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“If we are serious about moving towards energy independence in a cost-effective way, we should invest in solar energy. If we are serious about cutting air and water pollution and reducing greenhouse gas emissions, we should invest in solar energy”—Bernie Sanders

Solar energy is a definite solution to the increasing energy needs of our times. This is evident from solar rooftop installations growing at a rate of over 18 per cent in 2017. Solar power generation offers various avenues of business profitability. But, for investors, the fundamental questions remain: How can I go about it? Should I go online with solar ecommerce platform? Should I invest in commercial rooftop model? Should I buy my own land or leverage a third-party model?

To solve the dilemma, a few distinguished solar business models in India have been explained in this article. Your choice of a model should depend on the investment required, state government’s policies for solar power generation and its commercial usage, and natural conditions of the region.

Solar business models
Fig. 1: Solar business models (courtesy: http://www.solarmango.com/wp-content/uploads/2015/12/Biz-models-for-utility-scale-solar-india.png)

Sale-to-utility model

It refers to selling the solar power generated by you to state power authorities like NTPC.

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Power purchase agreement (PPA)/feed in tariff (FIT). An agreement is signed with the private business supplying solar power to the state/government body or DISCOM. Normally the stated period is 25 years and the prices are decided through competitive bidding and tenders. This is the most popular business model for commercial power supply usage.

GMR Infrastructure has installed a rooftop solar power plant at Delhi Airport for consumption by ‘Celebi’ for Cargo Terminal 2 of the airport. The plant has the capacity to produce 2MW per day. An approximate capital of 100 million rupees was invested to set up the power plant infrastructure. For almost 8000 units of solar power produced per day, ‘Celebi’ now saves 64,000 rupees per day—as against tariffs paid to DISCOM at the rate of 8 rupees per unit. The project’s expected ROI time is five-and-a-half years. The project has been operational for almost two years now.

Selling to private companies

A private solar power generating company is free to sell power to other private companies through a power purchase agreement.

Captive consumption

If the power generated by one unit of a business conglomerate is utilised by the same and other units of the business, it is defined as captive consumption. A classic case is that of Tata Steel, which utilises the power generated by Tata Solar.

Karan Sharma, managing director, SunSmith Infra, shares, “We have installed a 200kW rooftop solar plant at OM Furnishers in Gujarat. The initial capital investment required to set up the plant was 9.6 million rupees. The plant will produce about 1000 units of electricity per day, thereby saving 7000 rupees on a daily basis which would otherwise would have been paid to Dakshin Gujarat Bijli Vidyut Nigam Ltd as tariff.”

“It has become challenging to pin down an installation number as so many projects that are completed are stranded and unable to commission due to evacuation delays. It will all depend on what can get connected to the grid by the end of the year,” said Priya Sanjay, managing director of Mercom India.

Benefits of rooftop solar photovoltaic to the DISCOM
Fig. 2: Benefits of rooftop solar photovoltaic to the DISCOM (source: http://mnre.gov.in/file-manager/UserFiles/Presentation-on-Consultation-Meet-with-Channel-Partner-by-GIZ-ComSolar.pdf)

Government adaptation

Presently, Solar Energy Corporation of India undertakes solar rooftop power generation under two models:

CAPEX

Within this model, the complete rooftop system is owned by the private entity (third party). Lifetime (25 years) operations and maintenance is also within the purview of the third-party rooftop owner. Developers are responsible only for the first two years. They are selected through an extensive bidding process and are offered 30 per cent subsidy on the cost of the total system.

RESCO

In this model the entire system is owned by the developer. Operations and maintenance also remain the developer’s responsibility. Rooftop owners can consume electricity on the basis of a pre-decided tariff. Excessive power is transferred to the grid, based on the local government’s rules and regulations. For this model as well, the developers are selected through a bidding process.

India’s solar demand forecast
Fig. 3: India’s solar demand forecast (source: Mercom India Research)

Online solar ventures

Like any other business today, solar also has immense growth potential in the online space. One may opt to open an online solar market place of products or invest in creating an exclusive job portal for the same.

India Go Solar is an online ecommerce platform that sells solar related goods and services. India Solar Talent is an online recruitment platform for solar jobs.

Benefits provided by the government

The government provides 30 per cent capital subsidy to residential, government, social and institutional sectors for solar rooftop installations. The country has increased its rooftop budget by a significant 730 per cent since 2016. For states like Sikkim, Uttarakhand, Jammu and Kashmir, Lakshadweep, and Andaman and Nicobar, the subsidy is as high as 70 per cent.

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