Frequently Asked Questions on Solar Power

Solar Power industry in India is gaining more and more prominence with each passing day. The domestic/off-grid industry is picking up speed too. Owing to the queries we are receiving regarding the various issues pertaining to Solar Power Plant setup, we thought it would be a great idea to put together a bunch of questions and answer the same. We shall keeping adding to the list as we keep receiving more queries. So, here are the most Frequently Asked Questions and our answers for the same. Do let us know in case you would like us to answer any more questions. Also, kindly point out any inaccuracies/mistakes that you may find here so that we can correct the same for the benefit of everyone. We have tried our best to provide the best and most accurate information. However, inputs or responses to questions from other industry experts are encouraged and extremely appreciated.

[Update - 27-09-2013: The FAQs page has been updated. More questions have been added owing to the increasing frequency of certain kinds of questions. Questions have also been categorized based on their relevance.] 




How much land is required to setup a 1MW solar power generation Unit?

The land required for a 1 MW power plant setup is around 4.5-5 acres for Crystalline technology and around 6.5-7.5 acres for Thin-Film technology. This is only a rough benchmark and may vary based on technology and efficiency of panels.


What is the life-time of a typical Solar Power plant?

The useful life of a typical Solar Power plant is considered to be 25 years. This is the duration for which long-term PPAs are signed and financial models are built. However, Solar Power plants can run beyond 25 years while producing a lower output. Many Solar Panel manufacturers guarantee an output of 90% at the end of 10 years and 80% at the end of 25 years.


What is the annual energy generated from a 1 MW Solar Power plant?

The usual benchmark for energy generated from a 1 MW Solar Power plant is considered as 1.5 Million units. This is only a benchmark and should not be considered as the actual output for a given location. The amount of actual energy generated from a Solar Power Plant in an year depends on both internal and external factors. External factors which are beyond the control of a Solar developer can include the following:

  • Number of sunny days
  • Solar Irradiation
  • Day Temperatures
  • Air Mass

The output also depends on the following internal factors all of which are within the control of a Solar Developer:

  • Plant Location
  • Usage of Solar Tracking systems
  • Quality of equipment used
  • Workmanship of the EPC contractor
  • O&M activities


What are the various modes under which we can setup a Solar Power plant?

The various modes under which a Solar Power plant can be setup depends on the specific requirement. All the following are valid modes and the costs for each kind of system varies based on various factors:

  • Off-Grid Captive Consumption for domestic premises
  • Off-Grid Captive Consumption for commercial premises
  • Grid Connected (Net Metered) Captive Consumption for domestic premises
  • Grid Connected (Net Metered) Captive Consumption for commercial premises
  • Sale of Power generated to local Distribution Company (DISCOM)
  • Sale of Power generated to 3rd Party consumer (Industry or Commercial entity)


What is the cost of setting up a Rooftop Solar Power plant for domestic or commercial use?

Rooftop Solar Power plants can be broadly categorized into Battery-based and Non-Battery based systems. The benchmark cost set by MNRE for the year 2013-14 for these systems are Rs.90-100 per W for Non-Battery based systems and Rs.170-210 per W for Battery-based systems. More details can be accessed on the following MNRE webpage:


What size Solar Power plant is required for domestic or commercial use?

Identifying the Solar Power plant size for your domestic or commercial premises depends on the following factors:

  • Wattage of appliances to be run on Solar
  • Monthly energy consumption from these appliances
  • Energy Backup or Days of Autonomy required
  • Roof space available for plant setup

Based on these factors, the power plant sizing can be accordingly done at your end.



Permissions and Bank Loans

What permissions/clearances are required to setup a Solar PV Plant?

