IOSR Journal of Economics and Finance (IOSR-JEF)

e-ISSN: 2321-5933, p-ISSN: 2321-5925

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International Conference on Innovative Management Strategies 9 | Page
Madanapalle Institute Of Technology & Science, Bangalore, INDIA

Financial Analysis of Solar Photovoltaic Power plant in India

M. Ganga Prasanna, S. Mahammed Sameer, G. Hemavathi
Department of Management Studies MadanapalleInstitute of Technology& Science Post Box No: 14, Angallu,
Madanapalle -517325, AP.,India.

Abstract: Solar photovoltaic (PV) power systems for both utility as well as roof mount applications growing
rapidly in India. Solar power plants in India till date are mostly ground-mounted power plants. Most of the
utility scale PV power plants are typically in the scale of 5 MW in size and connected to the electrical grid.
The objective of this study is to present the financial feasibility of 100 KW roof top solar PV power. State of art
technology of solar PV modules, power electronics with fixed mounted array is considered for an educational
institute. Presently the institute is using utility power and also diesel generator to backup for power outing.
Financial analysis has been performed with present system cost based on life cycle cost of energy. Standard
financial procedures have been used and the sensitivity parameters studied, mainly focusing on various factors,
solar insolation variability at the site, the financial interest rates and operational and maintenance cost. The
feasibility analysis results were discussed and presented in the conclusions.
Keywords: Photovoltaic, Financial feasibility, Financial analysis, Insolation variability

I. Introduction:
The energy consumption of India is now soaring and may face severe electricity shortages in the near
future. India needs a sustained growth rate of 9 to 10% over the next twenty years to meet ]its growth objectives.
This implies that it will need to increase its primary energy supply buy a factor of three to four and to the
electricity generation by a factor of five to six .India receives nearly 300-330 days of solar energy and there is
a large potential available for generating solar power using unutilized space on rooftops of individual houses ,
industrial buildings ,commercial buildings, educational institutes or any other type of buildings can be used to
moderately fulfill the requirement of the building occupants and excess , if any , can be fed into the grid . So the
best suitable long term design solution for India would be highly distributed set of individual rooftop power
generation systems connected through a local grid.
In grid interactive rooftop solar PV power systems , the DC power generated from solar panel is
converted to AC power using power conditioning unit and is fed to the grid .The generated power during the day
time can be utilized fully by powering locked upmany and excess can be fed to the grid as long as grid is
available .In case , were Solar Power is not sufficient due to cloud cover or during the cloudy hours , the captive
loads are served by drawing power from the grid.The grid interactive rooftop solar system can work on net
metering basis where in the beneficiary pays to the utility on net meter reading basis only.
The main objective of present paper is to present the financial analysis of 100 KW rooftop solar PV
power systems for both with and without battery support. The sensitivity analysis of the various cost elements
have been studied and identified to look in for future reduction .The results were presented and the conclusions
were drawn.

II. Solar PV power system status in India:
In India, the solar market is undergoing changes from the incentive driven market to parity driven
market. But this change is creating problem to policy makers and creating delays in policies.
One of the results of this transition is that Indian solar market is moving from utility market to
generation market. Let us expect that 2014 will lay a strong ground for roof top solar market. To
understand the above statement we can take the delays that has been occurring in states like Andhra
Pradesh, Tamilnadu, Karnataka, Punjab and Uttar Pradesh that has been continuing in delays different states are
facing many litigations and no PPA`s have been signed.
On the other side, it is encouraging to see that many central and state governments have announced
some policies, subsidies, Feed-in-Tariff`s (FITs) etc.. To promote rooftop solar power but there may also suffer
some delays due to the election paralysis in India.
The solar energy corporation of India(SECI) was providing a capital subsidy for 100MW every year.
Due to all the above reasons, we can expect new solar PV capacity of 750 MW in 2014.

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Madanapalle Institute Of Technology & Science, Bangalore, INDIA
Why off-grid roof top system:
By using off-grid rooftop system the customer can have the following advantages.
Have access to power continuously all the time.
Not having any scheduled or unscheduled power cuts.
No dependency on diesel
The quality of this power is superior to the regular grid power.
Investment against increasing fuel and grid charges.

Application areas:
Hospitals
Educational institutions
Government offices
Commercial buildings
Petrol pumps
Construction companies
Water pumps

Salient features of off-grid roof top system:
Low and optimum maintenance cost.
Stable supply of power increases the overall efficiency of electronic components
Can effectively manage usage of power based on requirements through smart electronics.
Batteries designed for longer life.
Minimum power loss with effectively designed DC cables and Junction boxes.

What advantages educational institutes have with solar PV power system?
Self sufficient:
By installing solar PV power plant in the educational institution it can get a benefit of producing its
own and sufficient electrical energy without shortages or scheduled and unscheduled power cuts.

Renewable Energy Corporation:
Educational institutes can get a benefit of registering with Renewable Energy Certification which
increases the goodwill about the institution.

Training and Research:
Students can be given some training programs and research projects which increases the capability of
the students, which adds as a benefit to the institution.

