Project Code 2014RT06

Technical Manual
for
Banks & FIs
on
Grid-Connected Rooftop Solar Power
Prepared for
Ministry of New and Renewable Energy,
Government of India
Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

The Energy and Resou rces Institu te 2015

Suggested format for citation

T E R I. 2015
Technical Manual for Banks & FIs on Grid -Connected Rooftop Solar Pow er
N ew Delhi: The Energy and Resources Institute.
[Project Report N o. 2014RT06]

For more information

Project Monitoring Cell
TERI Tel. 2468 2100 or 2468 2111
Darbari Seth Block E-mail pm c@teri.res.in
IH C Com plex, Lod hi Road Fax 2468 2144 or 2468 2145
N ew Delhi 110 003 Web w w w .ter i i n .org
Ind ia Ind ia +91 Delhi (0)11

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Contents
List of Figures ....................................................................................................................................... iv
List of Tables ......................................................................................................................................... v
How to use this manual ........................................................................................................................1
Context ....................................................................................................................................................2
Explaining grid-connected rooftop solar PV systems ......................................................................3
What is m eant by a grid -connected rooftop solar PV system ?.................................................3
What are the relevant qu ality stand ard s and benchm arks? .....................................................6
What are the gu id elines for d esigning a grid -connected rooftop solar PV system ? ...........10
What are the O&M asp ects of a grid -connected rooftop solar PV system ? ..........................12
Bu siness m od els ............................................................................................................................16
Central and State policies ...................................................................................................................17
On-going schemes and programs......................................................................................................18
Financial and economic analysis .......................................................................................................19
What is the stand ard p roject life of a grid -connected rooftop solar PV system ? .................19
What are the p roject lifecycle costs of a grid -connected rooftop solar PV system ? ............19
What is the typ ical p ayback p eriod for grid -connected rooftop solar PV p rojects? ............21
What are the risks involved in lend ing to a grid -connected rooftop solar PV p roject? ......22
Annexure 1: General project development process for grid-connected rooftop solar PV
projects in India ............................................................................................................................26
Annexure 2: List of State Nodal Agencies (SNAs) ..........................................................................28
Annexure 3: Frequently Asked Questions .......................................................................................29

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

List of Figures
Figu re 1: Break-u p of the 100 GW solar p ow er target set by the Governm ent of Ind ia for 2022 .............. 2

Figu re 2: Illu strative exam p le of PV m od u les as p art of a grid -connected rooftop solar PV system ....... 3

Figu re 3: A string solar PV inverter ............................................................................................................... 4

Figu re 4: From left-to-right, a bid irectional (net) m eter, an AC com biner box, and an LT p anel in a
grid -connected rooftop solar PV system ................................................................................................. 5

Figu re 5: General w orking schem atic d ep icting energy flow in a grid -connected rooftop solar PV
system .......................................................................................................................................................... 5

Figu re 6: Typ ical hou rly solar generation u nd er clear -sky cond itions ....................................................... 14

Figu re 7: Typ ical energy losses in a grid -connected rooftop solar PV system .......................................... 14
Figu re 8: Typ ical annu al energy generation trend over p roject life ............................................................ 15

Figu re 9: Illu strative PVSYST rep ort for norm alized energy generation for a PV system ...................... 16

iv
List of Tables
Table 1: Qu ality stand ard s and certifications for a grid -connected rooftop solar PV system ................... 6

Table 2: Com m only u sed softw are for PV system d esign ............................................................................ 12

Table 3: General assu m p tions for estim ating generation from crystalline silicon PV m od u les ............. 15
Table 4: Key featu res of CAPEX and PPA -based bu siness m od els............................................................. 16

Table 5: Direct and ind irect incentives offered by Governm ent of Ind ia ................................................... 17

Table 6: Typ ical Cap ital Cost breakd ow n for a grid -connected rooftop solar PV system ....................... 19
Table 7: General assu m p tions u sed in financial analysis of grid -connected rooftop solar PV p rojects . 20

Table 8: Brief analysis of technology and p roject-related risks ................................................................... 25

v
How to use this manual
This m anual has been prepared w ith the intent to sensitize banks and FIs to the relevant
technology and project-related aspects of grid -connected rooftop solar pow er projects in
ord er to provid e guidance in the evaluation of project loan applications. The m anual
d iscusses, am ong other topics, the d ifferent components of a grid -connected rooftop solar
pow er system and its w orking; the relevant quality stand ard s and benchm arks for projects;
an overview of the fiscal and financial incentives for m arket grow th; the typical energy
generation patterns and perform ance m onitoring norm s; recom m ended system d esign
guid elines; the prevailing business m od els; and the salient technology - and project-related
risks for lend ers.

