13 Aug 2015

Paying for Rooftop Solar Panels

Installing solar panels on your terrace is costly, requiring a large upfront commitment of multiple lacs. Maybe one can get a loan from a bank, but why aren’t there other financing models?

For example, why can’t you rent panels and the inverter and other parts (dubbed “solar system” by the industry) by the month? In addition to the monthly rent, you’d pay for the installation, and for the eventual removal, but these fees would get waived if you kept the system for its life [1].

You could turn this model upside down. Instead of renting a solar system from a company, you could rent out the space on your terrace to the company. They’d pay you in the form of free electricity from the panels up to some limit, like ₹1000 per month, measured at grid prices. Beyond that limit, you’d pay the company for electricity consumed from their panels at the same rate you pay the grid. So it’s equivalent from your point of view, except when there’s a power cut, when you’d be happy to have the panels. Or maybe you’d get no free electricity; just a power backup when there’s a power cut.

There are more ambitious ideas, like having a parallel DC circuit all over your house, for low power devices like lights, charging and powering laptops, phones, low-power desktops, monitors, printers and so on. This would be powered by solar power, and would be more efficient than converting the DC from solar panels to AC, and then back to DC for powering your devices. AC power would be reserved only for high-power devices like microwaves and electric kettles and stoves.

No matter the technology, there are many situations in which financing options other than buying outright would help. For example, some people would not have lacs to invest in a solar system. And are not willing to take a loan, are not eligible for one. The kind of financing I’m proposing may also be cheaper than a bank loan.

People also be reluctant to invest lacs upfront because they may not trust the technology or the company selling them the system. Will it work properly? Will it really generate as much power as claimed? How long will it last? Am I being cheated? And so on. With a rental, the company takes more of the risk of the product not working, which is the right incentive. Or a buyer may may be worried that a big apartment will come up next door, blocking a lot of sunlight onto their panels, which will then become a waste.

There are many situations in which the kind of financing schemes I’m proposing will work better. Just as one can buy or rent an apartment, and neither option is universally better than the other, and both have their place, one should have many options to finance a solar system on their terrace, such as renting it, or renting out the space on their terrace to a solar company.

[1] This is important because these account for roughly half the total cost. It absolutely wouldn’t pay for someone to install panels on your terrace for a few months.

No comments:

Post a Comment