There are two DISCOMs in Telangana – TSSPDCL that supplies power to the districts of Hyderabad, Rangareddy, Mahbubnagar, Nalgonda and Medak, and TSNPDCL that supplies to Warangal, Karimnagar, Khammam, Nizamabad and Adilabad. The net metered rooftop solar installations are growing at a brisk pace, with the TSSPDCL site showing 652 commissioned projects as of date with a total capacity of 9.9 MW (an average of 15kW per installation)
Salient features of Telangana rooftop solar policy
The Telangana Solar Policy is common across the two DISCOMs. The highlights are:
- 25 year Power Purchase Agreement (PPA)
- Rooftop solar size limited to 100% of sanctioned / contract load, with an upper limit of 3kW for 1-phase connections and 500kW for others
- Choice between net metering and gross metering
- Monthly settlement
- For gross metering, the consumer continues to pay his electricity bill as usual while all the generated solar power is purchased at the average cost of service (ACoS) of the DISCOM as determined by TSERC every year. For FY 2016-17, the ACoS is ₹5.84 for TSSPDCL and ₹6.19 for TSNPDCL.
- For net metering, the generated units are subtracted from the consumed units and the consumer has to pay the bill for the net units consumed. If more power is generated by the rooftop plant than consumed, then the consumer gets a zero bill and the excess power is purchased by the DISCOM at the average pooled power purchase cost (APPC). For FY 2016-17, the APPC is ₹4.00 for TSSPDCL and ₹3.85 for TSNPDCL.
Net Metering or Gross Metering?
With so many terms and rates above, deciding on the type of metering and size of system might get confusing. With the objective of earning the most per unit of generated solar power, one observes the following hierarchy of rates
Retail electricity tariffs (above 200 units/month) >> ACoS >> APPC
Therefore, the best way to make money here would be by saving it, that is, by opting for net metering and reducing your electricity bill. Since the amount you earn per generated unit decreases once it exceeds your consumption, sizing the solar plant to generate only as much electricity as you consume is a prudent strategy. Use our estimator to understand the right size for your needs, how much it would cost and how much rooftop space it would occupy.
If by chance, you happen to have an electricity connection that has a high sanctioned load but relatively low electricity usage, then you could look into the economics of gross metering.
Sample Returns Calculation
If you are a residential LT-I (B) (ii) consumer and have a consumption of 1875 units every month, a 15 kW rooftop system on net metering can make this bill zero, thus saving you ₹16,383 every month. Assuming a turnkey project cost of ₹9.05 lakh, this would imply a simple annual return on investment (ROI) of 21.7%, which is quite attractive.
A net metered rooftop solar system also hedges you against rising electricity prices in future. Adding the rate of inflation of electricity tariffs (~5% per year) to the above ROI makes it even sweeter. To be conservative, we further assume the following:
- Panel output degradation of 1% per year
- Maintenance / wear and tear budget of ₹1125 per month with inflation at 3% per year
- Zero salvage value at the end of the PPA
The internal rate of return (IRR) of the rooftop solar system now works out to 24.2% per year! It is hard to think of any other investment category that can give such high returns over 25 years.
Starting from system design all the way to commissioning, Oorjan can provide a turnkey solution for you to go solar. If you are low on liquidity, and don’t happen to have ₹9.05 lakh ready to invest in rooftop solar, Oorjan can also assist you with bank financing. With a down payment of 15% (₹1.36 lakh), the EMI on a 7 year loan is ₹13,232, which is only 80% of your present electricity bill! Rooftop solar in Telangana thus makes very compelling economic sense. Please use our online returns calculator for Telangana to modify and get a feel for these numbers.
Contact us today to get started on rooftop solar in Telangana!