1
Context
In January 2010, the Governm ent of India launched the Jaw aharlal N ehru N at ional Solar
Mission (JN N SM) as part of its N ational Action Plan on Clim ate Change (N APCC) and set
out a target to achieve 20 GW of grid -connected solar pow er by 2022. This target w as revised
to 100 GW by 2022 in late 2014. Of this, 40 GW has been targeted through grid -connected
rooftop solar PV (full 100 GW break-up show n in Figure 1). The market potential of rooftop
solar pow er in India has been estim ated at 124 GW in a recent stud y by TERI 1. While 40 GW
is a highly am bitious target, it is attainable through concerted efforts on the part of the
d iverse stakeholder segm ents involved , viz. banks, system integrators, project d evelopers,
state agencies, d istribution utilities, etc. H ow ever, a host of challenges exist in the w ay of
reaching unrestrained participation from these stakeholders, and it is essential to ad d ress
their individ ual and shared concerns in ord er to achieve the goal. Participation of the
banking sector is absolutely key to forw ard progress. To enable that, tw o actions are
essential: (i) the concerns of banks in lend ing to grid -connected rooftop solar PV projects
need to be ad d ressed , and (ii) the banks m ust them selves be sensitized to the technology and
other project-related subjects. Issues expressed by banks particularly includ e lack of clarity
and und erstand ing of the system as w ell as the associated risks. This m anual is d esigned as
an inform ative guid e for banks & FIs to im part a w orking know led ge of grid -connected
rooftop solar PV systems and the associated project risks, in ord er to aid the banks in the
evaluation of loan applications for such projects. This m anual includ es a general d escription
of the system , its com ponents, its w orking, supporting policy fram ew ork, on -going
governm ent schem es & program s, approaches to estim ate the pow er generation and the
various cash flow s, and associated risks.

Figure 1: Break-up of the 100 GW solar power target set by the Government of I ndia for 2022

1 Reaching the sun with rooftop solar, TERI, 2015

2
Explaining grid-connected rooftop solar PV systems
What is meant by a grid -connected rooftop solar PV system ?
A solar photovoltaic (PV) system is a renew able energy pow er generation technology that
uses photovoltaic m odules to generate electricity d irectly from solar rad iation, using a
phenom enon called the photovoltaic effect. The electricity generated can be stored , used
d irectly, or fed back into grid . Solar PV is a reliable and clean source of electricity that can
suit a w id e range of pow er generation applications for resid ential, ind ustrial, agricultural,
etc. consum ers. Som e com m on applications includ e solar generation for captive
consum ption, pow er sale and savings in electricity costs (by red ucing use of d iesel -generator
sets or d raw al from distribution utility). The technology has seen significant success for
pow er generation in recent years across the w orld, such as USA, Germ any, Japan, China, etc.
A grid -connected rooftop solar PV system refers to a solar PV system that is located on the
roof of a build ing and is connected to the local distribution grid . It is a form of d istributed
pow er generation . The general w orking of the system can be sum m arized below .
A grid -connected rooftop solar PV system includ es d ifferent com ponents that are selected
d epend ing on the system type, site location and application. In the Indian context, system
com ponents generally com prise of the follow ing com ponents: PV mod ules, m ounting
structures, inverter and BOS (m eters, junction box, cables, etc.). Batteries and tracking
m echanisms are usually not seen in grid -connected rooftop solar PV system s in Ind ia,
m ostly because of the high costs of these com ponents.
The m ajor com ponents of a solar PV system are:
PV Modules The PV m od ules
are the d evices that actually
convert solar energy to electricity.
PV m od ules are m ad e from PV
cells, w hich are m ost com m only
m anufactured u sing silicon; other
m aterials used includ e cad m ium
tellurid e (Cd Te), copper ind ium
gallium selenid e/ sulfide (CIGS).
Generally, silicon-based solar cells
provid e higher efficiency (15% - Figure 2: I llustrative example of PV modules as
20%) but are relatively costly to part of a grid-connected rooftop solar PV system
m anufacture, w hereas thin film
cells are cheaper but less efficient (5% - 10%). Since d ifferent types of PV m od ules
have d ifferent characteristics (in term s of efficiency, cost, perform ance in low
irrad iation levels, d egrad ation rate), no single type is preferable for all projects. Good
quality PV m od ules generally have a useful life of 25 to 30 years, although the
perform ance steadily d egrad es by about 20% over life tim e. It is im portant to assess
the quality of PV m odules for use in projects. There exist a num ber of quality
stand ard s d eveloped by international and national organisations for the testing and
certification of PV m od ules and their perform ance. These are d escribed later in this
section. Figure 2 depicts m ulti-crystalline PV mod ules in a grid -connected rooftop
solar PV system .

