How to Calculate Your Electricity Bill Savings After Going Solar
The best financial and environmentally friendly choices you can make today are switching to solar power. Although most individuals are preoccupied with the cost of installing them, the truth is on how much you are going to save in the long run. It is not complex to know how much you will save on solar, the calculation is straightforward as long as you have the three variables: consumption, generation capacity and tariff structure. This is how to calculate how much money you will save and invest in the solar investment you are planning with certainty.
1. Be Aware of Your Present Electricity Usage
Use your electricity bills of the past 12 months. Identify two items, your mean monthly consumption (kilowatt-hours, kWh) as well as your unit tariff rate (₹/kWh). This provides you with a benchmark of what you are spending at the moment.
E.g. on an average of 500 kWh a month at ₹8/unit, then it will be ₹4,000 INR a month or ₹48,000 INR a year. This number is the amount of money you spend on electricity per year without solar; this is the baseline on which your savings will be compared to.
Also indicate whether your utility firm has a slab rate (with increased usage implies increased unit costs). A solar will decrease your reliance on the grid which may keep you in a lesser tariff slab and save further.
2. Calculate Your Photovoltaic Energy
The size of your solar system, location, and sunlight exposure determine the quantity of energy your solar system will produce. A 1 kW rooftop system generates 1,200-1,500 kWh annually in most cities of India.
As an illustration, a 5 kW system would produce some 6,000-7,500 units in a year. Multiply your projected annual generation by your tariff per unit to determine annual savings.
Example:
6,500 units × ₹8 = ₹52,000 saved per year.
It is important to note that weather and dust accretion may result in small performance changes but the quality of panels at high performance remain at over 80 percent after 20 years.
3. Include System Size, Cost, and Subsidy
System size is determined by the extent of the amount of your bill you wish to cover. On average 100-120 units per month of sunlight in the average conditions are approximately 1 kW. A 4-5 kW system will suffice to counter a bill of 500 units.
Residential solar installations in India currently cost ₹55,000-₹70,000 per kW (including panels, inverter and structure).
Government subsidies on PM Surya Ghar: Muft Bijli Yojana and other state subsidies may allow this cost to fall by 20 to 40 percent, particularly on small rooftop systems to 3 kW.
When it is installed, your operating cost is virtually free, only cleaning and a check-up of the inverter every now and then is required.
4. Charge Net-Metering and Grid Credits
Under net-metering, an overproduction of electricity by your system is refunded to the grid as credits on your subsequent bill.
You may produce in summer or high-sunlight months more than you use, and you may practically pay as much as that service charge. During winter or monsoon, you charge your credits or pay less.
In the majority of the cities, the solar customers save 80-95 percent of their overall annual bill, which depends on the household use of the panel and the direction of the panel.
5. Determine Payback and Lifetime ROI
Your total investment/annual savings would be used to estimate your payback period.
Assuming a 5 kW system costs ₹3 lakh INR and you save ₹50,000 every year, then the payback period is about 6 years. With the 25 year life of solar panels, you may also have 19 years of free electricity after that.
That will be a saving of ₹9-10 lakh in the lifetime of the system - much higher than your start-up expense. Moreover, solar-powered houses tend to experience a 5-10 percent increase in house value, which makes it an upgrade of its assets as well.
Conclusion
Going green takes more than a green initiative; it is an economic action plan. After knowing how you are going to use it, what your generation capacity and tariff is, then it becomes easy to calculate how much you are going to save. The right-sized system, trusted installer and availability to net-metering ensure that your rooftop becomes a long-term source of income - the bills are lowered, property value is increased and centuries of energy independence is ensured.