Green energy:
Can reduce the carbon gases into the environment














IOSR Journal of Economics and Finance (IOSR-JEF)
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III. Functional Description:
Following figure show that various components of solar PV power plant for roof top system


Key components of solar rooftop system

Solar Panel A solar panel (photovoltaic module) is a packaged, linked group of photovoltaic cells and it is
used as a component of a rooftop system to generate and supply DC electricity). Solar panels generally form a
part of a vast solar array (multiple panels connected together). Each panel is graded by its DC output power
under standard check conditions, and typically ranges between 100 - 350 watts. We have selected 200 watts
panels for our system

Junction box - An electrical junction box is a connecting box for solar PV modules for series and parallel
electrical connections, usually designed to conceal them from view and tampering. A small metal or plastic
connection box may form part of an electrical conduit wiring system in a building, or may be covered in the
plaster of a wall, hidden behind an access panel or spread into concrete with only the lid showing. It also
includes terminals for combining cables. Its safety degree should be IP65.

Inverter (Power Conditioning Unit) - The Power Conditioning Units (PCU) used in grid connects SPV
systems consists of an Inverter and other electronics for Maximum peak power tracking (MPPT),
Synchronization and remote monitoring.
The inverter is the most complicated part of the PV system. It has to behave as the interface between the PV
array and the Grid. As the PV array output fluctuates with the solar radiation the inverter has to cope with the same.
The major functions carried out by the PCU are as follows:
Change the incoming DC received from PV modules into AC with suitable power quality. TheInverter creates
sinusoidal AC waves forms with low harmonic distortion.
The inverter also has to act as a protective device of the system. It requires tripping out if thevoltage, current or
frequencies go beyond acceptable ranges.
We have selected 5 numbers of 20kW each inverter for our plant.

Manual/Automatic disconnect switch - It is an automatically/manually operated electrical switch designed to protect an
electrical circuit from damage caused by overload or short circuit. Its vital function is to detect a fault condition and, by
interrupting linkage, to immediately discontinue electrical flow.
Step-up transformers The output from the inverters require a further step-up in voltage to reach the AC grid
voltage level. This is the default case with our PV power plant installation, where the Low Tension (LT)
infrastructure cannot handle the amount of power which may be generated by the rooftop plant. The step up
transformer receives the output from the inverters to the required 11 kV grid voltage. Substation in our college is
used for grid connection.
Grid connection interface- In our large rooftop solar PV plants the electricity is generally used for the college
and remaining excess shall be exported to the grid network 11 kV voltage level. This interface is usually termed
IOSR Journal of Economics and Finance (IOSR-JEF)
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as interconnection point and supply metering apparatus. Interconnection point and metering point are used to
external to the PV power plant boundary and are typically located in the owners premises.

IV. Bill of materials:
100 KW roof top systems with battery backup bill of materials:
S.no Description Quantity Cost
Rs
1 Solar panels,200W@STC 500 35/W
2 Mounting structure 100 8000/KW
3 Inverter 20 50000/KW
4 Cables 100 2000/KW
5 Battery, 12V/200Ah 50 12000
6 Combiner box 20 10000
7 Main junction box 10 8000
8 Fuses & Disconnects Set 3000
9 Protection switches 37 500
10 Energy monitoring meter 2 4000
11 Remote control and monitoring system 1 200000

100 KW roof top system without battery backup bill of materials:
S.no Description Quantity Cost
Rs
1 Solar panels,200W@STC 500 35/W
2 Mounting structure 100 8000/KW
3 Inverter 20 50000/KW
4 Cables 100 2000/KW
5 Combiner box 20 10000
6 Main junction box 10 8000
7 Fuses & Disconnects Set 3000
8 Protection switches 37 500
9 Energy monitoring meter 2 4000
10 Remote control and monitoring system 1 200000

V. Cost price of solar PV power system:
Components
Design and engineering
Installation and commissioning
Operational and maintenance
Components:
The components cost of solar PV power system with battery backup is shown in table 1

Table 1: 100 KW roof top system cost with battery backup
Components Cost/unit Total cost
RS RS
Solar panels,200W @STC 35/W 500 3850000
Mounting structure 8000/KW 100 880000
Inverter 50000/KW 20 1000000
Cables 2000/KW 100 200000
Battery, 12V/200Ah 12000 50 600000
Combiner box 10000 20 200000
Main junction box 8000 10 80000
Fuses & Disconnects 3000 Set 300000
Protection switches 500 37 185000
Energy monitoring meter 4000 2 8000
Remote control and monitoring system 200000 1 200000
Total 7303000
VAT 5.50% 401665
Transport and Installation 10% 730300
Miscellaneous 6% 438180
Project management, Design and Engineering 10% 730300
Total cost 9603445
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Option 2 is 100KW roof top system without battery backup. The detailed cost of various components given in
table 2
Table 2- Option 2 100 KW roof top system cost without battery backup
Components Cost/unit Total cost
RS RS
Solar panels,200W @STC 35/W 500 3850000
Mounting structure 8000/KW 100 880000
Inverter 50000/KW 20 1000000
Cables 2000/KW 100 200000
Combiner box 10000 20 200000
Main junction box 8000 10 80000
Fuses & Disconnects 3000 Set 300000
Protection switches 500 37 185000
Energy monitoring meter 4000 2 8000
Remote control and monitoring system 200000 1 200000
Total 6703000
VAT 5.50% 368665
Transport and Installation 10% 670300
Miscellaneous 6% 402180
Project management, Design and Engineering 10% 670300
Total cost 8814445