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Inverter The inverter converts the DC pow er

prod uced by the PV mod ules into AC pow er.
The AC pow er is then either injected into the
grid or consum ed on -site. Inverters represent the
second -largest equipm ent cost in grid -connected
rooftop solar projects. For grid -connected
rooftop solar applications, inverters com e in
stand ard sizes ranging from a few hund red
w atts to a few hund red kilow atts, d epending on
system size. These inverters are usually string
inverters, w hich have sm aller capacities
(typically < 60 kW), as opposed to central
inverters, w hich have larger capacities (typically
Figure 3: A string solar PV
> 300 kW) and are generally used in MW-scale
inverter
solar PV projects. There are m any d ifferent types
of inverters in the m arket; selection of an inverter for a project d epend s o n a num ber
of factors, includ ing application (for instance, there are different inverters for PV
system s w ith and w ithout battery storage), size, cost, function, usage, etc. Som e
inverters also perform energy m onitoring functions. In the absence of quality
ind igenous inverters, the Indian m arket is d om inated by foreign inverter
m anufacturers. From the technology perspective, inverters have m atured to a large
d egree and opportunities of cost red uction through technology innovation are not
expected in the m arket. Top-of-the-line inverters offer efficiencies in the range of 95%
- 98%. Prod uct stand ard s for inverters are d iscussed later in this m anual. Figure 3
presents a sam ple string solar PV inverter.
Mounting structure The m ounting structure, or racking system , is the support
structure that hold s the PV panels. PV m od ules are generally m ounted on support
structures in ord er to more efficiently capture solar insolation, increase generation,
and have a stable structural support. Mounting structures can be either fixed or
tracking. Fixed tilt m ounting system s are sim pler, low -m aintenance and cheaper than
tracking systems. Due to these reasons, fixed tilt m ounting structures are the norm in
Ind ia. Mounting structure d esigns are highly specific to the site, and over tim e have
seen im provem ent in durability and red uction in costs. Cost red uction is m ostly
achieved through d esigns that use less material (m ostly steel). Mounting structures
for rooftop solar PV installations also require com pliance w ith regulations or
guid elines associated w ith the structural aspects of the roof, such as load -bearing
capacity, w ind loading, etc.
Balance of System Balance of system (BoS) consist of cables, sw itchboard s, junction
boxes, m eters, etc. Electricity m eters record the am ount of electricity consum ed
and / or prod uced (in kWh and kVAh) by a custom er w ithin a prem ises. In ad d ition
to the m etering of the net energy consum ption/ prod uction of a grid -connected
rooftop solar PV system , m ost regulations in Ind ia on m etering also stip ulate the
location of an energy meter for m easuring the generation of the PV array. Figure 4
d epicts a bid irectional (net) m eter, an AC com biner box and an LT panel for a grid -
connected rooftop solar PV system .