A certain set of permissions need to be obtained and documents need to be submitted in order to setup a Solar PV plant. While these may vary from state-to-state, in order to get a Solar PV Project Accredited by AP State Load Dispatch Center (AP SLDC) for REC mechanism, the following are the statutory clearances and environmental clearances to be furnished:

    1. Industrial Clearance
    2. Land conversion (Agricultural to Non-Agricultural)
    3. Environmental Clearance Certificate from APPCB, Hyderabad
    4. Contract labour license from AP Labour Department
    5. Fire Safety certificate from AP Fire Department
    6. Latest tax receipt from the Municipal/Gram Panchayat for the factory land.
    7. Auditor compliance certificate regarding fossil fuel utilization
    8. Approval from Chief Electrical Inspector
    9. Clearance from Forest department

Also, all necessary approvals/agreements before start of Solar PV project construction are to be furnished as and when necessary. These include the following:

    1. Land purchase
    2. Power Evacuation arrangement permission letter from DISCOM
    3. Confirmation of Metering Arrangement and location
    4. ABT meter type, Manufacture, Model, Serial No. details for Energy Metering.
    5. Copy of PPA (important as Preferential PPA projects are not eligible for REC mechanism)
    6. Proposed Model and make of plant equipment
    7. Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE
    8. Details of Connectivity with DISCOM
    9. Connectivity Diagram and Single Line Diagram of Plant
    10. Details of pending court cases with APERC, Supreme Court of India, High Court of A.P. or any other courts
    11. Any other documents requested by AP SLDC

While these are the documents that AP SLDC requires for REC project accreditation, these are typically the clearances/documents required in general for a Solar PV project.


Can Solar Power developers avail loans from banks for Solar Power plant setup? What is the loan % and what criteria does a bank/lending institution look for?

There are 2 kinds of Financing mechanisms that are usually discussed – Recourse Financing and Non-Recourse Financing. Recourse Financing requires collaterals and other extensive guarantees from the Solar developer who wishes to avail loan. Non-Recourse Financing, on the other hand, does not require any additional collateral as the Asset or Power Plant itself is the collateral in this case. Recourse Financing is the prevalent mechanism in India currently owing to lack of confidence of banks in the Power and Solar Power sector. The typical Debt-Equity Ratio (Loan to Investment Ratio) for Solar Power plants is 70:30. And the typical collaterals required for a 70% project cost loan could be in the range of 40-60% project cost. This, however, varies from bank to bank as each bank has its own risk perception/mitigation strategy, exposure targets to various sectors and Non-Performing Asset (NPA) limits.



Setup Costs and Power Sale Tariff 

What would be the total project cost excluding the cost of land?

Total project cost per MW would be in the range of Rs.6.5 Crores-Rs.8 Crores depending on the kind of technology you are using, whether or not you are using tracking systems, the kind of EPC Contractor you choose for power plant system etc. CERC recently announced the benchmark tariff for setup of Solar PV and Thermal Plants in India. Here’s the link to the document containing more details:

The table below indicates CERC determined benchmark cost for Financial Year 2013-14.

CERC benchmark Cost Solar PV - 2013-14


What would be the O & M cost?

Central Electricity Regulatory Commission (CERC) benchmark costs for O&M is Rs.11.63 lakhs/year/MW for 2013-14 with a 5.72% increase every year. This varies from project to project based on the number of people you employ for maintenance, frequency of cleaning of panels, onsite-engineer availability etc.


What would be the per unit expected sale price?

This depends on the mode of sale of power and the consumer of power.

  • In the case of sale of power to DISCOM, the prevailing Average Pooled Power Purchase Cost (APPC) will be applicable.
  • In the case of sale of power to 3rd Party consumer, a mutually agreed price can be agreed upon and accordingly a PPA can be signed.

It is to be kept in mind that several additional charges such as Wheeling Charges, Distribution Charges, Open-Access Charges, Cross-Subsidy Charges are applicable in the case of sale of power to 3rd party. These charges vary from State-to-State and DISCOM-to-DISCOM and even based on voltage levels.



RECs and Carbon Credits (CERs)

Which kinds of Solar Power plants are eligible for REC benefits?

