Estimation of Levelised Cost of Power from Rooftop Solar PV

This estimation of levelised cost of solar power is calculated based on inputs provided to Solar Mango’s Free Solar Calculator –
www.solarmango.com/in/calculator/rooftopsolarpv. A summary of inputs and a detailed calculation of costs, including a 25-year projection, are provided
further below.

Levelised Cost of Solar Power

Solar power differs from other sources of power such as grid power or diesel power in being entirely a fixed cost – costs incurred do not vary with power
generated; the bulk of the cost is incurred upfront, with energy generation spread over 25 years with minimal maintenance expenditure. This makes it
difficult to compare on an equitable basis with other sources of power that have a significant variable component, and where expenditure is incurred at the
time of consumption.

This difficulty is overcome by calculating the levelised cost of each source of power. Levelised cost considers all costs incurred over a lifetime and discounts
them to today’s value. This discounted cost is divided by the number of units (kWh) generated over the lifetime of the plant to arrive at a cost per unit in
today’s terms. This levelised cost now allows comparison between different sources of power.

Plant Details
Plant Capacity 2 kW Discounting Factor 12%
Plant Cost 1.25 Rs. Lakhs Depreciation Benefit Yes
Minimum Shade Free Roof Area Required 200 Square Feet

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 Estimation of Levelised Cost of Power from Rooftop Solar PV

This projection is an approximation based on several assumptions (provided below). Please calculate your returns based on conditions at your site before
deciding on your solar plant.

Levelised Cost
a) Present Value of cost over 25 years 0.95 Rs. Lakhs
b) Total Generation over 25 years 20,791 kWh
c) Levelised cost/kWh over 25 years (a/b) 4.55 Rs.

Notes and Assumptions

1. Solar plant capacity is 2 kW, with 1 kW = Rs. 0.625 Lakh

2. Maintenance is 1.00% of project cost, with 5.00% annual escalation
3. Inverter lifespan is 10 years, with 3.00% annual cost reduction
4. Accelerated depreciation is at 80.00%. It is assumed that the entire benefit of accelerated depreciation can be claimed
5. Corporate tax rate is 35.00%
6. Plant generation is 4.00 kWh per KW per day, with 1.00% annual panel degradation. A further 3.00% reduction is provided for losses due to power failure,
lower loads on holidays, etc.
7. Debt service calculation assumes 70.00% debt (Rs. 0.88 Lakhs); 13.00% interest rate; 7-year loan term with no moratarium; repayable quarterly through
equated installments
8. Present Value of cost over 25 years (Rs. 0.95 Lakhs) is sum of Present Value cost in table below
9. Discounted Generaton and Cumulative Discounted Generation are used to levelise the tariff over 25 years

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 Estimation of Levelised Cost of Power from Rooftop Solar PV

25-year Cost Projection

Rs. Lakhs
Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Generation (kWh) - 2,832 2,804 2,776 2,748 2,721 2,694 2,667 2,640
Plant Costs
Initial Solar PV Plant Investment (Equity) 0.38 - - - - - - - -
Inverter Replacement - - - - - - - - -
Maintenance - 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02
Total Plant Cost 0.38 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02
Debt Service
Principal - 0.08 0.09 0.11 0.12 0.14 0.16 0.18 -
Interest - 0.11 0.10 0.09 0.07 0.05 0.04 0.01 -
Total Debt Service Cost - 0.19 0.19 0.19 0.19 0.19 0.19 0.19 -
Tax savings
Tax savings from depreciation - (0.35) (0.07) (0.01) - - - - -
Tax savings from interest - (0.04) (0.03) (0.03) (0.02) (0.02) (0.01) (0.01) -
Total Tax Savings - (0.39) (0.10) (0.04) (0.03) (0.02) (0.01) (0.01) -
Net Plant Cost (d) 0.38 (0.18) 0.10 0.16 0.18 0.19 0.20 0.20 0.02
Present Value factor (e) 1.00 0.89 0.80 0.71 0.64 0.57 0.51 0.45 0.40
Present Value cost (d X e) 0.38 (0.16) 0.08 0.12 0.11 0.11 0.10 0.09 0.01

Cumulative Present Value cost 0.95 Rs. Lakhs

Discounted (Adjusted) Generation (kWh) - 2,529 2,235 1,976 1,747 1,544 1,365 1,206 1,066
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Cumulative Discounted Generation 20,791 kWh
 Estimation of Levelised Cost of Power from Rooftop Solar PV

Particulars Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17
Generation (kWh) 2,614 2,587 2,562 2,536 2,511 2,485 2,461 2,436 2,412
Plant Costs
Initial Solar PV Plant Investment (Equity) - - - - - - - -
Inverter Replacement - - 0.21 - - - - - -
Maintenance 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03
Total Plant Cost 0.02 0.02 0.23 0.02 0.02 0.02 0.02 0.03 0.03
Debt Service
Principal - - - - - - - - -
Interest - - - - - - - - -
Total Debt Service Cost - - - - - - - - -
Tax savings
Tax savings from depreciation - - (0.06) (0.01) - - - - -
Tax savings from interest - - - - - - - - -
Total Tax Savings - - (0.06) (0.01) - - - - -
Net Plant Cost (d) 0.02 0.02 0.17 0.01 0.02 0.02 0.02 0.03 0.03
Present Value factor (e) 0.36 0.32 0.29 0.26 0.23 0.20 0.18 0.16 0.15
Present Value cost (d X e) 0.01 0.01 0.05 - - - - - -

Discounted (Adjusted) Generation (kWh) 942 833 736 651 575 509 450 397 351

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 Estimation of Levelised Cost of Power from Rooftop Solar PV

Particulars Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25

Generation (kWh) 2,388 2,364 2,340 2,317 2,293 2,271 2,248 2,225
Plant Costs
Initial Solar PV Plant Investment (Equity) - - - - - - - -
Inverter Replacement - - - 0.16 - - - -
Maintenance 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04
Total Plant Cost 0.03 0.03 0.03 0.19 0.03 0.04 0.04 0.04
Debt Service
Principal - - - - - - - -
Interest - - - - - - - -
Total Debt Service Cost - - - - - - - -
Tax savings
Tax savings from depreciation - - - (0.04) (0.01) - - -
Tax savings from interest - - - - - - - -
Total Tax Savings - - - (0.04) (0.01) - - -
Net Plant Cost (d) 0.03 0.03 0.03 0.15 0.03 0.03 0.04 0.04
Present Value factor (e) 0.13 0.12 0.10 0.09 0.08 0.07 0.07 0.06
Present Value cost (d X e) - - - 0.01 - - - -

Discounted (Adjusted) Generation (kWh) 310 274 243 214 190 168 148 131

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 Estimation of Levelised Cost of Power from Rooftop Solar PV

If you are an industrial or commercial energy consumer looking for a rooftop solar plant or if you wish to have a
customised online solar calculator, do talk to ramya@solarmango.com

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