Questions that Interest You

How much land is required to setup a 1MW solar power generation Unit?

The land required for a 1 MW power plant setup is around 4.5-5 acres for Crystalline technology and around 6.5-7.5 acres for Thin-Film technology. This is only a rough benchmark and may vary based on technology and efficiency of panels.

What is the life-time of a typical Solar Power plant?

The useful life of a typical Solar Power plant is considered to be 25 years. This is the duration for which long-term PPAs are signed and financial models are built. However, Solar Power plants can run beyond 25 years while producing a lower output. Many Solar Panel manufacturers guarantee an output of 90% at the end of 10 years and 80% at the end of 25 years.

What is the annual energy generated from a 1 MW Solar Power plant?

The usual benchmark for energy generated from a 1 MW Solar Power plant is considered as 1.5 Million units. This is only a benchmark and should not be considered as the actual output for a given location. The amount of actual energy generated from a Solar Power Plant in an year depends on both internal and external factors. External factors which are beyond the control of a Solar developer can include the following:

Number of sunny days

Solar Irradiation

Day Temperatures

Air Mass

The output also depends on the following internal factors all of which are within the control of a Solar Developer:

Plant Location

Usage of Solar Tracking systems

Quality of equipment used

Workmanship of the EPC contractor

O&M activities

What are the various modes under which we can setup a Solar Power plant?

The various modes under which a Solar Power plant can be setup depends on the specific requirement. All the following are valid modes and the costs for each kind of system varies based on various factors:

Off-Grid Captive Consumption for domestic premises

Off-Grid Captive Consumption for commercial premises

Grid Connected (Net Metered) Captive Consumption for domestic premises

Grid Connected (Net Metered) Captive Consumption for commercial premises

Sale of Power generated to local Distribution Company (DISCOM)

Sale of Power generated to 3rd Party consumer (Industry or Commercial entity)

What is the cost of setting up a Rooftop Solar Power plant for domestic or commercial use?

Rooftop Solar Power plants can be broadly categorized into Battery-based and Non-Batterybased systems. The benchmark cost set by MNRE for the year 2013-14 for these systems are Rs.90-100 per W for Non-Battery based systems and Rs.170-210 per W for Battery-based systems. More details can be accessed on the following MNRE webpage: Permissions involved in Solar

What permissions/clearances are required to setup a Solar PV Plant?

A certain set of permissions need to be obtained and documents need to be submitted in order to setup a Solar PV plant. While these may vary from state-to-state, in order to get a Solar PV Project Accredited by AP State Load Dispatch Center (AP SLDC) for REC mechanism, the following are the statutory clearances and environmental clearances to be furnished:

Industrial Clearance

1.Land conversion (Agricultural to Non-Agricultural)

2.Environmental Clearance Certificate from APPCB, Hyderabad

3.Contract labour license from AP Labour Department

4.Fire Safety certificate from AP Fire Department

5.Latest tax receipt from the Municipal/Gram Panchayat for the factory land.

6.Auditor compliance certificate regarding fossil fuel utilization

7.Approval from Chief Electrical Inspector

8.Clearance from Forest department

Also, all necessary approvals/agreements before start of Solar PV project construction are to be furnished as and when necessary. These include the following:

10.Land purchase

11.Power Evacuation arrangement permission letter from DISCOM

12.Confirmation of Metering Arrangement and location

13.ABT meter type, Manufacture, Model, Serial No. details for Energy Metering.

14.Copy of PPA (important as Preferential PPA projects are not eligible for REC mechanism)

15.Proposed Model and make of plant equipment

16.Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE

17.Details of Connectivity with DISCOM

18.Connectivity Diagram and Single Line Diagram of Plant

19.Details of pending court cases with APERC, Supreme

20.Court of India, High Court of A.P. or any other courts

21.Any other documents requested by AP SLDC

While these are the documents that AP SLDC requires for REC project accreditation, these are typically the clearances/documents required in general for a Solar PV project.

Can Solar Power developers avail loans from banks for Solar Power plant setup? What is the loan % and what criteria does a bank/lending institution look for?

There are 2 kinds of Financing mechanisms that are usually discussed – Recourse Financing and Non-Recourse Financing. Recourse Financing requires collaterals and other extensive guarantees from the Solar developer who wishes to avail loan. Non-Recourse Financing, on the other hand, does not require any additional collateral as the Asset or Power Plant itself is the collateral in this case. Recourse Financing is the prevalent mechanism in India currently owing to lack of confidence of banks in the Power and Solar Power sector. The typical Debt-Equity Ratio (Loan to Investment Ratio) for Solar Power plants is 70:30. And the typical collaterals required for a 70% project cost loan could be in the range of 40-60% project cost. This, however, varies from bank to bank as each bank has its own risk perception/mitigation strategy, exposure targets to various sectors and Non-Performing Asset (NPA) limits.

Setup Costs and Power Sale Tariff

What would be the total project cost excluding the cost of land?

Total project cost per MW would be in the range of Rs.6.5 Crores-Rs.8 Crores depending on the kind of technology you are using, whether or not you are using tracking systems, the kind of EPC Contractor you choose for power plant system etc. CERC recently announced the benchmark tariff for setup of Solar PV and Thermal Plants in India. Here’s the link to the document containing more details:

What would be the O & M cost?

Central Electricity Regulatory Commission (CERC) benchmark costs for O&M is Rs.11.63 lakhs/year/MW for 2013-14 with a 5.72% increase every year. This varies from project to project based on the number of people you employ for maintenance, frequency of cleaning of panels, onsite-engineer availability etc.

