Case Studies
3kW plant - A 93.1% Bill Reduction on a 3.9-Year Payback with Government Subsidy. (Mr.Nanda)
This case study examines the installation of a 3kW rooftop solar power plant at a family residence in Egmore, Chennai. The homeowner, facing consistently high bi-monthly bills under TANGEDCO's LA-1A (Domestic) tariff, sought a solution to reduce costs. By leveraging the PMSurya Ghar: Muft Bijli Yojana subsidy, the project became an outstanding financial success.
The gross cost of the system was ₹1,90,000, but with a ₹78,000 subsidy, the net investment was reduced to just ₹1,12,000. The 3kW plant, which is strategically 80% exempt from network charges, slashed the bi-monthly electricity bill from ₹4,262 to just ₹294 (a 93.1% reduction).This high-yield investment provides a subsidy-enabled payback period of just 3.9 years.
Client:
A family in a multi-level home in Egmore, Chennai, with standard modern appliances. Tariff Category: TANGEDCO LA-1A (Domestic)
The Challenge:
The Domestic "Tariff Trap"Even with moderate-to-high consumption, TANGEDCO's telescopic billing structure heavily penalizes homeowners. The family's consumption pattern kept them in the expensive upper slabs.
Energy & Cost Profile Before Solar:
- Average Bi-monthly Consumption: 785 units (kWh)
- Annual Consumption: 4,710 units (kWh)
Breakdown of a Typical Bi-monthly Bill (785 units):
- Energy Charges: ₹4,630
- Total Average Bi-monthly Bill: ₹4,630
- Annual Electricity Cost: ₹27,780
The homeowner was paying ₹27,780 annually in a recurring expense with no return.
A 3kW on-grid solar system was installed under TANGEDCO's net-metering policy. This size was chosen to maximize the benefits of the central government subsidy and match the home's consumption
System Specifications:
- Plant Capacity: 3 kWp
- System Type: On-Grid (Net-Metered)
- Location: Egmore, Chennai
- Annual Generation (Year 1): 5136.5 units (kWh)
- Average Bi-monthly Generation: 856 units (kWh)
Financial Breakdown: Leveraging the Subsidy:
- Gross System Cost: ₹1,90,000
- Less: PM Surya Ghar Subsidy (for 3kW): - ₹78,000
- Net Investment by Homeowner: ₹1,12,000
The Strategic 3kW Advantage: 80% EXEMPT from Network Charges:
A key part of this project's success is its size. As per TANGEDCO's GISS policy, domestic solar systems up to 10kW are 80% exempt from paying network charges. By taking these charges, and the correct consideration is that they do apply to this 3kW system. This 80% exemption is a financial benefit, saving the owner an additional ₹1,603 per year (5,136.5 units @ 20% of ₹1.59/unit) that larger systems would have to pay.
With a net investment of only ₹1,12,000, the savings are high, leading to a much faster pay-back.
Results: A 93.1% Bill Reduction. The 856 units of bi-monthly generation almost perfectly offset the 785 units of consumption.
Before vs. After: A Bi-Monthly Cost Comparison
This table tracks the payback on the ₹1,12,000 net investment.
Assumptions:
- Net Investment: ₹1,12,000
- Grid Tariff Escalation: 5% per year (Conservative estimate)
- Solar Degradation: 0.8% per year (Standard panel efficiency loss)
Payback Period Analysis
At the beginning of Year 3, only ₹29,984 of the initial investment remains to be recovered.
- Payback Calculation: (₹29,984 / ₹31,623) × 12 months = 11 months
- Total Projected Payback Period: 3 Years and 11 Months1. Rapid Payback: The ₹78,000 subsidy slashed the payback period, turning the project into a short-term, high-return investment.
2. High ROI: The project delivers an annualized, inflation-proof return of 23.2% on the net investment.
3. Bill Elimination: A 93.1% reduction in the bi-monthly bill (from ₹4,262 to ₹294) provides immediate and significant cash flow relief.
4. Strategic Cost Avoidance: By staying at 3kW, the homeowner is exempt from 80% network charges, maximizing their savings.
5. Environmental Contribution: The 3kW plant is a responsible green asset.- Annual CO2 Reduction: 3kW × 650 kg CO2/Year = 1,950 kg (1.9 tons) of CO2 emissions avoided per year.
- Environmental Equivalent: This is equivalent to planting over 60 mature trees annually.
This 3kW installation is a perfect example of a subsidy-optimized solar project. The combination of the substantial government subsidy and the strategic sizing (to Minimize network charges)make this an incredibly smart financial decision. It converts a simple household utility into a high-performing asset, achieving full payback in just over 3.9 years and generating free electricity for decades to come.