4
 Figure 4: From left-to-right, a bidirectional (net) meter, an AC combiner
box, and an LT panel in a grid-connected rooftop solar PV system

A schem atic of the general w orking of a net-

m etered grid -connected rooftop solar PV
system is d epicted in Figure 5. Grid -connected
rooftop solar PV system s are generally
characterized by:
Electricity generation in d aytim e
Low m aintenance requirem ent
Sim ple installation
Easy scalability
Robustness
H igh upfront investm ent Figure 5: General working schematic
depicting energy flow in a grid-connected
rooftop solar PV system

W H AT D OES GRI D -CON N ECTED ROOFTOP SOLAR PV OFFER?

Due to the nature of the technology, the electricity generated varies by day, season,
year and is also dependent on geographical location. Typically, a small 100 kWp
grid-connected rooftop solar PV system w ill:

Generate ~12,650 units of electricity in a month (average);

Consist of 400 600 PV panels occupying roughly 1000 m 2 (~ 25 m x 40 m)
roof space. A s thumb rule the area requirement for SPV system is 10 m 2/ kW;

Generate 1,51,800 kWh in a year and at 8 Rs/ kWh grid electricity cost, the
solar energy can potentially offset Rs 12,14,400 annually in utility bills;

Payback in 4-10 years considering a 15% subsidy on initial cost. H ow ever, the
system w ill last for over 20 years;
The solar output can be supplied to the grid if the SPV system produces in
excess of electricity requirement or w hen the building is vacant, thereby
earning revenue.

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

What are the relevant quality standard s and benchm arks?

Certification and stand ard ization of PV system com ponents is an on -going process in Ind ia.
It is also essential to the fast grow th of the sector, since w ithout prod uct certification and
stand ard ization, there w ill be a lack of confid ence in the technology and consequently, a
higher risk perception am ong project d ebt financiers in the m arket. In recognition of this, the
Governm ent of India has pushed the id entification and use of prod uct stand ard s
(international stand ard s, if Ind ian stand ard s not available); w ith respect to the d evelopm ent
of ind igenous stand ard s, there is an on -going effort involving the Governm ent of Ind ia, PTB
(Physikalisch-Technische Bund esanstalt Braunschw eig und Berlin), TERI, CPRI (Central
Pow er Research Institute), QCI (Quality Council of Ind ia) and others. There exist a num ber
of stand ard s, concerning prod uct quality, safety, perform ance, d urability, grid
interconnection, efficiency, harm onics, surge protection, pow er quality, etc. Since BIS
stand ard s have not yet been developed for all PV system com ponents, other certifications
are in use in the m arket w hen BIS certification is not available, such as those of IEC
(International Electrotechnical Com mission). Table 1 lists the d ifferent stand ard s and
prod uct certifications for various PV system com ponents (further standard s applicable as
d eveloped from tim e to tim e). It is recom m ended that the stand ard s m arked M andatory
be necessarily checked by the bank. One w ay to d o this could be d eveloping a checklist of
the stand ard s and com paring the quality stand ard s ad hered to by the equipm ent planned
for purchase by the project d eveloper / system integrator / system ow n er to the stand ards
recom m end ed by MN RE before sanction of the loan. It m ight be ad visable to ask loan
applicants to present m anufacturer certificates of the adherence of the equipm ent.
Table 1: Quality standards and certifications for a grid-connected rooftop solar PV system

Mandatory Advisory

Solar PV Modules/Panels
IEC 61215/ IS 14286 Design Qu alification and Typ e Ap p roval Yes -
for Crystalline Silicon Terrestrial
Photovoltaic (PV) Mod u les
IEC 61646/ IS 16077 Design Qu alification and Typ e Ap p roval Yes -
for Thin-Film Terrestrial Photovoltaic
(PV) Mod u les
IEC 62108 Design Qu alification and Typ e Ap p roval Yes -
for Concentrator Photovoltaic (CPV)
Mod u les and Assem blies
IEC 61701 Salt Mist Corrosion Testing of Yes -
(As ap p licable) Photovoltaic (PV) Mod u les
IEC 61853- Part 1/ IS Photovoltaic (PV) m od u le p erform ance Yes
16170 : Part 1 testing and energy rating : Irrad iance
and tem p eratu re p erform ance
m easu rem ents, and p ow er rating
IEC 62716 Photovoltaic (PV) Mod u les Am m onia Yes (As p er
(N H 3) Corrosion Testing site cond ition
like d airies,
toilets)

