A manufacturer of automotive components in the factory belt, Chakan area, in Pune recently renovated their existing plant and added two high-tonnage stamping presses. Electricity discoms in the country were supplying peak electricity at prices over ₹10.50 per unit, plus the monthly bills for demand charges kept on rising. Thus, power was turning out to be one of the largest operating costs of the plant. In order to cover this continuous loss, the team decided to raise funds to erect a rooftop solar system of 500 kW.
They chose a turnkey vendor with the only reference being a cheap EPC quote for the project. After a delay of two months to commissioning, electricity generation numbers went down 22% below the projected yields. What is it? It turned out that the contractor had installed low-tier non-ALMM modules together with under-rated string inverters. Moreover, the structural fixtures on the metal shed were susceptible to thermal expansion as they were of lightweight construction only and shadow profiles seasonal were not considered for the processing towers. So, even though their investment cost in the beginning reduced by 5%, it went for waste and was replaced by a number of consequences like, loss in power generation, maintenance breakdowns etc., and financial returns taking a longer time.
This particular case has become a warning sign for purchasing officers, management officials, and chief financial officers in India. A switch from one type of factory building or workplace to solar energy is not just a requirement imposed on the firm as the only way to show it is concerned with the environment, but a capital decision to be executed over the long run so as to guarantee a steady level of energy costs for the next 25 years. Therefore, to achieve the best result, it would be wise to take the total value perspective, the quality of solar asset and engineering works and the whole cost over the asset life instead of focusing only on the price at the front end.
Definitions about Commercial Solar Solutions
Commercial Solar Solutions India is the total process of designing, purchasing, financing, installation, running and maintaining photovoltaic (PV) power plants for commercial and industrial (C&I) consumers. These projects differ from the small-scale residential solar installations or multi-megawatt utility-scale solar parks. Solar installation of commercial scale is engineered with an objective of direct integration into the facility’s present-day supply and use of electric facilities.
Such systems are mostly limited to commercial buildings or cold storages with 50 kW rooftop arrays but large units that generate heavy production of goods such as the textile industry and a logistics warehouse may require solar power that is of multi-megawatt level both rooftop and ground-mounted. These models can be categorized into 2 types:
- CAPEX Model (Capital Expenditure): In this business arrangement the company itself will fund, purchase and manage the solar asset. By making their energy source investment through direct purchase the company benefits from the depreciation allowance and they can take full control to enjoy maximum power consumption reduction in the future.
- OPEX / RESCO Model (Renewable Energy Service Company): A solar power generation and installation company is the sole provider who gets the funding and performs the installations and maintenance works on behalf of a client. On this basis a client neither makes capital outlay nor is he/she charged anything for installation of the solar power system. The electricity is purchased at PPA rates for which the client is bound for a fixed term. For example, in 2020-21 the grid tariff varied between ₹6 to ₹ 20 for consumers at various places and the pre-agreed PPA tariff is lower by 30% to 50%.
Importance of Solar Power in the Supply Industry
Electricity charges in the country manufacturing centers to the effect of Industrial and commercial consumers like the major industries such as Maharashtra, Tamil Nadu, Gujarat, Haryana and Karnataka are constantly around ₹8.00 to ₹12.50 per unit. If a facility solely depends on using electricity from the grid then it is going to bear the impact of any increase in tariffs, extra subsidy charges and variable fuel costs.
Changing the operating mode through integration with solar electricity:
Reduction in Direct Operational Costs
An organization can save money on running at the expense of using less grid power if it uses solar energy during high grid tariff times such as daylight hours. Besides, solar generation generally occurs when factory workers are active and, as a result, factories can easily cut grid consumption that used to be constant baseline.
Reduction of Tax Liability through AD
Businesses that install solar systems under the CAPEX model can claim up to 40% tax depreciation (Accelerated Depreciation or AD) as allowed by the Income Tax Act, Section 32. That will reduce the net cost the company would pay for the solar system after accounting for tax by 10-12% from day one if the company is within 25-30% tax bracket.
Protection from rising grid tariff
Electricity tariff increases around 3-5% per year over history in India. Setting up an on-site solar plant allows organizations to determine the generation cost of energy as a fixed amount over time (which comes to below ₹3.00 per unit typically when spread over the life of the system). This gives organizations a clearer, long-term picture of their costs.
Decarbonization and Compliance under Scope 2 of Greenhouse gases
In India, the suppliers of component parts and contractors are required by global OEMs to demonstrate that they meet the ESG standards, in that they make carbon footprints reduction. On-site solar power directly leads to a reduction in Scope 2 GHG emission.