Solar Power Plants need to be Grid-Connected on order to avail REC benefits. Though there have been recommendations on multiple occasions that Off-Grid Solar Power plants be made eligible for RECs, the proposal is still under discussion. Solar Power plants setup under the following 3 modes are eligible for REC benefits:

  • Captive Power plants
  • Sale of power to Govt. at APPC
  • Sale of power to 3rd party at mutually agreed price

Captive Power Plants are eligible for RECs subject to the condition that Concessional/Promotional Transmission or Wheeling Tariffs and/or banking facility benefit are not availed. Also, Solar Power plants setup under Preferential Tariff schemes are not eligible for RECs. Check out more information on RECs on our REC page here –


Is there a minimum size for Solar Power plants to be eligible for RECs?

As per the Second Amendment of REC Principal Regulations – 2013, there is no lower limit for Solar Power plants to be eligible for RECs. Though it previously stated that 250 KW is the minimum size for Solar Power plants to be eligible for RECs, the same has been removed as part of the above stated amendment.


Can CDM benefits (Carbon Credits) be availed for a Solar Power plant?

Yes. REC Mechanism and CDM are mutually exclusive and hence a power developer can claim CDM benefits (Carbon Credits) also. However, it is to be noted that the current trading prices of Carbon Credits or Certified Emission Reductions (CERs) at the European ETS system is less than 0.7 Euro which are pretty low compared to the 15-20 Euro trading prices a few years back. At these prices, getting a Solar project registered under CDM mechanism does not make any sense as the payback for the expenses in the process itself takes several years. Unless the Solar Power Plant is of size 10 MW or more it does not make financial sense to go for Carbon Credits (CERs).



Benefits for Solar Power plants

What kind of Central/State benefits are available for Solar Power plant setup?

Solar plants can be categorized into 2 broad categories – Grid Connected and Off-Grid plants. The usual Govt. support available for an Off-Grid plant is a Capital Subsidy of 30% on the project cost upto a maximum size of 500 KW. This can be claimed by the Manufacturer/Supplier/EPC Contractor (should be an MNRE accredited supplier) on behalf of the customer. The list of MNRE accredited suppliers (all across India) can be downloaded from

Subsidy is not available for Grid Connected plants that engage in sale of power either to the local DISCOM or a 3rd party. Following are the benefits a Solar Power Developer involved in Sale of Power Generated can avail:

  • Accelerated Depreciation – Upto 90% of asset value with 80% depreciation allowed in the first year.
  • 10 years Tax Holiday – Tax holiday can be availed for 10 years during which time Minimum Alternate Tax is still applicable (19.9305%) which can be offset against tax payable later.
  • Other State specific exemptions which vary from state to state.


Can Accelerated Depreciation benefits be claimed by Solar Power Developers?

Yes. Accelerated Depreciation benefits can be claimed by Off-Grid and Grid-Connected Solar Power Developers in order to offset taxes on profits from their connected businesses. Typically, 90% depreciation is allowed with 80% allowed in the first year.


Can Capital Subsidy be claimed for a 1 MW Solar Power plant (or greater size)?

No. Capital Subsidy cannot be claimed for plants beyond 500 KW size. Also, capital subsidy is made available only to Off-Grid and Decentralized Solar Power applications and not Grid Connected Plants that are in the business of selling the generated power.


Is there any subsidy available for Solar Power plant setup?

Capital Subsidy of 30% is applicable only for captive power plants up to 100 KW. This is expected to be increased to 500 KW for FY 2103-14 but an official confirmation regarding the same is still awaited. Subsidy will not be applicable in case of sale of power.



Setting up Solar Power plant in Andhra Pradesh

We would like to setup a Solar power plant in Andhra Pradesh but we have not participated in AP solar bidding. What are the other options?

Since you have not participated in AP Solar Bidding, one other way would be the REC route. You can sell the generated power to APTRANSCO or third party consumer. Through this route, you sell power to APTRANSCO/third party and also claim RECs for the same. This way, you will be able to get a base tariff (APPC) from APTRANSCO and then additional revenue can be generated through sale of Solar RECs. However, it is to be kept in mind that the following additional benefits may be availed for a Solar PV Project commissioned before June 2014 subject to the condition that REC benefits are not availed (in case of Captive Generating Plants and Plants setup under Preferential Tariff basis):

  • Exemption from  Electricity Duty
  • Exemption of Wheeling Charges, Transmission Charges and Cross-subsidy Charges
  • Refund of VAT
  • Refund of Stamp Duty and Registration Charges for purchase of land

However, it has to be kept in mind that REC revenue is market driven and can fluctuate as both demand and supply are pretty low on Solar front right now. Kindly refer to our monthly newsletter – REChronicles ( – for more and up-to-date information on the REC market.

