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 - 31-08-2014: The FAQs page has been updated. CERC Benchmark Cost and related details have been updated from 2013-14 figures to those of 2014-15.] 




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 are the links to the documents containing more details: and

The table below indicates CERC determined benchmark cost for Financial Year 2014-15.

CERC benchmark Cost for Solar PV for 2014-15


What would be the O & M cost?

Central Electricity Regulatory Commission (CERC) benchmark costs for O&M is Rs.12.3 lakhs/year/MW for 2014-15 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. 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.


3,300 thoughts on “Frequently Asked Questions on Solar Power

  1. Anand

    We r an EPC contractors based in vijayawada (AP) , we r having investors we need private PPA’s 1mw -3mw in Andhrapradesh , anyone having the PPA’s pls contact 8885777163

  2. Amit

    I am interested to give my land in haryana on lease gor solar projects. If interested pls contact 9466406786…

  3. Raghavendra

    I have multiple land in Karnataka n speciality in north Karnataka is most sunny in all the seasons .
    So it is more benefit to install solar power plant if any invester intrested you can reach me at this no. 7760613320

  4. Ankineedu.k

    Hai All Of You. Hope you are doing great! !!!
    This is Ankineedu From vijayawada.
    We want to unit rate 4 Rupees customers given multiples of 500KW need. If you have intrest ed invester. We are Heartly invite. Contact Details :

  5. mandeep

    Sir i m basically from hp and intrseted in roof top solar plant my roof area is 1500 sqf and free from any sunlight obstruction….please contact me at 9816024670

  6. Jitendra dhayal

    I am itrested for 1 mw plant 10 acer land avaible & 1 caror finaceial availeble how to stars all process plz tell me
    My contect number 9694902491,8824001234

    1. ALI

      Dear sir,

      Greetings to you,

      Thanks for posting your requirement on this website.
      We kindly request you to contact us for MW Solar Power Plant Project EPC with govt and Private PPA at All over India. For details kindly contact Mr ALI – +91 – 9833872117

  7. Basavaraj

    I want to set up solar power system but I don’t know knowledge about documents and procedure and dealer so please guide me my contact no. 7204630262 or 8904307033

  8. Sham Sharma

    We have 120acres land in haryana if anybody interested to install solar power project in my land. Then I can give land to him. Contact 8950550725

  9. VINOD

    Iam interested to know if a 3BHK 2100 sqft house power source to be converted to solar what will be the total cost for the setting up

    1. Rakesh

      We are Rambans Energy Systems We can help you in setting up solar power plant anywhere in India with lowest priced EPC and high quality MNRE approved equipments. We also arrange private as well as government PPA’s and investors for your project. Plz call me at +91-8527021151 for complete details. Thanks & Regards
      Rakesh Kumar Pandey

    1. Gurmeet Singh

      We can help you in setting up solar power plant anywhere in India with lowest priced EPC and high quality MNRE approved equipments. We also arrange private as well as government PPA’s and investors for your project. Plz call me at 9915500493 for complete details. Thanks.

  10. Ilesh Jadav


    We are planning to establish solar power plants in Karnataka and Rajasthan. The size of the plants will be minimum of 2 MW and maximum of 20 MW. We have enough fund as well as the technology to establish the project. (Note: We are planning to establish a fresh projects with our technology, so not interested to buy any running project)

    We like to know if anyone can arrange PPA (either private or government) with 15 months bank guarantee and the required land for the same. The PPA must be valid and the land must be title cleared. (You could arrange multiple PPA’s for 2 to 20 MW)

    The projects will be live within 12 months after finishing the documentation and other process.

    Please mail me the details on

    1. Gurmeet Singh

      We can arrange PPA and land for you provided the EPC is offered to us. Please let me know of your interest. Please call at 9915500493 for complete details.

    2. ALI

      Dear sir,

      Greetings to you,

      Thanks for posting your requirement on this website.
      We kindly request you to contact us for MW Solar Power Plant Project EPC with govt and Private PPA at All over India. For details kindly contact Mr ALI – +91 – 9833872117

  11. lavish

    Hi, I want solar system for my home of around 5kw in Jaipur Rajasthan.Can someone tell me the cost after deducting subsidy provided by govt.
    Contact me on 7665819243.