6
 Mandatory Advisory

IEC 61730-1,2 Photovoltaic (PV) Mod u le Safety Yes -

Qu alification Part 1: Requ irem ents for
Constru ction, Part 2: Requ irem ents for
Testing
IEC 62804 Photovoltaic (PV) m od u les - Test m ethod s Yes (PID- Yes (PID-
(Draft Sp ecifications) for the d etection of p otential-ind u ced resistant resistant
d egrad ation. IEC TS 62804-1: Part 1: m od u les m od u les
Crystalline silicon system system
voltage m ore voltage less
than 600 V than 600 V
DC) DC))
IEC 62759-1 Photovoltaic (PV) m od u les Yes -
Transp ortation testing, Part 1:
Transp ortation and ship p ing of m od u le
p ackage u nits
Solar PV St ring Inv ert ers/PCUs
IEC 62109-1, IEC Safety of p ow er converters for u se in Yes -
62109-2 p hotovoltaic p ow er system s - Part 1:
General requ irem ents, and Safety of
p ow er converters for u se in p hotovoltaic
p ow er system s - Part 2: Particu lar
requ irem ents for inverters. Safety
com p liance (Protection d egree IP 65 for
ou td oor m ou nting, IP 54 for ind oor
m ou nting)
IEC/ IS 61683 Photovoltaic System s Pow er Yes -
(For stand -alone cond itioners: Proced u re for Measu ring
system s) Efficiency (10%, 25%, 50%, 75% & 90-
100% Load ing Cond itions)
BS EN 50530 Overall efficiency of grid -connected Yes -
p hotovoltaic inverters:
(Will becom e IEC This Eu rop ean Stand ard p rovid es a
62891) p roced u re for the m easu rem ent of the
(For grid -interactive accu racy of the m axim u m p ow er p oint
system s) tracking (MPPT) of inverters, w hich are
u sed in grid -connected p hotovoltaic
system s. In that case the inver ter
energizes a low voltage grid of stable AC
voltage and constant frequ ency. Both the
static and d ynam ic MPPT efficiency is
consid ered .
IEC 62116/ UL 1741/ Utility-interconnected Photovoltaic Yes -
IEEE 1547 Inverters - Test Proced u re of Island ing
Prevention Measu res

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Mandatory Advisory

IEC 60255-27 Measu ring relays and p rotection Yes -

equ ip m ent - Part 27: Prod u ct safety
requ irem ents
IEC 60068-2 (1, 2, 14, Environm ental Testing of PV System Yes -
27, 30 & 64) Pow er Cond itioners and Inverters
a) IEC 60068-2-1:
Environm ental testing - Part 2-1: Tests -
Test A: Cold
b) IEC 60068-2-2:
Environm ental testing - Part 2-2: Tests -
Test B: Dry heat
c) IEC 60068-2-14:
Environm ental testing - Part 2-14: Tests -
Test N : Change of tem p eratu re
d ) IEC 60068-2-27:
Environm ental testing - Part 2-27: Tests -
Test Ea and gu id ance: Shock
e) IEC 60068-2-30:
Environm ental testing - Part 2-30: Tests -
Test Db: Dam p heat, cyclic (12 h + 12 h
cycle)
f) IEC 60068-2-64:
Environm ental testing - Part 2-64: Tests -
Test Fh: Vibration, broad band rand om
and gu id ance
IEC 61000 Electrom agnetic Interference (EMI), and Yes -
(As ap p licable) Electrom agnetic Com p atibility (EMC)
testing of PV Inverters (as ap p licable)
Fuses
IS/ IEC 60947 (Part 1, 2 General safety requ irem ents for Yes -
& 3), EN 50521 connectors, sw itches, circu it breakers
(AC/ DC):
a) Low -voltage Sw itchgear and Control-
gear, Part 1: General ru les
b) Low -Voltage Sw itchgear and Control-
gear, Part 2: Circu it Breakers
c) Low -voltage sw itchgear and Control-
gear, Part 3: Sw itches, d isconnectors,
sw itch-d isconnectors and fu se-
com bination u nits
d ) EN 50521: Connectors for p hotovoltaic
system s Safety requ irem ents and tests
IEC 60269-6 Low -voltage fu ses - Part 6: Yes -
Su p p lem entary requ irem ents for fu se-
links for the p rotection of solar

