Monday, 7 April 2014

Solar Energy : Top 3 (Business) Reasons to Go Solar !

Solar Energy : Top 3 (Business) Reasons to Go Solar !
[updates of 17th October 2015 below]

Solar Energy utilization for Power generation from Photo Voltaic is considered by many Investors and Companies for the plethora of benefits it brings. In addition to being truly green, PV Solar also makes for a very strong business case.

This blog post touches upon the Top 3 (Business) Reasons to Go Solar !


Renewable Energy Breakup in India as per existing installations

Reason # 1 Government Incentives and Subsidies
PV Solar being relatively new to India is encouraged by Central and various State Governments by means of incentives and subsidies. Although with current drop in PV Solar prices and rising cost of grid prices, a PV Solar project can become viable even in the absence of incentives and subsidies.

Solar rooftop projects upto 100 kWp (and now even larger projects) enjoy 30% subsidy from MNRE. This is ideal for Industrial plants who wish to go for a pilot project in PV Solar. The system could be grid-synchronized for ease of operation and use of Solar Power along with grid power during daytime.

Solar Energy Rooftop PV Solar Project
One of our PV Solar rooftop projects under commissioning
In fact such systems could also be used for motive loads and not just lighting or air-conditioning load. A grid-synchronized system could power pumps, blowers and compressors as well.

[Other interesting article - Solar Project : Execution Stages]

Larger projects such as Solar farms can opt for Preferential Tariff or Feed-in-Tariff which improves revenues through sale of power to DISCOMs. The tariff realization could be as high as INR 7 per kWh.

Alternatively MW-level offsite Solar projects could also be used to power Industrial plants. Direct benefit in terms of saving on grid power is attractive.

Reason # 2 Tax Benefits (including 80% Accelerated Depreciation)
For existing businesses investment in PV Solar makes commercial sense due to the 80% accelerated depreciation benefit. The RoE for such projects is very quick as these projects are financed by leading banks.

Additionally 10 year tax holiday on revenue through sale of Solar power is also available. Some States have also relaxed the cross-subsidy and electricity duty on Solar power both for captive projects as well as open access projects.

Reason # 3 Long-term gains
Whether the Solar project is installed for captive consumption or for feeding to grid it comes with long-term benefits.

[Other article you may find interesting - Solar Energy FAQs]

In case of captive consumption, it is important to note that the grid power prices are rising and will continue to rise for a long time to come. As compared to this Solar project has an upfront cost and no running cost. In fact if a 100 kWp project cost is amortized over a period of 10 years simple cost of power generation works out to be INR 5 per kWh. This simply means that in its useful life of 25 years a PV Solar project will payback itself several times as cost of generation is nearly zero after the initial investment is recovered.

For a grid-feed project of multi-MW level Power Purchase Agreement could be signed for 25 years. In fact this is the only business wherein a buyer agreement is available for a very long tenure. The multi-fold appreciation in land value (where the project has been installed) is a definite advantage over and above the usual benefits.

Updates of 17th October 2015

Several States have announced a clear Solar policy with several additional benefits. These include (but not limited to) :

  1. Discount of 50% or more on wheeling charges for Solar Power.
  2. 10 year tax holiday on revenue generated from Solar Power.
  3. 100% exemption on Electricity Duty.
  4. 50% Exemption on Stamp Duty for procurement of land for Solar Power.
  5. Lower cost of financing by Govt. bodies with a discount of 2% or more on existing lending rates.
  6. Declaration of Solar Projects under PSL (Priority Sector Lending) sector meaning easier financing options for projects upto 3 MW for businesses and for projects upto 15 kW for individuals.
  7. VGF (Viability Gap Funding) is offered by the Government for projects which are driving the prices in Solar further down.
[Have you checked our latest article on Solar Energy Job & Business Opportunities in India?]

In addition to the plethora of benefits that investing in PV Solar brings based on Government guidelines there are also several private entities (including Enerco Energy Solutions LLP) that carries out 100% financing of Solar Power Projects on BOOT basis. This means you start saving from day 1 of commercial operations of PV Solar project at your site.



Enerco Energy Solutions LLP has set up several PV Solar projects across India and also worked with leading Cos. on matters of Energy Conservation and Solar Power. 

In Solar our present focus is on
  1. Investing (upto 100%) and setting up Solar Projects for Industrial and Commercial Clients on BOO or BOOT basis.
  2. Advising Industrial and Commercial Clients on how they could use PV Solar to their benefit.
  3. Development of multi-MW level Solar Park
In case you are interested to know more please feel free to write to us on solar@econserve.in

9 comments:

  1. Thanks on your marvelous posting!...... .. solar panels

    ReplyDelete
  2. Dear Sir,

    In addition to the above business reasons Solar energy is truly green - which is the biggest advantage.

    Thanks,
    Vikas Gupta

    ReplyDelete
    Replies
    1. Dear Sir,

      Thank you for your comment.

      It is indeed true that PV Solar is the truly-green with the shortest 'Energy Payback' among all the renewable energy technologies. The Energy Payback for a PV Solar project could range from 2 years to 4 years depending on various factors.

      Regards,
      Enerco Energy Solutions LLP

      Delete
  3. Do you also provide financing for these projects? If so on what basis i.e. equity share-holding or BOOT or debt? Kindly elaborate.

    Regards,
    Sanath

    ReplyDelete
    Replies
    1. Dear Mr. Sanath,

      Firstly, thank you for your comment.

      Yes we provide all kind of financing required for PV Solar projects including -
      1. BOOT or CAPEX model with 100% investment
      2. Equity partnership in large-scale projects / Solar Parks
      3. Debt financing of Solar projects

      Interestingly RBI has recently announced inclusion of Solar Projects in PSL (Priority Sector Lending) which would ease debt financing of Solar projects for businesses looking for investments in Solar projects upto 3 MW.

      Please do let us know if you have further queries.

      Delete
  4. Sir,

    You offer Solar lease model?

    ReplyDelete
    Replies
    1. Dear Sir,

      Yes - we do offer Solar lease model as well.

      Thanks !

      Delete
  5. Are you financing Govt. DISCOM backed Power Purchase Agreements? We have Solar PPAs across India ranging from 5 MW to 25 MW looking for immediate financing.

    ReplyDelete
    Replies
    1. Dear Gaurav,

      Yes - we can fund Govt. backed PPAs with majority investment. Please email further details on solar@econserve.in

      Thanking you !

      Delete