Download documents relevant to Andhra Pradesh Solar Policy here –




I have land and some company posted that they are looking for people having land and ready to invest about Rs.10 lakhs. Can I go ahead with this investment?

It is difficult to comment much without more information about the company. However, it is advised to check the company’s track record to understand the company’s previous projects and the revenues/returns from such projects. A couple of things that you might have already understood from the info on this FAQs page is that a typical good quality Solar PV Power plant required Rs.6.5-8 Crores for setup. In line with this, the investment of Rs.10 lakhs you have been asked to make comes to around 1.5% of total project cost which is not much. If your land also has certain value, that can be factored into your equity contribution to the project. While we am not sure about the promise made by the company to you in terms of returns, kindly make sure that your investment has been duly considered in project equity and the associated returns. Also, it is possible that there are several other investors such as you who might be investing in the project. You might ask the company details regarding the same. Following are a few more things you can ask the company to provide:

  • Is the entire project equity funded from investors such as you? If ‘Yes’, who are the other investors? If ‘No’, what is the debt portion, where is it coming from and what is the interest rate?
  • Where is the project going to be setup?
  • Who is the power sold to and at what price is it being sold?
  • What are the yearly estimated revenues and returns?
  • When would you as an investor start making money (important as payback period is reasonably high for Solar Projects)?

As an investor, you have every right to know the answers to these questions. Kindly evaluate all scenarios and clarify all you queries before making such an investment.


546 thoughts on “Frequently Asked Questions on Solar Power

    1. Muralidharan.V.

      Dear Sir ,
      With an efficient Single Axis tracking system you need around 16MW project.
      Any further details ,please send your email id and contact no.Please specify the location also, which bears an important role in power O/P to a considerable extent.


  1. Tarun Kumar

    I have completed my engineering in Electronics and communication stream & I would like to setup a solar power plant between 500KW-1MW in telangana region as i am having 5-10 Acres of land,the main advantage is the substation is much behind the land area . I have secured some information related this project but i want exact figures related the profits and losses of setting solar plant, Government Policies, Bank loan requirements as i am a student and father is an government employee of Indian army. Regarding off and on grid , How much money we need to spend to build a Plant . I need a suggestions and feedback’s.
    Thanks and regards ,
    Tarun kumar

  2. Ravi

    Hi all consultants here !

    Iam a builder basically from Telangana State, Nalgonda District, we have an 50 Acres of Land in my home town, in which we are planning to establish a Solar power plant.

    For which I need complete establishment Cost, Govt. Sabsidary, Life of the Plant, Revenue modules / profit modules by email.


    1. Muralidharan.V.

      NIce Mr.Ravi,

      Please send your cont ph no and email id so that we can have an initial discussion and then send you full details to have a clear picture of the project.

      Thanks and Regards ,

  3. vinay singh

    Sir I want to know about solar panel or how get a electricity without energy suplly .we are belongs to bihar in small village there is nothing to electric so pls give me a detail or cost of fixed up10 kw only not more than

  4. Balasubramanyam

    I am Balasubramanyam from Tirupati, intrested in setting up a 1MW solar power plant PV in Andhra pradesh near Nellore District can u please guide on Modalities and sequence of steps to be followed with the government bodies like NEDCAP ,MNRE etc. Please let me know on Subsidy details offering by Government .
    Your immediate response in this regard is highly appreciated


  5. venkatesh

    hi sir,
    i am venkatesh from andhra pradesh, intrested in setting up a solar power plant in andhraprsdesh can u give any details like appraching government and process.

    thank u.