8
 Mandatory Advisory

p hotovoltaic energy system s

Surge Arrest ors

IEC 61643-11:2011 / IS Low -voltage su rge p rotection d evices Yes -
15086-5 (SPD) Part 11: Su rge p rotective d evices
connected to low -voltage p ow er system s
Requ irem ents and test m ethod s
Cables
IEC 60227 / IS 694, General test and m easu ring m ethod for Yes -
IEC 60502 / IS 1554 PVC (Polyvinyl chlorid e) insu lated cables
(Part 1 & 2) (for w orking voltages u p to and inclu d ing
1100 V, and UV resistant for ou td oor
installation)
BS EN 50618 Electric cables for p hotovoltaic system s Yes -
(BT(DE/ N OT)258), m ainly for DC cables

Eart hing /Light ning

IEC 62561 Series IEC 62561-1 Yes -
(Chem ical earthing) Lightning p rotection system com p onents
(LPSC) - Part 1: Requ irem ents for
connection com p onents
IEC 62561-2
Lightning p rotection system com p onents
(LPSC) - Part 2: Requ irem ents for
cond u ctors and earth electrod es
IEC 62561-7
Lightning p rotection system com p onents
(LPSC) - Part 7: Requ irem ents for earthing
enhancing com p ou nd s
Junct ion Boxes
IEC 60529 Ju nction boxes and solar p anel term inal Yes -
boxes shall be of the therm o p lastic typ e
w ith IP 65 p rotection for ou td oor u se, and
IP 54 p rotection for ind oor u se
Energy Met er
IS 16444 or as sp ecified a.c. Static d irect connected w att-hou r Yes -
by the DISCOMs Sm art Meter Class 1 and 2 Sp ecification
(w ith Im p ort & Exp ort/ N et energy
m easu rem ents)
Solar PV Roof Mount ing St ruct ure
IS 2062 / IS 4759 Material for the stru ctu re m ou nting

N ote: Equivalent stand ard s m ay be used for d ifferent com ponents of the system s. In case of
clarification, the follow ing organizations/ agencies m ay be contacted :
Ministry of N ew and Renew able Energy (MN RE)

9
Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

N ational Institute of Solar Energy (N ISE)

The Energy and Resources Institute (TERI)
TUV Rheinland
UL

Technical Guid elines and Best Practices

Solar PV Roof Mount ing St ruct ure
Alum inum fram es w ill be avoid ed for installations in coastal areas.
Solar Panels
Plants installed in high dust geographies like Rajasthan and Gujarat m ust have the
solar panels tested w ith relevant d ust stand ard s (Applicable stan dard w ould be IEC
60068-2-68).
Fuse:
The fuse shall have DIN rail m ountable fuse holders and shall be housed in
therm oplastic IP 65 enclosures w ith transparent covers.
Cables:
For the DC cabling, XLPE or, XLPO insulated and sheathed , UV-stabilized single
core flexible copper cables shall be used ; Multi-core cables shall not be used .
For the AC cabling, PVC or, XLPE insulated and PVC sheathed single or, multi-core
flexible copper cables shall be used ; Outd oor AC cables shall have a UV-stabilized
outer sheath.
The total voltage d rop on the cable segm ents from the solar PV m od ules to the solar
grid inverter shall not exceed 2.0%
The total voltage d rop on the cable segm ents from the solar grid inverter to the
build ing d istribution board shall not exceed 2.0%
The DC cables from the SPV m od ule array shall run through a UV-stabilized PVC
cond uit pipe of ad equate d iam eter w ith a m inim um w all thickness of 1.5mm .
Cables and w ires used for the interconnection of solar PV m od ules shall be provid ed
w ith solar PV connectors (MC4) and couplers.
All cables and cond uit pipes shall be clam ped to the rooftop, w alls and ceilings w ith
therm o-plastic clam ps at intervals not exceed ing 50 cm ; the m inim um DC cable size
shall be 4.0 m m 2 copper; the m inim um AC cable size shall be 4.0 mm 2 copper. In
three phase systems, the size of the neutral w ire size shall be equal to the size of the
phase w ires.

