The average solar business profit margin is 20%-25%.
Solar power plants have low operating costs, and their profit margin is high, making them a lucrative business venture.
Not to mention that they are gaining popularity in the market and becoming a cheaper option for energy production.
They were not profitable enough to be commercially viable earlier.
However, with the growing demand for clean energy and decreasing costs, the solar power plant business is becoming more and more competitive.
In fact, the solar power plant business can be profitable for companies because they have low start-up costs.
Moreover, they can generate electricity at a lower rate than other forms of energy production like coal and natural gas.
Overview of Solar Business in Bharat
Types of Solar Business in Bharat
In India, solar power is still a relatively new concept.
In fact, the government has been pushing for the use of solar energy for the last few years.
Some of the different types of solar power business are:
Expected Gross Profit in Solar Business
It is difficult to give an exact answer to what a solar business can expect its gross profit to be as many factors contribute to it.
Such as initial investment, cost of power produced per month, interest rates on capital, etc.
However, the expected gross profit in the solar business can be around 15% - 20%.
To clarify, the actual profit will depend on several factors, such as:
There is no doubt that the solar business industry is booming at a very high rate.
The global solar power market is predicted to grow from USD 184 billion in 2021 to USD 293 billion in 2028 at a CAGR of 6.9% in the forecast period 2021-2028.
The demand for this renewable resource is increasing along with population growth and global warming concerns.
As a result, it is opening up new opportunities for the solar power industry to be profitable.
Investment
The basic investment required to start a solar business is Rs. 10 Lacs to 15 Lacs minimum.
Here is a list of expenses in a solar business that you will have to invest in:
There are various ways in which solar power can get investment:
Successful solar businesses can get a great return on investment.
With the increasing demand for solar power, investors are more likely to invest in businesses they can see the potential.
Here are some steps that you need to take to obtain investment funds:
Solar power is now a key sector for investors everywhere.
It is due to its low carbon footprint and the prospect of low-risk returns in the future as solar energy becomes more popular.
Area
The land area required to start a solar power business is approximately 1,000 - 2000 sq ft.
However, if you are planning to get into just installation or providing after-sale services, you will need only 180 - 400 sq ft to set up your office.
Choosing a location for a solar power business can be very difficult. The location is one of the most important things for businesses.
You need to consider factors such as:
Most importantly, do not forget to consider:- "Are there enough people with disposable income to buy solar panels?".
A solar power business should ideally be located in an area that has high sunlight hours, a low cost of living, and a low unemployment rate.
Human Resource
To run a solar power business, the people required are solar panel installers, electricians, accountants and management.
People required for solar power are usually called "Solar Power Engineers" or "Solar Power Technicians".
A specific type of solar power engineer is called an "Energy Distributor", who may have less working experience but more knowledge about renewable energy systems than other engineers conducting the same job.
Solar power requires a great deal of education, so you will need someone who knows both how they work and how they can make them work better.
Apart from that, you will also require the following people to run a solar business:
You will require to invest a good amount in human resources as basically, they will be the ones running your business.
The estimated budget for human resources in the solar business is around Rs. 4 - Rs. 5 Lacs per month.
Now that you know the solar business profit margin, learn how to start a solar power plant business in Bharat
Solar power is gaining popularity very quickly. It is not only considered as an option that is essential to reduce carbon footprint emissions and to tackle climate change, but also to be a viable alternative to the conventional power production methods for saving homeowner’s money in the long run.
How frequently do you see solar rooftops in India? Unless you are residing in a tier 1 city, chances are slim that you have come across more than two to three of them in your neighborhood. But this landscape is rapidly changing. Very soon you would find it difficult to spot a house without a solar rooftop.
In a study by the US Department of Energy, it is estimated that solar energy can account for 40% of the United States’ electric supply by 2035 and 45% by 2050. With this estimation, there is clear indication that solar energy is the way forward for many countries having large populations including India and China.
In addition to the above, solar energy will also become a quintessential factor in meeting the power needs and demands of the future.
The largest contributor to this power generation across the globe will not be any governmental or industrial entity but homeowners and direct consumers like us. Homes, commercial buildings, and units will have rooftop solar systems that will power the lights, television, and other electrical appliances we use on a daily basis.
