costs). Such an investment is expected to have a payback period of 10 to 12 years. The return on such an investment is likely to be around 8 percent, which is a considerable amount. 

Challenges for homeowners in transitioning to a solar system 

There are three main challenges the homeowners are likely to face in making a transition to a solar system. The following are the challenges: 

1. Budget Constraints

The first impediment to transition to a solar system is budget constraints. Investing in a solar system is a big headache for a homeowner, as it requires a lot of money. A home solar system requires an investment of Rs. 1,00,000, which is not cheap for most of India’s population.  However, people do not understand is that a solar system offers a considerable amount of returns in the long run, by making significant reductions in the money paid to the discoms as energy bills. 

2. Double Expectation

People have double expectations from a solar system. This means that they need such a solar system, which would not just result in significant cuts in terms of energy bills, but also expect all their appliances and gadgets to work during power cuts. 

3. Net Meter

The net metering system allows the owner of a solar system to claim credit for the energy they send back to the power grid. However, as simple as it might sound, net metering is more complicated than it seems. It is not easy to procure a net meter. People usually complain that it looks good only in theory, but in reality, the process of procuring a net meter and claiming credit for the extra power sent to the power grid is extremely difficult. 

Feasible Solution for Home Owner

While challenges are persistent, there are feasible solutions, as well, when it comes to installing a solar system at your house. We have listed down some of these solutions. 

1. Buying Solar System on EMI

Loans are there your best option to make an investment as large as this with. A homeowner can take a loan for installing a solar system and pay EMIs over a long period. In this way, the initial burden of investing a huge sum of money can be negated. Some banks also offer specific loans for solar systems. Otherwise, you can also take a loan for a solar system under the category of home improvement. 

2. Installing a Hybrid Solar System 

A number of companies are offering hybrid solar systems, which can help customers solve the problem of double expectations, as mentioned earlier. 

3. Discover Self Solution for Net Metering 

It is not feasible to get net metering through third parties. Therefore, the homeowner should consider the possibility of finding net metering options by visiting their nearby discom office. Some states like Uttar Pradesh, Bihar, Haryana, etc. also have online portals, which might be of help to customers. 

Commercial Solar System

A commercial solar system is a grid-connected system of up to 25 kW capacity, and these are installed at hospitals, resorts, schools, cold storage facilities, hotels, petrol pumps, offices, workshops, etc. A commercial solar system requires a higher level of investment than a home solar system, but the investment per kW is lower. It happens to be somewhere about Rs. 50,000 per kW. If your space’s monthly energy bill is Rs. 25,000 hypothetically, installing a solar system in such a circumstance can lead to savings of Rs. 14,000 per annum. Moreover, the payback time is also less (around 3 to 4 years), with a higher return on investment of around 28 percent, as compared to a residential solar system. 

Challenges for Business Owners

Just like the homeowners, business owners have to face a number of impediments when it comes to installing a solar system at their commercial establishment. The following are those challenges: 

 1. Installation Space

Just like houses, commercial establishments in a country like India, too, exist in small spaces. There are limitations in terms of the area required for the installation of solar panels. Many commercial establishments operate from rented areas and the business owners are not free to make such installations. 

2. Return on Investment

Business owners expect a fast return on investment, with an average payback period of fewer than 5 years. Thus, while they buy good quality solar panels, they tend to spend less on other components like the inverters, BoS, etc. If these components malfunction, the whole system is affected, hence, negatively impacting the return on investment. 

3. Durability

Business owners tend to focus only on the actual panels and ignore the other important component - the mounting structure. A poor quality mounting structure might fail to support the solar panels, wasting all the money that you had spent on installing the solar system.

Feasible Solution for Business Owner

While there are major challenges for business owners with respect to solar systems, the following are some of the feasible solutions available for those challenges: 

1. Customized Installation

To deal with the issue of space constraints, the business owner can opt for wall-mounted solar panels. Besides, they can also discuss with the engineers for other feasible and viable customized options, so as to derive the best performance out of the solar system installed at their commercial establishment. 

2. Analyzing all the components 

Business owners should focus on the entire solar system, rather than a single component. If they install durable components in the entire system, they won't have any complaints about their returns. Install high ROI solar panels

3. Install High Quality Products

It is essential to install good quality products offered by a reputed brand for the entire system, from the panels to the inverters to the mounting system. A failure of one component can adversely affect the performance of the entire system. 

Things to note before installing a solar system

The following things should be taken into consideration before installing a solar system at any place:

 1. Expert Guidance

While there is a lot of information on solar systems on the internet, you must always seek expert advice before installing a solar system. The expert will guide you regarding specific problems pertaining to your location, space, etc.

2. Right Product Selection

Always go for reputed brands and the right products. A solar system is a long-term investment, and you would obviously not want to incur high costs on repairs. 

3. Scope of Work 

Do have a word with the system providers and installers about their scope of work and terms and conditions of the warranty, so as to avoid any last-minute arguments. 

4. System Performance

While buying your solar panel equipment,,  make sure that they are the right fit for your system. Also, keep track of the performance even after installation. A number of apps are available these days to monitor the performance of the solar system. Be in touch with your system provider, so that you can contact them in the event of a lapse or an issue. 

5. Installer Portfolio

You must ensure that you hire the most reliable installer you can find to avoid damages to your solar panels and other equipment. Do a background check of the installer’s history. If you are not satisfied, look for other installers in your town or city. 

Conclusion

It is expected of all of us to be cautious before making any type of investment, and a solar system, being a huge investment, must be made in the right direction. While many people may have negative preconceptions about investing in solar panels, we would like to argue that solar panels are worth it. However, you need to be aware of a number of factors, and this article has taken note of all such considerations. Go through this article thoroughly before making the choice of transitioning to a solar system for your home or office. 

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