What are the gu id elines for d esigning a grid -connected rooftop solar PV
system ?
The d esign of a PV plant aim s at achieving the low est possible levelized cost of electricity. It
com prises id entification of load , sizing of system , and selection of suitable
technologies/ prod ucts. This in turn requires assessm ent of costs, pow er output, benefits /
d raw backs of technology type, quality, spectral response, perform ance at low rad iation
levels, nom inal pow er tolerance levels, d egrad ation rate and w arranty term s.

10
Selection of inverter includ es assessment of com patibility w ith mod ule technology,
com pliance w ith grid cod e and other applicable regulations, inverter-based layout,
reliability, system availability, serviceability, m od ularity, telem etry requirem ents, inverter
locations, quality and cost.
In d esigning the site layout, the follow ing aspects are im portant:
Choosing row spacing to red uce inter-row shad ing and associated shading losses
Choosing the layout to m inimise cable runs a nd associated electrical losses
Allow ing sufficient d istance betw een row s to allow access for m aintenance purposes
Choosing a tilt angle that optim ises the annual energy yield accord ing to the latitud e
of the site and the annual d istribution of solar resource
Orientating the m od ules to face a direction that yield s the m axim um annua l revenue
from pow er prod uction; as Ind ia is in the northern hem isphere, the m od ules w ill
usually be south-facing, although som etim es they are kept facing w est in ord er to
sync generation w ith evening peak d em and
The electrical d esign of a PV project can be split into the DC and AC system s. The DC
system com prises the follow ing:
Array(s) of PV m od ules
DC cabling (m od ule, string and m ain cable)
DC connectors (plugs and sockets)
Junction boxes/ com biners
Disconnects/ sw itches
Protection d evices
Earthing

The AC system includ es:

Inverter
AC cabling
Sw itchgear
Transform ers (only for large size system s)
Substation (only for large size system s)
Earthing and surge protection
Autom atic d ata acquisition and m onitoring is an im portant com ponent of any grid -
connected rooftop solar project. It allow s comparison of actual generation w ith d esign
calculations d uring the system operation, and helps in identification and analysis of faults.
In the d esign phase, it is also im portant to give d ue consid eration to the surround ing
structures, for particular use in shad ing analysis.
For system d esign, one of the m ost com m only used softw are in Ind ia is the PVSYST, w hich
has becom e the ind ustry stand ard . Table 2 lists som e of the various PV system d esign
softw are prevalent in the sector, both in Ind ia and abroad .

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Table 2: Commonly used softw are for PV system design

Softw are D escription

D eveloped by: Canad ian governm ent, ind u stry,

acad em ia
RETScreen
Use: Evalu ation of energy p rod u ction, savings,
costs, em ission red u ctions, financial viability, risk
D eveloped by: Originally d evelop ed by N REL;
N ow licensed to H OMER Energy
H OMER Use: Design of d istribu ted energy system s,
inclu d ing technical and econom ic feasibility
analysis
D eveloped by: N REL (N ational Renew able
Energy Laboratory)
Use: Estim ation of energy p rod u ction, p eak and
N REL Solar Ad visor Mod el (SAM)
annu al system efficiency, LCOE, cap ital cost,
O&M costs
(u sed w ith TRN SYS)
Develop ed by: SolarGIS
SolarGIS p vPlanner Use: Site p rosp ecting, p refeasibility and p re-
d esign assessm ent, yield assessm ent
D eveloped by: F-Chart Softw are
PV F-Chart Use: Estim ation of energy generation, efficiency,
load , econom ics, life cycle costs, equ ip m ent costs
D eveloped by: PVSYST Photovoltaic Softw are
PVSYST
Use: Stu d y, sizing, sim u lation and d ata analysis
D eveloped by: LaPlace System s
SolarPro Use: Estim ation of p ow er p rod u ction, life cycle
analysis