In this post, we will understand the schematics of Rooftop Solar Systems and how much they can realistically save in the long run and contribute in the future.
Rooftop solar system is a series of solar panels installed on rooftops of residential homes, commercial buildings, institutions, and industrial buildings. These systems are used to harness the sun’s energy and convert it into electrical power. This can be done by adding a device known as an inverter that converts the DC power generated by the solar panels on the rooftop to AC power as most appliances/devices run on AC.
Benefits of Rooftop Solar Systems
Types of Rooftop Solar Systems
There are three types of rooftop solar systems that are employed commonly today.
On Grid Solar System is a rooftop solar system that is integrated with the main grid supply. This system allows power to be used from the grid supply only when the rooftop solar system is unable to supply the required power.
These systems are connected to the public electricity grid and have no battery storage. Any solar power that is generated from an on-grid system (and not used in your house) is exported onto the electricity grid. This allows the homeowners to also leverage the metering system and earn revenue from the unused electricity.
Off Grid Solar System employs battery storage and will not be connected to the electricity grid. This system is designed in such a way that it has enough power generation and battery storage capabilities to meet the home’s requirements even in the depths of winter when there is no or little sunlight.
This rooftop solar system is not linked to the main grid and can run on its own with its battery. So, the solar power generated from the rooftop solar system charges the battery which is then used to power various applications. This system is more expensive than the ‘On Grid System’ as there are batteries and other components used.
A hybrid solar system combines the best from the grid-tied solar system and the off-grid system: it can interact with the utility grid and store energy in a battery. This system allows homeowners to store power in batteries for their daily use, when the power grid goes down or when the electricity grid is not connected. These systems provide power to offset the grid power when the sun is shining and will even send excess power to the grid for credit, which can be used later.
In this system, the on-grid and off-grid systems work in tandem. Though a battery is used, the advantage here is that after the battery is fully charged the excess power generated is fed to the grid which generates additional revenues for the consumer.
Feasibility of using rooftop solar systems to generate power in homes
While the advantages and benefits of using solar energy is evident, the question that many ask is still basic. Will installing rooftop solar panels save money? The answer is ‘Yes’. Although solar panels my seem to be expensive, there are huge savings that homeowners can enjoy as they go.
While the rooftop solar installations are a long-term investment due to the upfront costs involved in the installation and setup of these systems, they have very minimal, or no-costs involved in maintenance for at least 6-8 years depending on the conditions. So, the break-even can be expected in the long-run. While you can see the reduced electricity bills immediately.
Let’s deep dive and see how much we can realistically save using the rooftop solar systems.
Scenario 1:
5KW Rooftop Project is employed in a house where there is an average use of 300 KWh/month.
So, in the above case the homeowner will end up making an average profit of Rs. 1,650 every month by installing a rooftop solar system.
Scenario 2:
5KW Rooftop Project is employed in a house where there is an average use of 1000 KWh/month.
So, in the above case the homeowner will save Rs. 3,300 on an average every month by installing a rooftop solar system.
In most cases, the homeowners are estimated to save a huge percentage of their monthly electricity bills by employing the rooftop solar system in their homes. Since there is an upfront cost involved, homeowners will need time to collectively be profitable.
Time required to break-even on the investment
Solar power systems, as we know, already are a long-term investment that enables smart savings in the long run. Typically, the cost of setup depends on the number, amount and capacity of the components installed.
In India, typically with the government subsidies involved, homeowners can break even on their investment with 2-3 years for a 5Kwh power system and without the government subsidies, it might take 3-5 years for the same.
Considering this scenario, a lot of homeowners are already ready to invest in the rooftop solar power systems in their homes.
Some of the successful implementations by Enphase:
Rooftop solar system is becoming a common household entity in the recent times. These systems provide advantages like lower electricity bills, reduced carbon footprint, and potentially higher home values.
While the magnitude of the gains from the rooftop solar systems can vary widely from one house to another depending on various factors, with careful planning and implementation, homeowners can not only transition to green electric power supply at minimal recurring expenses but also sell the unused power to the electricity board generating revenues and further savings.
References
Solar Futures Study
Solar Futures Study
Schedule a call with our in-house expert to get a free analysis on how much you can save with a rooftop installation for your home.