Is setting up a solar power plant profitable in India?

we are talking about utility(for commercial purpose) based solar plants (MW scale plants).

It majorly depends on tariff( Rs/ kWh). Tariff is the price at which you will sell your solar electricity to the government. The Recent market rate is around Rs 4.43/ kWh. The solar market is very competitive now. Tariff prices in 2010, when solar projects started in Gujarat, Note: India were as high as Rs 12 to 16 Note: Construction cost was also very high during that time which has come down drastically in recent times). One plant has guaranteed life of 25 years.

A bit approximate breakup cost (of the most recent 20MW plant )will explain it better

Plant size : 20 MW, i.e. 20 x 10^6 Watts.

Total Expenditure :

1. Cost of land : 4.36crore. 109 acer(for this project around 4lac/acer)
2. Cost of EPC (Engineering, Procurement and Construction) : 100 crore (around 5 crore/ MW)
3. Other incidental costs : 10 crore (rough assumption)

So total investment = 4.36+100+10 = Approx 115 crore.

Suppose Tariff decided according to the agreement for this project was Rs 5.00 / kWh.

A bit of engineering calculation :

Avg no of sunshine hours = 6 hrs /day

No of units per day = {6(hrs) * 60(mins) * 60(secs) * 20 x 10^6 Joules} / 3600000

= 120000 kWh

Units produced in a year = 120000 * 365 =4380000 units per year

Income from selling the electricity = 4380000 * 5 =Rs 21,60,00,000 or 21.6 cr (i.e. rupees Twenty one crores, Sixty lacs per year)

Extra information : So Break Even time for the project stands at ( 115 cr / 21.9 cr) 6.5 years. We have not taken into consideration the interest and time value of money.

After 6.5 years all is profit.

With recent low tariff rates Break even can even reach as high as 10 years.

Hope it helps you, people.

Do comment if you have any doubts about it.