Main Technical Points and Purchase Decisions to be Aware of
The quality and configuration of components purchased will directly determine whether your solar asset will yield regular returns for 25 years or if it will keep creating problems through the need for ongoing maintenance. Prior to execution contract signing, sourcing teams should look out for some vital features technically:
1. Solar Photovoltaic (PV)Module Choice
About half to two-thirds of your costs are on modules. Here are the key considerations when evaluating solar modules:
- AALMM is one of the government regulations that list acceptable modules and manufacturers. As a prerequisite of a grid-connected solar plant and also for quality certification and compliance checking, all solar panels must be from the Approved List of Solar Modules manufactured by Approved Manufacturers list (ALMM). Check whether the solar products are on the Approved list of Models and Manufacturers.
- Cell Type: These latest cell developments such as Monocrystalline P(EC) (P(EC) refers to Passivated Emitter and Rear Contact) and TOPCon (Tunnel Oxide passivated Contact) cells are expected to replace old technology (Polycrystalline). Besides, TOPCon panels give higher cell conversion efficiency (up to 22%), smaller temperature dependence, lesser wear rate, which are ideal features for solar panel performance in industrial areas where ambient temperature is on the high side.
- Bifacial vs. Monofacial modules: Bifacial solar modules are designed to receive sunlight from both front and back sides whereas monofacial modules are the opposite (i. e. they can receive light only from the frontal side). The installation in areas with high reflectivity (e. g., white roof coatings and light-colored ground) of bifacial solar PVs can add 5-15% additional output compared to monofacial solar PVs which is quite a significant gain.
2. Inverter Design and Power Grid Connection
The solar inverter is the device to transform electricity in direct current format (DC current in the solar string) to a standard alternating power grid format so that the electricity can be delivered into the plant’s mains grid system.
- Choice between String Inverters and Central Inverters: Rooftop solar systems having a solar output between a minimum of 100 kW to 2 MW shall use string inverters only. They can be installed multiple numbers so the Maximum Power Point Tracker is not limited to the solar panel as MPPT features of each string inverter would not impact the others. Central inverter system is usually used when we develop ground mount solar plants.
- Radiation protection and heat dissipation design: Ensure that the inverters are IP65-rated or IP66-rated (high protection against water and dust ingress) and therefore can be safely operated even on harsh environments such as factories. Besides, ensure that the inverters have the right type of Surge Protection Devices (SPDs) built-in (Type II or Type I+II).
3. System Support Components (SSC) Quality Check
Besides modules and inverters getting the lion’s share, many a time system failures actually stem from below-standard Balance of System (BoS) components.
MMS: Industrial rooftops particularly older trapezoidal sheet structures are recommended to use non-drilling type or light-load structural fixings as they need to withstand the winds (150 to 200 km/h according to IS 875 standards). Hot-dip zinc coated steel (minimum 80 microns) or aluminum structures are better to prevent premature corrosion.
Cables and Connectors: Solar direct current cables are the main cause of fire hazards and also responsible for a reduction in output of the solar panels. The best solar UV resistant, halogen free, cross-linked, solar cables are those certified en 50618. Sub-standard DC cables are likely to cause increased thermal resistance, voltage drop losses as well as a risk of fire.
Designing and building a commercial solar power plant involves a good blend of electrical engineering, civil structural changes, and getting the regulations right. When looking at suppliers for turnkey Commercial Solar Solution India offerings, procurement teams must go the systemic way to check off four fundamental areas:
Electrical Design And On-site Inspection Capabilities
Don’t select a vendor who submits a proposal using only the remote satellite data. The EPC vendor must have a certified partner to carry out detailed on-site structural load testing (to ensure that the roof can handle 12 15 kg/m² of dead load), the shadow analysis using 3D simulation software, and the power quality test at your plant’s main meter board.
DISCOM and Regulatory Track Record
Having reached the technical completion mark by building the solar plant in no way concludes the work, the project is a total no-go without energizing it. This means getting DISCOM approvals, CEIG inspection clearances, and net-metering meters installed. If you are lucky to have partnered with the one that knows the ropes well in local DISCOMs you won’t get frustrated by endless bureaucratic procedures.
Maintaining Operations and Facilities Commitment
To keep the solar panels at maximum efficiency through their lifespans, panel cleaning, and electrical testing are among essential operations. Review the vendor’s O&M maintenance plan to be aware, e.g., of scheduled times for panel cleaning, planned preventive maintenance work, replacement of inverters and other equipment, and performance-ratio (PR) guarantees.
Usual pitfalls in procurement when it comes to solar projects
Inevitably all of us have missed something while shopping for industrial solar projects. But, the ones listed below, you will not want to miss:
- Chasing after the cheapest watt:
Lowest cost per watt is one of the main criteria and a supplier would be very inclined to deliver the lowest cost per watt with minimum requirements on structural steel thickness, cable sizes, the number of junction boxes, etc. and protection devices. This is not just initial capital saving as over the lifespan of the project (25 years), the yield loss (2% in sub-standard BOS components) significantly exceeds the capital savings.
- Ignoring the Roof Condition and Lifetime:
Moving ahead and having a solar system that would be there for 25 years, while mounting it on a corrugated iron roof that could need re-roofing in 5 years is a recipe for major problems. Do make sure any necessary roof work such as structural repairs, re-waterproofing, or metal roof replacement, is done first before the solar installation work begins.
- Overlooking the Water Requirements for Panel Washing:
Without proper maintenance, dust build-up on the solar panel’s glass can lead to as much as 25% power output loss. Make sure your premises have sufficient water facilities to support the cleaning of the panels. If not, then the dry-cleaning robo-cleaning system is a great option that can be included in the initial equipment list.
- Missing out on Net-Metering Sanction Limits: Policies of State DISCOMs widely differ regarding the maximum rooftop solar capacity you can have installed (usually up to 50-100% of your sanctioned connected load). Getting a solar system set up without confirming the net-metering capacities from DISCOM in advance is a recipe for an oversize plant stuck in one place without being able to put excess power back to the grid.
Reality Checks in the Commercial Sourcing of Solar PV
Installation and operation of Commercial Solar Plants in India depend on many factors like local production policies and supply chains, state/regional laws, and legal timelines of various statutes:
Domestic vs Imported Modules
Owing to Basic Customs Duty (BCD) rates as well as “Almn” regulations, the majority of large solar systems in the country rely mainly on modules manufactured in India which either carry the Indian or imported solar cell. It is important for your vendor to have a solid delivery schedule from premier Indian solar panel suppliers to keep a project from experiencing any delays.
Statewise net-metering and Open access Polices-
Solar policies are primarily decided by the individual states in India.
- Roof-top Net-metering: Nearly all states net-metering for commercial users up to a certain capacity. For example, some may permit up to 250 kW or 500 kW. Once these levels are exceeded, plants are often subject to gross metering, net billing, or zero-export regulations.
- Group Captive and Open Access: Industrial users who can’t generate the necessary amount through on-site solar and have small rooftops for solar power systems may procure off-site solar from the open access/ group captive model. Such arrangements will result in the facility drawing solar power generated on the solar farms at a distance via the state transmission grid!
GST & Financial
The Goods & services Tax rates are different for different products and services as per the provisions mentioned in The Central Goods & Services Act 2017 along with its Schedule and also the State-specific legislation. Procurement teams should coordinate closely with finance teams so they can claim input tax credits and thus reduce corporate tax liabilities, thereby enhancing net project returns after the corporate tax reduction.
Frequently Asked Questions
1. What is the average payback period for a commercial solar PV installation in India?
Mostly industrial, commercial users paying grid tariffs between ₹8.50 and ₹11.00 per unit would get very simple financial payback of CAPEX solar installation within 3 4.5 years. Also, 40% accelerated depreciation is a major boon in this case which reduces the payback even further. If factoring this, you get lower net payback period!
2. How does the Accelerated Depreciation facility work for commercial solar projects?
A commercial entity investing in a solar power generation system mainly for the utilization of energy, by itself, is eligible under Section 32 of Income Tax Act, to claim accelerated depreciation at a rate of 40% on the capital block/ assets value of the solar power generation system in year 1 itself, provided the capital is commissioned before October 1st (i.e, 180 days). Commissioning done after October 1st attracts normal depreciation at 20% in 1st year followed by depreciation at 5%.
3. What is the difference between CAPEX and OPEX/RESCO solar models?
In the case of CAPEX solar, your company purchases equipment and owns the assets immediately, reaps full tax benefit like Accelerated Depreciation, saves a maximum on electricity bills and gets the greatest long-term gains. As for OPEX/RESCO models, an outside developer will be the owner and operator of the equipment, which will be installed on your premises and your company will get power supplied at the fixed and reduced rate of tariff throughout PPA period without making any initial capital investment.
4. How much roof area is required for a 100 kW commercial solar installation?
A typical 100 kW commercial rooftop solar system powered with mono-PERC or TOPCon high-efficiency modules will occupy about 7, 000 to 9, 000 square feet of roof space that is mostly free of shading, depending on the module tilt angle as well as roof design, etc.
5. What kind of maintenance work needs to be done after a commercial solar plant is commissioned?
Solar photovoltaic (PV) plants do not have moving parts, so they require very minimal maintenance. The main operations and maintenance (O and M) activities would involve cleaning of panels regularly (about every 10-15 days depending on how much dust is in the environment), hot spot detection via thermal camera scans, string performance monitoring, tightening of load bearing bolts from time to time, and routine care of the inverters.
Crafting an Endurance Industrial Solar Plan
Cutting off the power supply and switching it over to solar electricity, that is, integrating solar power with your facility’s energy is one of the most efficient strategies for cutting industrial overheads, controlling risks, and fulfilling corporate environmental goals. However, to make the most of a solar asset financially over 25 years is strongly dependent on the early steps taken when procuring the equipment.
By considering the total output generated over the life of the project for vendor selection, selecting only Tier 1 ALMM components, doing in-depth structural load checks, and collaborating with expert EPCs, procurement officers will be able to install Commercial Solar Solutions India that are dependable power cutting solutions and also long-term business growth facilitators.