  6. moh abid siddiqui

    hello sir

    i am having 100 acr lend non agriculture i am interested for solar power plant can you suggest me what is the cost of 10 MW plant and what is the scam of m.p govt

    please help me

    1. Muralidharan.V.

      Dear Sir ,
      Very glad to know that you are interested in Solar Power Investment.
      Please let us know your contact no and email id so that we can discuss in detail and clarify your doubts.
      Let us know the location of the land and the distance from the nearest substation.
      Thanks and Regards ,

  7. jayavardhan reddy

    we are having agriculture land 15acres ihad donated land for ap electricity board 75cents for substation capacity 33/11kv 500mv iam planning for solar power plant of 1mw ihad not prticipated in any bid or i dont know much about this can u guide me or recommend any one has a partner my land is in kadumur village midthur mandal kurnool district andhrapradesh

  8. Sri Aditya

    Hi, we own 50 acres of land in west godavari district and we are very much interested in installing a solar plant . Is it good to install it in this land or to acquire 100acres in anantapur district as claimed radiations are high in that area and the issue is that the land we own is not plain has small mountain like elevations. Is it possible to install in this land and if yes how many MW plant can be installed ?

    1. K Praveen Kumar

      Hello Mr. Aditya this is Praveen Kumar from Unistring Tech Solutions Pvt.Ltd.
      Please provide your contact details so we can discuss in detail or you can call me at 9642787572. My mail id

    2. Muralidharan.V.

      Dear SIr ,
      Please send your mob no and contact email id to the following and we can discuss in detail reg the project.
      Please let us know which village of W Godavari dist is your present land? We can see the irradiation in that area and think of alt land only if necessary.

      Regards ,

  9. krishna

    Dear pradeep,
    We have barren land in AP(newly formed state) sufficient for 1Mw.We have client who would like to avail power from us(we would get PPA from them).
    Can we setup the plant under Open access + REC (third party agreement now).


  10. Gurpreet

    I am thinking to setup small plant for manufacturing of solar equipments, can you plz guide me how to setup the project and other details as well.
    Kindly contact me on / +91 8800628177

  11. raghu


    im planning to setup a solar power plant for 500kw, i have my land of 4acres. could anyone me send me the project details in detail please.

    thanks in advance

  12. vamsi pavankumar reddy

    Hai…… Dis is vamsi i approched a cunsultent abt 5mv solar plant…. He said… 18%of module efficiency and 96%of inveter efficiency…. To instal a plant….frm de jurman technology….. He said 6500 units produced per day…. Is it true…. And pay back period will be in 6yrs….please tell me…. The truth…. Please contact me 9642668642 r (

    1. Pradeep (Post author)

      Hello Vamsi,

      Everything other than the 6500 units per day figure that you’ve been informed is true. No. of units produced per day are dependent on the quality of plant setup, the local atmospheric conditions (Solar Irradiation, Temperature etc.). On a safe side, you can assume 4500-5000 units of production per day. However, the actual energy output values have to be estimated for the specific data. Please check other parameters such as Loan Amount, Loan Interest Rate and Power Selling Tariff Rate i.e. PPA Rate in order to arrive at the payback period.

      Hope this helps.

  13. srikanth

    iam having 10 acre land which has no usage.and iam much intrested in setting up a 1mv solarpowerplant.
    and the matter is i cannot be able to invest anything.

    1. Krishna

      Greetings from solar pv power project consultant.

      Dear Srikanth,
      Pls furnish ur 10 acres land details and the proximity from substation.
      We are helping clients with land and not having investments to set up solar power plant.
      Give ur & mail Id with land details.. Certainly we will help you.

      Email :

  14. Kishore Kumar

    We have our own land and are interested in setting up 5 MW plant. Can somebody advise on the subsidies and bank loans? We are looking for a consultant who can help end-to-end till completion of the project.

    1. Tharun

      Dear sir
      Iam Tharun works for bosch solar energy .
      we will give end to end solution .
      there is no subsidy for mw plants.
      you can avail bank loan upto 70 %.

      please contact me for more information ,

      Tharun karra
      0 82979 60700

    2. Muralidharan.V.

      Dear Mr.Kishore Please let me know the location and size of land holding.Based on the location we can assure 19.25 lakhs units/MW/annum and can also arrange for 3rd party PPA. We can also arrange for finance if need be based on the financial background of the investors at a comfortable rate of interest , assuring a good ROI.