VI. Financial analysis:
Sensitivity analysis:
Sensitivity analysis is done to study how the uncertainty in the output will be affected to different types
of inputs.
Sensitivity analysis has been undertaken to determine how variations in the inputs impact the financial
feasibility of installing and operating a PV solar system. The sensitivity analysis actually involves the
changes/variations in the different inputs to the financial analysis and the result that is obtained by doing that
financial analysis. This is an important for calculating the importance of various factors in getting the total
financial results. The calculation of sensitivity analysis is done by considering the changes in following factors.

Net present value:
The difference between the present value of cash outflows. NPV used in capital budgeting to analyze
the profitability of an investment or project.NPV analysis is sensitivity to the reliability of future cash inflows
that an investment or project will yield.
NPV=

(1+)

=1


Internal Rate of Return:
The discount rate often used in capital budgeting that makes the net present value of all cash flows
from a particular project equal to zero. Generally speaking, the higher a projects Internal Rate of Return, the
more desirable it is undertake the project.
IRR = +



Levelized cost of energy production (LCOE):
The cost of energy production from the solar PV power plant is estimated taking into 25 years of plant
life with 20% degradation for 25 years.

100 KW Solar PV power plant financial analysis:
Total project cost:
With battery: 9603445
Without battery: 8814445

Calculations
Calculation of NPV, IRR, and LCOE values for Solar PV power systems (with and without battery) at
different capital costs and Interest Rates.

IOSR Journal of Economics and Finance (IOSR-JEF)
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International Conference on Innovative Management Strategies 14 | Page
Madanapalle Institute Of Technology & Science, Bangalore, INDIA
Capital cost Interest Rates
0% 10% 13%

Original
Capital cost
NPV With battery 0.16crores 0.01crores 0.06crores
Without battery 0.20crores 0.04crores 0.01crores
IRR With battery 31.81% 14.92% 10.59%
Without battery 37.78% 20.56% 14.98%

10% increase in
capital cost
NPV With battery 0.51crores 0.23crores 0.13crores
Without battery 0.80crores 0.63crores 0.57crores
IRR With battery 41.28% 26.67% 21.60%
Without battery 82.91% 69.13% 64.78%

10% decrease in
capital cost
NPV With battery 0.85crores 0.70crores 0.64crores
Without battery 0.89crores 0.75crores 0.70crores
IRR With battery 96.01% 82.46% 97.28%
Without battery 107.07% 93.66% 88.88%


Capital Cost
Interest Rates
0% 10% 13%

Original capital
cost

LCOE
With Battery -- 5.3
Rs.CAD/KWh
5.3 Rs.CAD/KWh
Without Battery -- 5.0
Rs.CAD/KWh
5.0 Rs.CAD/KWh

10% increase in
capital cost

LCOE
With Battery -- -- 5.7 Rs.CAD/KWh
Without Battery -- -- --

10% decrease in
capital cost

LCOE
With Battery -- -- --
Without Battery -- -- --





IOSR Journal of Economics and Finance (IOSR-JEF)
e-ISSN: 2321-5933, p-ISSN: 2321-5925
PP 09-15
www.iosrjournals.org
International Conference on Innovative Management Strategies 15 | Page
Madanapalle Institute Of Technology & Science, Bangalore, INDIA
VII. Conclusions:
Total investment: 96 lakhs for 100kW roof top solar PV power plant with battery backup, 88 lakhs for
without battery backup.
The acceptable NPV cost with and without battery is 0.06 and 0.01 crores respectively with the interest
rate of 13%.
The acceptable IRR with and without battery is 10.59% and 14.98% respectively with the interest rate
of 13%.
The preferable LCOE with and without battery is 5.3 and 5.0 with the interest rate of 13%.

7. Suggestions:
Installing of 100KW solar PV power system with battery (9603445) and without battery (8814445) can
be undertaken at an interest rate of 13%.
With increase/decreases in capital cost at 10%, also the solar PV system can be installed at the interest
rate of 13%.

Acknowledgements:
The authors wish to record their appreciation for the MITS college management for their support.

References:
[1] India Solar Compass-January 2014, journal published on India Solar Market by Bridge to India-www.bridgetoindia.com.
[2] Development of Financial Model of Bankable Feasibility Analysis of a 1MW Rooftop Solar PV Project in India- a project report
by Abhishek Chaudary-under NPTI (National Power Training Institute)-for LAHMEYER INTERNATIONAL.