What would be the per unit expected sale price?

This depends on the mode of sale of power and the consumer of power.

  • In the case of sale of power to DISCOM, the prevailing Average Pooled Power Purchase Cost (APPC) will be applicable.
  • In the case of sale of power to 3rd Party consumer, a mutually agreed price can be agreed upon and accordingly a PPA can be signed.

It is to be kept in mind that several additional charges such as Wheeling Charges, Distribution Charges, Open-Access Charges, Cross-Subsidy Charges are applicable in the case of sale of power to 3rd party. These charges vary from State-to-State and DISCOM-to-DISCOM and even based on voltage levels.

Which kinds of Solar Power plants are eligible for REC benefits?

Solar Power Plants need to be Grid-Connected in order to avail REC benefits. Though there have been recommendations on multiple occasions that Off-Grid Solar Power plants be made eligible for RECs, the proposal is still under discussion. Solar Power plants setup under the following 3 modes are eligible for REC benefits:

  • Captive Power plants
  • Sale of power to Govt. at APPC
  • Sale of power to 3rd party at mutually agreed price

Captive Power Plants are eligible for RECs subject to the condition that Concessional/Promotional Transmission or Wheeling Tariffs and/or banking facility benefit are not availed. Also, Solar Power plants setup under Preferential Tariff schemes are not eligible for RECs. Check out more information on RECs on our REC page here –

Is there a minimum size for Solar Power plants to be eligible for RECs?

As per the Second Amendment of REC Principal Regulations – 2013, there is no lower limit for Solar Power plants to be eligible for RECs. Though it previously stated that 250 KW is the minimum size for Solar Power plants to be eligible for RECs, the same has been removed as part of the above stated amendment.

Can CDM benefits (Carbon Credits) be availed for a Solar Power plant?

Yes. REC Mechanism and CDM are mutually exclusive and hence a power developer can claim CDM benefits (Carbon Credits) also. However, it is to be noted that the current trading prices of Carbon Credits or Certified Emission Reductions (CERs) at the European ETS system is less than 0.7 Euro which are pretty low compared to the 15-20 Euro trading prices a few years back. At these prices, getting a Solar project registered under CDM mechanism does not make any sense as the payback for the expenses in the process itself takes several years. Unless the Solar Power Plant is of size 10 MW or more it does not make financial sense to go for Carbon Credits (CERs).

What kind of Central/State benefits are available for Solar Power plant setup?

Solar plants can be categorized into 2 broad categories – Grid Connected and Off-Grid plants. The usual Govt. support available for an Off-Grid plant is a Capital Subsidy of 30% on the project cost upto a maximum size of 500 KW. This can be claimed by the Manufacturer/Supplier/EPC Contractor (should be an MNRE accredited supplier) on behalf of the customer. The list of MNRE accredited suppliers (all across India) can be downloaded from Subsidy is not available for Grid Connected plants that engage in sale of power either to the local DISCOM or a 3rd party. Following are the benefits a Solar Power Developer involved in Sale of Power Generated can avail:

  • Accelerated Depreciation – Upto 90% of asset value with 80% depreciation allowed in the first year.
  • 10 years Tax Holiday – Tax holiday can be availed for 10 years during which time Minimum Alternate Tax is still applicable (19.9305%) which can be offset against tax payable later.
  • Other State specific exemptions which vary from state to state.

Can Accelerated Depreciation benefits be claimed by Solar Power Developers?

Yes. Accelerated Depreciation benefits can be claimed by Off-Grid and Grid-Connected Solar Power Developers in order to offset taxes on profits from their connected businesses. Typically, 90% depreciation is allowed with 80% allowed in the first year.

Difference between a Solar Inverter and a Regular Inverter

Something that is often asked is what exactly is a solar inverter and how does it differ from a regular inverter we use daily?

What is an inverter?

A power inverter is an electric power converter that changes DC (Direct Current) to AC (Alternating Current).

Why do I need to convert to AC?

Long distance transmission on our grids is done on AC. So, most of our regular home appliance run on AC. Whereas, power generation like in the case of Solar Energy is in DC. This creates a requirement for DC to AC conversion, to transmit it over large distance or in other cases to use it with AC devices.

What is a UPS and is UPS and a inverter the same thing?

No. This is a quite common misconception and people often mistake a UPS as an inverter.

A UPS is an Uninterrupted Power Supply. It basically provides an alternative power source when the regular

While it is true that both have inverting operation and both are used for backup. Most often in India, a home UPS is actually an inverter. The essential difference is that UPS has no delay, whereas the inverter does.

Regular Inverter: Operation of a standard inverter

A regular inverter or a UPS will basically have a battery to store energy from the grid when the supply is available. When the grid is cut off, it will basically switch to power from the energy stored in the battery.

Solar Inverter : What's the difference?

A solar inverter, generally is grid tied and can synchronously transfer the energy from the grid. A solar inverter can basically feed into the electrical grid and has functions to attach to various photovoltaic arrays. Solar Inverters have MPPT or PWM technology that allow the batteries to be charged at a constant level. Solar inverters also have islanding protection, which basically means to prevent automatic re-connection.

Why use a charge controller?

Sun light varies throughout the day. That basically means that sometimes during a day there will be more power generation and other times, it would be lesser. Let's say a cloud comes up then sudden.