      Please call on 09445094041 or email to veeemdee!
      Regards ,

    3. Muralidharan.V.

      Please send your email /contact ph no so that we can discuss before sending other project details.
      We can do with assured power o/p guarantee , also 3rd party PPA also arrange for funding if necessary based on clients’
      Regards ,

  15. RAMAM R S

    Sir , is for selling to grid only.
    2.Whether A.P.Govt gives any subsidy if it is for selling to grid?
    3. Whether banks give loans without additional securities other than plant and machinery?
    4. Are there any such plants established in Navyandra pradesh?
    Kindly guide me.

  16. RAMAM R S

    Sir , is for selling to grid only.
    2.Whether A.P.Govt gives any subsidy if it is for selling to grid?
    3. Whether banks give loans without additional securities other than plant and machinery?
    4. Are there any such plants established in Navyandra pradesh?
    Kindly guide me.
    Ramam R S

  17. RAMAM R S

    I have 5 acres of land i Vizag district. I would like to set up 1MW solar power plant. Please guide me the right way.

  18. Vamsi Krishna

    Hi Consultants,

    I am planning to setup a 500 KW (phase-I) plant (solar or biogas) in TELANGANA state. Request to reach me out on my email with details of projects you have implemented, also leave your contact number & I will get back to you.

    1. Muralidharan.V.

      Please send your email /contact ph no so that we can discuss before sending other project details.
      Can do both bio and solar plant .

      Regards ,

  19. Ramesh babu S

    Dear sir,

    I had 5 Acres of land in my home town. I am a post graduate Engineer present working as engineer. My dream is to install the solar plant in my land. I Have doubts on these bellow.
    1. No particular proofs for that is my land, but since 30 years we have to use that land.
    2. How to get land documents
    3. how much cost to start the plant need. what is initial amount.
    4. How to get permission to cross the railway line.

    Please reply on my mail.
    My contact: 09493108508

    1. Anshuman

      Dear Sir,
      kindy share me your land location,like state name,village name, dist name.
      We are industrial consultant From maharashtra . Our focused product is solar power plant.we assist for solar power plant across the country.



    i need in detail about solar power plat from installation to selling please mail me if there is any document related to it

      1. naane

        hello tharun this is naane actually i have a plan to start solar power are a bosch employee, i just want to know about the setup cost and what are the requirements for this plant and i have lot of connections with govt of telangana and andhra pradesh, so if u wanna tie up with us u can just contact me on my num 9959844200.

  21. Ravivardhan Reddy

    Dear Sir,
    I have 7 Acres of land in Telangana and interested in Solar power plant. Ready to invest in it. Please suggest me on this.


    1. Muralidharan.V.

      NIce to see that you are interested in Solar Power plant as investment . You can go for a 1MW plant.Please let me know how much you can invest.You can get more details if we discuss.Please send an email with your cont mob / tel no.

      Regards ,

      09445094041 /

  22. g s choudhary

    Dear sir we have 50 acres own land on the road and near 132 kv gss far 100 meters.we want information about solar power plant ,please guide. i am from bikaner in rajasthan contact 09667567840,09461342425

  23. Murli

    For 500Kwp captive solar plant,is it economical to use 5x100kw inverter which gives 415v output or a single 500kw inverter whose output is 300v along with transformer to step it up to 415?


    Dear Sir,
    I am from maharashtra want to install solar power plant in 5 acres what is the cost of the project? How much can I get power for one day. contact me on 9421162021

    1. Tharun karra

      Dear harsha.

      Iam tharun works for Bosch solar energy.
      To whom you want to sell the power is important…

      Recently the up govt opened a state policy, the minimum capacity to participate in bid is 5 mw.

      For more information you can plzz contact.


  25. guruprasad

    Dear Sir,
    I am from Karnataka want to install solar power plant in 5 acres what is the cost of the project? How much can I get power for one day. contact me on 09343587680


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