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Rooftop Solar: The eco-friendly way to cut your electricity bill

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Kazi Zaman, a volunteer at the Bangalore Apartments' Federation, has been tracking the renewables industry for many years now and has served on the Board of Directors of a leading Indian wind turbine manufacturer. He gave a detailed session on Roof Top Solar system and its economic and environmental impacts.

Published in: Environment
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Rooftop Solar: The eco-friendly way to cut your electricity bill

  1. 1. © 2012 Veda Corporate Advisors Private Limited 11 PRESENTATION TORooftop Solar : The eco-friendly way to cut your electricity bill Kazi Zaman Neighbourhoods of Tomorrow 8th September, 2018
  2. 2. © 2012 Veda Corporate Advisors Private Limited 22
  3. 3. 3 Rooftop solar: An introduction Why solar? • Zero fuel cost • Integrated with existing systems • Optimal use of unutilized roof • No transmission losses • No moving parts – low maintenance costs • No air / noise pollution
  4. 4. 4 What makes rooftop solar compelling today?
  5. 5. 5 Solar energy for residences: Why now ? • Modules are semiconductors : Price fall is similar to that of chips • Regulatory changes such as net metering have allowed solar to grow beyond niche off-grid applications Installed capacity in India: 2.6 GW to 23 GW in 4 years
  6. 6. 6 Regulatory easing: Bottlenecks eased • Solar power is infirm • And unfortunately storage (i.e., batteries) is expensive • While panels last 25 years, batteries don’t • Introduction of net metering is a game changer • Eliminates need for expensive storage • Disadvantage of infirm nature of solar power removed • Intra-day surpluses are exported to grid • Bi-directional meter records usage and export – billing is on net units consumed
  7. 7. 7 Win-win: Eco-friendly as well as wallet friendly • Compelling long term economics • even without subsidy / concessional financing / tax breaks • Project IRRs in the mid teens and above • Payback periods are reducing. Now 5 ½ to 6 years approx. • Regulatory framework becoming more customer friendly • BAF is driving efforts at the highest level in Karnataka • Eco-system of vendors and partners rapidly emerging to offer long term support and maintenance contracts
  8. 8. 8 Economic models for roof top solar
  9. 9. 9 Economic constructs available today Capex Model Opex Model Location of plant Apartment rooftop Apartment rooftop Ownership of plant RWA RESCO / IPP Capex for plant RWA RESCO / IPP Responsibility for O&M O&M vendor selected by RWA O&M vendor selected by RESCO Performance risk is on RWA RESCO / IPP Economic benefit Entirely to RWA RESCO shares benefit with RWA; upside retained by RESCO
  10. 10. 10 Capex Model: An illustration • Broad economics for a 75 kWp plant • Capex of ~Rs 50L • Generation of ~1.05 lakh units per annum in year1 • Net savings in electricity bill of ~Rs 8.75 L per annum • Payback period ~ 6 years; IRR ~ 16-19 % • Pros • RWA typically earns 4.5% pa net of taxes on corpus; 17% IRR is outstanding in comparison • Concerns for RWA • Large upfront outlay • What if something goes wrong? Who will fix it?
  11. 11. 11 Opex / RESCO Model: An illustration • Plant economics assessed by RESCO PPA signed with RESCO for 100% offtake of generated electricity as a rate lower than utility rate • For same 75kWp example, generation of 1.18 lakh units per annum in year1 on same roof • Net savings in common area electricity bill of ~Rs 2.5 L per annum • Pros • No capex cost or project risk • Guaranteed savings • Per unit inflation typically much lower than utility inflation • Concerns for RWA • Bulk of upside accrues to RESCO partner • Give up opportunity to take advantage of further fall in panel prices in future
  12. 12. 12 Hybrid models for risk mitigation • Capex model with robust generation guarantee • Pro: Mitigates risk in early years • Concerns: Complex contracts; cost of guarantee will be priced in • RESCO model with buyback option • Pro: Gives RWA a chance to change their mind later • Concerns: Complex contracts; cost of option will be priced in
  13. 13. 13 Process Step 1 •Technical feasibility Step 2 •Choice of economic model Step 3 •Seek quotes from vendors Step 4 • Implement project
  14. 14. 14 BAF initiatives on Rooftop Solar • Generating awareness amongst RWA’s • Helping RWAs shortlist and select vendors based on appropriate economic construct • Engaging with authorities at the highest level to ease hassles in paperwork and process
  15. 15. 15 THANK YOU! Go green! Go solar! Save money!

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