  12. shobha choudhary

    I have 21 bigga land near jodhpur,rajasthan. I want to set up a solar power plant. Somebody plz help in this regard. My contact no is 8268881875 / 9004404985

  13. Rishav Bhatia

    Dear sir, we are having 5 acre of land in Haryana state and I am interested in establishing the Solar plant on that land. I want to get full information of procedure to be followed for establishing the Solar plant. I also want to know the investment required for the different component such as Solar model, installation cost, maintaine cost etc and total investment required.
    I also want to know from where the arrangements of funds can be done for Solar plant establishment and what will be its procedure and norms.
    I want to know that where we can sell the generated electricity and at what price.
    Sir please tell that how much return and profit can be made.

    Warm regards
    Rishav Bhatia

  14. Solar Power India

    Most of the city’s existing solar projects are on single-family houses on Staten Island ,
    but townhouse owners in Brooklyn are getting on board, and owners of apartment buildings in the Bronx and Queens are also starting to consider ways to
    harness the sun’s power.

  15. NITISH Kumar Patel

    I wanted to start my own solar plates manufacturing company. Which machine required for that. And how can I extend my business. From where I get order for solar plate. Please guide me . As soon as possible my contact no is 8553396933
    Thanking you

  16. NITISH Kumar Patel

    I wanted to start my own solar plates manufacturing company. Which machine required for that. And how can I extend my business. From where I get order for solar plate. Please guide me .
    Thanking you

  17. Gaurav B

    we are the solar company and working in the solar roof-top, solar domestic, solar commercial and solar mega project installer.

    if have any query then ask
    mob. 9518762699

  18. bujji vutla

    we will set up roof top solar power plants in your industries,Schools,hospitals and house to reduce power tarrifs. if anybody required Please feel free to call me
    we are MNRE certified company.
    Bujji vutla

  19. Suhas Bapat

    I have one client having showrooms on different locations in Pune, and total connected load is 1475 Kwp from different locations.

    Can we sign up PPA with this mentioned client. we have operational plat in Maharashtra.


  20. Abhay mishra

    I have a lot of property in estearn up if land required in any project. Than this no.9889598116.7275767800.9794817116.

  21. nitin

    Hi,I am nitin.I have rope mfg plant.
    Useing power 60 hp plant.I am intresed to solar power in use maney cost for 60 hp.
    Con= 9892670211

  22. Gurmeet Singh

    Yes. We can guide you in setting up solar power plant anywhere in India. Please call us at 9915500493 for details. Thanks.

  23. Radhamma.n

    . I had 2 acres agricultural land and I want start solar power plant buisiness and ii want to know full details about starting the plant means capital,profit etc
    Can you guide me.
    . thanking you

  24. venkat

    Hi ,
    i have interest for solar power plant establish. can you give suggestion . we have own land in village(AP) .
    how vil get the funds .

    1. bujji vutla

      Hi Venkat Please give your details otherwise call me. We are solar providers in AP and Telangana.


    2. Gurmeet Singh

      Please call me at 9915500493 if you are interested in installing solar power plant on your land in AP or Telangana. We will also arrange PPA with the respective state power board or private clients(AA/AAA rated) for 20-25 years. We also work with many investors(Indian as well as foreign) who are keen to invest in solar power plants all over India. We also do the lowest priced and highly competitive EPC all over India. You may also mail your queries to

      1. Gurmeet Singh

        Please call me at 9915500493 or mail me at if you have signed PPA with the state government. We will arrange funding from our private investors at very low rates and will do the lowest priced EPC of India with MNRE approved equipments. Thanks.

        1. Digvijay Singh

          Hello sir plzz do contact me i m interested in solar power plant i ve land in my village if u can arrange funds .. we can do 50 % sharing . I can provide u land plzz do contact m on 9805555053, 7018819669.

    1. kartik singh

      Hi Gurmeet singh if i can arrange 3MW PPA and have own 15 acre land,what will be the initial amout in hand for execution of is possible 100% loan or finance for project

  25. Gurmeet Singh

    Now set up solar power plant at your factory, hospital, school, college, hotel, mill etc. without paying anything from your end if your monthly power consumption is 15000 units or above. You will purchase power from us at 20% or more discount. We will sign PPA with you for 5-15 years. O&M is our responsiblity for 5-15 years. After this we will handover the plant to you without any extra charges. Please call us at 9915500493 for complete details. Thanks.

    1. Aditya

      Gurmeet how does this whole thing works.i would like to know the details so that i can look for similar opportunities in this field.


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