Our earlier post on rooftop solar in Delhi was very popular and we got many inquiries from residents of Gurugram, Faridabad and other parts of the NCR whether the post was applicable to them too. Since electricity is a state subject, the solar policies vary from one state to another. This post talks about the solar economics specific to Haryana.
Haryana is a wealthy state, having the second highest per-capita income among full-fledged states. This implies a higher need for electricity – its per capita electricity consumption is 189% of the national average. Consequently, Haryana has 2.2% of the country’s population but 3.53% of the total installed power capacity.
Although Haryana is largely self-sufficient in power, its electricity problems are symptomatic of the rest of the country. Populist freezing of electricity tariffs for almost a decade coupled with large-scale AT&C losses (power theft) have left its electricity distribution companies bleeding. To stem the losses, power cuts were often resorted to, leading to the ubiquitous diesel generators seen in Gurugram and Faridabad. However, hope in the form of UDAY is turning the sector around, and Haryana is among the better performing states undertaking power sector reforms.
Coal and gas-powered plants presently make up 83% of the installed generation capacity, but Haryana has set a target of 650 MW of grid-connected rooftop solar target by 2018-19. To support this, HERC released grid connected rooftop solar regulations in 2014 and amended it in 2015.
Rooftop solar is also a great way to invest your money – as this article will show, if you have shadow free roof space, you can install a solar power plant, save money on your electricity bill and thereby earn handsome returns on your investment.
Haryana Electricity Distribution Companies (DISCOMs)
Depending on where you stay in Haryana, you would be served by one of two public sector DISCOMs
- Uttar Haryana Bijli Vitran Nigam Limited (UHBVN) covers Ambala, Jhajjar, Kaithal, Karnal, Kurukshetra, Panchkula, Panipat, Rohtak, Sonipat and Yamunanagar
- Dakshin Haryana Bijli Vitran Nigam (DHBVN) covers Bhiwani, Faridabad, Fatehabad, Gurugram, Hisar, Jind, Mahendragarh, Mewat, Palwal, Rewari and Sirsa
Salient features of Haryana rooftop solar policy
- Rooftop solar size limited to 100% ±5% of sanctioned / contract load.
- Net metering with yearly settlement: Every month, the units generated from the solar plant are subtracted from the consumed units and the prosumer has to pay the bill for the net units consumed. If more power is generated by the rooftop plant than consumed, then the prosumer gets a zero bill and the excess power is carried forward to the next month.
- The total generation by the rooftop plant is capped at 90% of the electricity consumed over the financial year. If any excess electricity is generated and fed into the grid, the prosumer will not be compensated for it.
- Additional Generation Based Incentive (GBI) of ₹0.25 per unit of gross solar energy generated upto cap amount, this extra incentive will be reviewed every year.
Since there is a hard cap on solar generation, it is fairly straightforward to size the rooftop system within the three limits of consumption, sanctioned load and available shade-free rooftop space. Use our convenient solar sizing calculator and quote generator to find the right plant size and cost for your need.
Sample Returns Calculation
The published electricity tariffs for Haryana are lower than Delhi, but there are hidden and opaque charges in the form of Electricity Duty, Municipal Tax and Fuel Surcharge Adjustment (FSA). If you are a domestic consumer and have an average monthly electricity usage of 900 units, you would come under Category III and your bill would look as follows:
|Energy Charges||₹ 6,075|
|Electricity Duty||₹ 90|
|Municipal Tax||₹ 45|
A rooftop solar plant of 6.8 kWp will need 612 sq ft of shade free roof space, offset 90% of your consumption and bring your net consumption down to 90 units per month. Your new bill would now look as follows:
|Energy Charges||₹ 608|
|Electricity Duty||₹ 9|
|Municipal Tax||₹ 5|
The capital needed for a system of this size is ₹4,62,400 and you are saving ₹ 7,619 – ₹ 741 = ₹ 6,878 every month by installing it. This gives you a simple annual return on investment (ROI) of 17.8% which is quite attractive! Going in for a 7 year, 11.05% loan with 85% financing (terms and conditions) on this system gives an EMI of ₹6,740 – this is less than the money you have saved on your bill! Therefore, if you install solar on your rooftop today, you start benefiting from the first month itself!
- These calculations are based purely on savings from the electricity bill, and do not include the incentive (GBI) of ₹0.25 per unit mentioned in the regulations. This adds ₹ 202 to your monthly benefit.
- Electricity tariffs in Haryana had been artificially kept low and constant in the past. Because of the power reforms, they are expected to rise in future. Neighbouring Delhi has seen an average 6.9% per year annual increase in electricity tariff since 2007. Going in for net metering hedges or shields you from future rate increases. Thus you can add this rate to the above ROI.
- Non-domestic consumers can further take advantage of accelerated depreciation (AD) benefits
- Business owners can expense out the interest part of the loan EMI.
- While the loan in the examples above is fully paid off in 7 years, the useful life of photovoltaic systems is 25 years. As the regulations compel the DISCOM to accept rooftop solar electricity up till the useful life of the system, you effectively get free electricity from year 8 to 25!
The above make a compelling financial case even more lucrative. To be conservative, we can assume the following:
- Panel output degradation of 1% per year
- Maintenance / wear and tear budget of ₹510 per month with inflation at 3% per year
- Zero salvage value at the end of the PPA
The net effect of the above allowances would decrease effective returns by ~2.5% per year. The overall ROI considering a 5% electricity tariff inflation remains extremely attractive at ~20% per year.
Starting from system design all the way to commissioning, Oorjan can give a turnkey solution for you to go solar. If you are low on liquidity, Oorjan can also help you with bank financing.
Contact us today to get started on rooftop solar in Haryana!