The Interesting Case of KERC – Earn from Your Solar Investment

When one looks at the economics of installing a RTPV system based on the solar tariff ap-provals of Karnataka Energy Regulatory Commission (KERC), the current slow penetration of solar energy in the residential market becomes mysterious.

KERC has approved RTPV solar energy generation tariffs of Rs 7.08/kWh for those without subsidy, and Rs. 6.03 with subsidy. Undoubtedly these are attractive tariffs. KERC has approved tariffs to be charged to residential consumers at the rate of Rs 4.70/kWh for power consumption of 31 to 100 units, Rs. 625/kWh for 101 to 200 units, and Rs 7.30 above 200 units. In addition, KERC has approved gross metering in the case of residential consumers.

KERC has been generous in computing the cost of power generation from RTPV. I have computed the cost to generate power using discounted rate of return to give 12 per cent on the investment of RTPV. The resulting economics are attractive. In the absence of 30 per cent subsidy, cost to generate is Rs 6.25/kWh, and if subsidy is secured then the cost is only Rs 4.50/ kWh. The reason these estimates are higher than the prices quoted above is scale of economy.

Hence, the KERC move shows that house owners who install RTPV will be able to earn money by selling power to their DISCOMs. They sell power at higher price and buy power at lower price. They are also assured of getting power 24 hours a day. What is true of Karnataka is potentially applicable to other states as well. Even in states where gross metering is not allowed, owners stand to earn a good return on their solar investment. Components that are required for rooftop solar installations are photovoltaic panels (which convert solar sunshine into direct electricity), batteries to store electricity when power is not re-quired and the sun is shining, inverters to convert DC into al-ternating electricity (AC), cables and other miscellaneous items like junction boxes, earthing, lighting arrestors, conduits, etc. Panels account for about 50 per cent of the total cost. A shade-free area of at least 200 square feet is required for solar installation on the roof of a house; permission from the DISCOM is required to install the same. Also, a long-term contract has to be signed with the DISCOM to avail subsidy. It is advisable to get the RTPV installed by a contractor authorised by the DISCOM.