Wednesday, 10 July 2013

Solar Energy an Economical Alternative to Conventional Power Supply

Rising energy prices and growing environmental concerns are making solar electric systems more attractive to homeowners. A solar electric system reduces high energy costs and keeps your home up and running during power outages. The current brief article to show cases the advantages of using solar power as an alternative and indeed renewable resource in the long run. Most solar electric systems last 25 years (typical life span of solar panels and sometimes even beyond) and pay for themselves in 4 to 5 years after tax credits and subsidies. That means homeowners or commercial entities can enjoy free electricity for years. If we install batteries to back up your solar electric system, it will provide power for 1-2 days (depending on the capacity of batteries) during cloudy/stormy weather conditions.

As a part of National Action Plan on Climate Change, Government of India launched Jawaharlal Nehru National Solar Mission (JNNSM) in 2009 to promote the development and use of solar energy for power generation and other uses with the ultimate objective of making solar energy competitive with fossil-based energy options. Despite this, widespread installation of solar PV systems to generate electricity on urban rooftops does not seem like a reality due to lack of appropriate knowledge.

Typical costs associated with a 5 KW solar roof top plant that can generate 8000 units per year (675 units per month) are shown in figure 1 (in the pdf file). This power generation should be sufficient for an average household in India and it requires around 40 square meters of roof space. The government is providing 30% subsidy to the incurred costs and accelerated depreciation up to 80%. This benefit can be claimed by both commercial and non-commercial entities, which makes PV attractive in terms of low capital cost. Besides capital subsidy, soft loan at 5% for balance cost of system excluding beneficiary share of 20% may also be available from many commercial banks and also through NABARD. If household/office power consumption is less than 675 units per month, they can either sell the surplus power to the grid or go for lesser KW (1 - 4) installation. One can also install a solar electric system that can meet part of a home/office electricity needs, offsetting 60-70% of most homeowners’ power with solar electricity, as conventional power tariffs are very cheap if we use less than 100-200 units per month.

If we come to the effective cost analysis, a 5 KW roof top solar installation typically costs around Rs. 7 Lakhs including costs of batteries (typically 1.5 Lakhs for 1 KW). Excluding the government subsidy makes the overall cost to Rs. 5 lakhs of one time investment for 25 years and that can produce 675 units of electricity per month over 25 years period. Please note that solar PV panels and related equipment costs are getting reduced and in particular photovoltaic modules cost has decreased by almost 70% in last 4 years.

For a household/office consuming around 675 units of power per month, according to the current tariff (in Andhra Pradesh), it will cost around Rs. 4200 per month (Rs. 50,000 per year), and power tariffs are getting doubled every 5 years (i.e. 12% increase every year). Even if we take the best case of just 5% increase (yearly) in power tariff, this will make the household pay around Rs. 17 Lakhs in next 20 years, and a case of 10% increase will make the sum to Rs. 29 Lakhs in next 20 years.

On the other hand, due to extreme power cuts, electricity supply through diesel generators has been a common practise in power looms, office buildings, commercial entities, malls, theatres, restaurants etc. The cost of power generated by diesel generators is about Rs 13-16 per unit and with some low efficiency engines the actual cost could be higher. The solar power is highly economical compared to the rising high cost of diesel and the incremental maintenance costs associated with diesel generators.

For example, malls in cities require electricity 24x7. There have been times during the summers, when there have been 10 hours of unscheduled power cuts. During such times, 2,000 to 3,000 litres of diesel is used and the mall shells out as much as Rs 1.5 lakh daily. Similarly, standalone restaurants (A/C) are typically consuming 30-45 litres of diesel (75 – 110 units of electricity) every day and their spending ranges between Rs. 1500-2500 daily (5 – 9 lakhs per year). For example, if we install a 20 KW solar system for similar restaurant, which costs around Rs. 18 lakhs (after subsidy). This will produce 90 units per day, where equivalent savings in diesel will be around Rs. 1800 per day (7 lakhs per year with the current fixed price of diesel).

So, solar power is at least 2 - 4 times cheaper (although it looks expensive now) in the long run when compared to the conventional power supply and significantly cheaper compared to diesel based generators. Indeed you will also enjoy the luxury of uninterrupted power (given the sun shine we have in India for all 12 months). We may not conclude that the solar roof top system is possible for every Indian house hold, but many of upper middle class families and all commercial entities, offices etc. can definitely afford it. Even the middle class families can go for these (partial or full) installations by utilizing the soft loan scheme. Solar power will not only save your money, but also save the mother earth from pollution.

According to a survey carried out by the Manufacturer's Association for Information Technology (MAIT), India Inc lost about Rs 43,205 crores (~$10 billions) in 2008-09 due to power outrages. The revenue loss due to power failure grew at an average of 11.9% in the last 5 years, which conveys India Inc might have lost Rs 2,73,172 crores in mere last 5 years. Besides manufacturing, power failure problem is more cost intensive for farmers, textiles, cement, paper, sugar mills, ceramic industries etc.

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