Punjab is gifted with a good amount of the solar radiations and hence offers an opportunity for the solar electricity to grow as an alternate source of energy.
The facts & figures of the state
The concept of break-even cost
It is the maximum cost which you invest in the residential solar, provides you the minimum risk-free return like return offered by the government bonds.
I got interested in determining the break-even cost of 2KW residential solar power system without battery backup in Punjab. I needed the following main variables to complete my task:
The average solar insolation in Punjab
Energy produced by the 2KW solar power system in a year
The grid charges in the state
The current average electricity charge per unit for the common domestic consumer in Punjab having 2KW and consuming approximately 300 units per month is Rs. 5.6 - 6/unit. The growth rate in per unit charge over the period of 10 years is 5.8% per year. In order to determine the break-even cost, I assumed that the per unit grid charges will grow at this rate in the future.
The minimum risk-free return
The 10-year Indian bond yield is 7%, means that your solar power system must give at least 7% return on your investment in order to make the system feasible. I mean to say that if the system actual cost is more, the break-even cost then the return offered is < 7% and it is not feasible
if the system cost is less than the break-even cost, the return offered by your system > 7% and the system is feasible. It can be written as follows:
Units generated by the system
The life of the system is 25 years and it will keep generating electricity units till 25 years although at the decreasing rate. The total units generated in the life time is around 85,977 units.
The break-even cost of the 2 KW system
The conclusion I made: