9 killer benefits of adopting solar in your business

14/11/2016

Every business consumes electricity directly or indirectly and therefore there is an opportunity for the entrepreneur to incorporate solar in his workplace. There are many benefits attached of going solar:

India is a tropical country having solar insolation in between \(5 – 5.7 KW/m^2/day\) making it a hot destination for the solar power business. The Indian economy is growing and the young generation is experimenting with their career by beating the defined paths. They are growing, adopting & implementing the benefits of solar in their businesses. You too can become a smart business owner when you understand the commercial benefits of solar electricity and implement them in your business.

(1) Avail the benefit of the accelerated depreciation:

The government is offering accelerated depreciation on the solar power system, further reducing the cost of your installation. By accelerated, I mean that the enterprise can claim 80% of the total invested amount as a depreciation for that financial year and it also results in the decrease in the tax liability for that year. For example, the profit of ABC ltd is 20 lakhs and the company has invested and installed a 10 KW solar rooftop worth Rs. 8,00,000. Now, the company can charge 80% of Rs. 8,00,000 which is Rs. 6,40,000 as the accelerated depreciation in that particular financial year. Now, the company will be paying tax on Rs. 20,00,000 - Rs. 6,40,000 = Rs. 13,60,000 (Profit - accelerated depreciation). A tax saving of 0.35 * Rs.6,40,000 = Rs. 2,24,000 (Corporate tax rate = 35% ).

(2) Incentive and the subsidy from the government

The government is offering certain percentage as subsidy on the cost of your solar power system. For example if your solar roof costs you 1 lac and the government subsidy is 30%, then your effective cost of the solar roof is Rs. 1,00,000 - 30,000 = Rs. 70,000, making it an attractive energy option for the entrepreneurs.

(3) Free source of energy

India is also a country which experiences frequent and long power cuts. The cheap and the free energy source in this situation can prove to be a big relief for the entrepreneurs otherwise affecting the productivity and the quality of work. The free source of energy makes you energy independent and now you are no longer dependent on the grid electricity.

(4) Reduced operating cost

The solar is almost a onetime investment and after that you are not paying for the electricity bill thus reducing your monthly electricity expenses. You can use that saved amount to fund or support or meet your daily business operations which can further boost your business in the positive direction.

(5) Good return on investment & payback period:

If take into account the accelerated depreciation, government incentives offered, your commercial solar (without battery backup) power system is bound to provide you around 15% annual return on your investment year on year which is quite attractive if I look into other investment opportunities in India.
The return on investment on the solar roof is more > 10%
Read: Why it is important to know the Internal Rate of Return (IRR) of your solar power system?

(6) Reliable, cheap & maintenance free system

The grid electricity is not as reliable as the sun. It is almost constant source of energy and is going to power our planet for another 4-5 billion years. Can you find other energy source more reliable than solar energy?
No, you cannot (wind is there but requires very large space to operate and you cannot install at your rooftop to power your personalized needs)
Most of the businesses in India in the absence of the grid electricity, operate on diesel generators and the per unit cost of electricity in this case is somewhere between Rs. 14-Rs. 16 per unit. Moreover, the maintenance cost of diesel electricity is quite high.
Can you take out your profitability when your operating cost is so high?
The per unit cost of solar is somewhere Rs 5-6 per unit which is almost 1/3rd of the electricity cost when running on the diesel generators and it is almost a maintenance free system.

(7) You need very little or no maintenance of your solar power system

Another big benefit is that you need very little maintenance or no maintenance is required for the first 5 years of the system. The maintenance cost can be a huge dent in your pocket & can affect your business. Please understand this that you need money to buy the petrol (energy source) to run your car but your energy source (sunlight) is available at free of cost to run your solar power system and meet your electricity needs.

(8) A good hedge against the volatility and the inflation in the grid electricity prices

All of us know that the commercial electricity prices are soaring year on year & installing solar power can hedge you against the price volatility and the inflation. The soaring electricity bills along with the volatility in their prices can affect your business operations and its profitability. As sun light is available at free of cost, having no effect of volatility and the inflation, hedging your business against grid electricity prices.

(9) More customers acquisition & enhanced employee satisfaction

You are actually creating a more viable business model by incorporating solar into your business. Now, you are taking one step closer in preserving the environment, helping you to win and acquire more loyal customers. They tend to buy more of your products in the feeling of supporting a company which is concerned about the environment. Also, working for the environment conscious company is also a source of motivation for the employees and they contribute more, increasing the productivity of your company.

Conclusion:

Adopting and implementing the solar in the businesses is now becoming the need of the hour. Moreover, you are supporting the local economy by providing the more job opportunities in this field. The solar industry in the nascent stage in India and any support or the contribution from any side will help in growing and spreading solar energy adoption in the country. Because, ultimately it is not the benefits but the widespread adoption of the technology in the long run that will save the planet.
So become a smart entrepreneur, foresee the future, adopt and incorporate the solar technology in your business for the ultimate growth and the long term benefit of your enterprise.

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