For those of you interested in installing solar panels on your rooftop, we understand that the idea is appealing and a little daunting at the same time.
Daunting, because you may feel that you simply don’t know enough about solar systems to be able to decide how many panels your house will need or how much money it will cost you.
Well, through this series of blog posts, we will demystify the basics and the process of setting up your own rooftop solar system.
Install Solar Panels on Your Rooftop: Understanding the Basic Drivers
Step 1: Why do You Want to Go Solar?
It’s quite likely that you’re fed up with regular power cuts. Summer is fast approaching, so it’ll be an even bigger concern these days. Therefore, you may want to install a rooftop solar system and enjoy uninterrupted power, at least during the day.
Or, you’ve heard or read somewhere that solar panels can help reduce your electricity bill. That’s obviously an appealing proposition, so you’re interested in taking the step.
These are both good reasons, and you can actually enjoy both the benefits. Read on to find out more.
Step 2: Understand How Solar Will Benefit You
A) Free* electricity: Not all the time, but as long as the sun shines, you can rely on the free electricity generated by your own solar panels. If you live in a sunny area (and that is almost all of India), that means – weather permitting – anywhere between 4-6 hours of free electricity a day.
B) Savings on your electricity bill: You will consume less electricity from the central grid, and therefore see a drop in your monthly electricity bills.
C) Energy Security: Most importantly, a rooftop solar system is a safe bet against frequent power outages. Most of India enjoys more than 300 sunny days a year, so for a majority of the year you can enjoy uninterrupted power** without having to worry about the central grid.
*of course, when we say free electricity, you will still be paying back for the cost of the rooftop solar system out of the money you save on your electricity bill. However you do not have to pay for the electricity the solar panels generate.
**Solar panels and systems work best when there is uninterrupted availability of the sun. Changes in weather – such as dark rain clouds blocking the sun – may lead to a drop in energy production.
Install Solar Panels on Your Rooftop: Understanding the Business Models
Step 3: Is Upfront Investment the Only Way to Go Solar?
No. You have the option of not paying for the components, and yet enjoying the benefits of the system. This is made possible by the multiple business models of the solar sector:
A) Operational expenditure (OPEX) model: The system’s costs are born by a project developer, who further contracts the project to an EPC (Engineering, Procurement & Construction) service provider. Therefore as a customer you only need to interact with the project developer.
The developer purchases the system components while the EPC service provider designs, installs and commissions the system.
The developer will sign an agreement (called the Power Purchase Agreement, PPA) with you for you to purchase the (solar generated) electricity, usually at a tariff that is lower than that of the central grid.
Under the OPEX model, as per the PPA, you may or may not have to bear the cost of maintaining the system. However, this is nothing to be worried about. Rooftop solar systems are extremely robust and solar panels usually come with a performance warranty of 20 – 25 years.
Their maintenance is also inexpensive, and often times it will take nothing more than for you to wipe off any dust from the panels.
B) Capital expenditure (CAPEX) model: Here you do purchase the entire system – solar panels and all other components – upfront, and then contract an authorized system supplier/installer/EPC service provider to install the system on your rooftop.
The advantage of this model is that you own the system, and therefore you can generate your own electricity right from the day the system is commissioned. It might be a good investment choice for you – if you have the money.
Operational expenses for a quality system that is properly installed will be very low, and system maintenance can be delegated to an authorized operation and maintenance (O&M) contractor/EPC service provider.
C) Lease model: Similar to leasing a car, under this model you do not purchase or own the system. It is instead leased from another company (the actual owner of the system) for a monthly/annual fee that is agreed upon in a signed agreement.
The advantage of the lease model over the CAPEX model is that it does not require you to make a significant payment upfront. Instead, you pay a monthly fee for leasing the rooftop solar system, and you get to enjoy free solar generated electricity.
Make sure that you understand Steps 1 to 3 before you go further.