With regard to PV system d esign, IEC has released a stand ard , the IEC 62548 PV arrays
Design requirem ents, w hich d oes not have an equivalent BIS stand ard at present. This
stand ard sets the d esign requirem ents for PV arrays, also includ ing DC array w iring,
electrical protection d evices, sw itching and earthing provisions.

What are the O&M aspects of a grid -connected rooftop solar PV system ?
Maintenance
Com pared to m ost other pow er generating technologies, solar PV system s hav e very low
m aintenance and servicing requirem ents. H ow ever, suitable m aintenance of a PV plant is
essential to optim ise energy yield and m axim ise the life of the system .
Sched uled m aintenance typically includ es:
Mod ule cleaning (d ust, bird d ropping and oth er d ebris can cause 5-10% d ecrease in
pow er generation)
Checking m od ule connection integrity
Checking junction / string com biner boxes
Therm ographic d etection of faults using Therm ographic cam era
Inverter servicing

12
 Inspecting mechanical integrity of m ounting structures
Vegetation control
Tightening cable connections that have loosened
Routine balance of plant servicing / inspection
Com m on unsched uled m aintenance requirem ents includ e:
Replacing blow n fuses
Repairing lightning d amage
Repairing equipm ent d am aged by intrud ers or d uring m od ule cleaning
Rectifying supervisory control and d ata acquisition (SCADA) faults
Repairing m ounting structure faults
Manufacturers and d evelopers generally have set practices for PV system m aintenance, w ith
m any offering m ulti-year AMCs (Annual Maintenance Contracts); AMCs are m and atory for
d evelopers and system integrators that are empanelled w ith MN RE as Channel Partners
und er the Ministrys grid -connected rooftop solar PV schem e. AMCs m and ate that the
contractor shall carry out the required m aintenance activity (includ ing replacem ent of
equipm ent) insid e the guarantee period of the AMC (usually 2-5 years), w ithout any cost to
the custom er.
A typical AMC for a grid -connected rooftop solar PV system w ould include:
Pre-d ecid ed m aintenance sched ule
Supply of spare parts as required
Replacem ent of d efective m od ules, inverters, etc.
Maintenance of log sheets for operational d etail
Com plaint logging and its attending
Insurance (m achine breakd ow n insurance, general insurance covering fire,
earthquake, etc.)

Perform ance m onitoring

An im portant aspect of a com plete grid -connected rooftop solar PV system is perform ance
m onitoring. This is essential in the successful operation and m aintenance of the system ,
since it provid es the relevant d ata for fault d etection and performance analysis. At
m inim um , the d ata includ es the d ata logged in inverters, sw itches and m eters. This is the
case in sm all-size PV system s.
In MW-scale PV systems, m ore sophisticated data acquisition system s (e.g. SCADA) ar e
required in ord er to procure and assim ilate d ata from a num ber of monitoring d evices,
includ ing w eather d ata m easurem ents. In these system s, the system operator/ ow ner (as per
business m od el) should m onitor the perform ance once a d ay, to ensure generation
ad herence to d esign estim ates, tim ely d etection of faults and deliver optim al perform ance.

System operation and perform ance

The actual generation is very closely related to the instantaneous solar irrad iance on the
surface of the solar m od ule, and follow s a bell curve as solar rad iation increases and
d ecreases from m orning to evening. An exam ple of a generation curve for a d ay und er clear -
sky cond itions is show n in Figure 6.
Energy generation of a solar PV system can be estim ated using the system size (kW p or
MWp), basic solar resource d ata, and system losses (Figure 7 d epicts typical PV system
energy losses). In the prelim inary project phase, generic estim ations can be m ad e using just

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Figure 6: Typical hourly solar generation under clear-sky conditions

these parameters. For more accurate calculations, softw are prod ucts are available that use
location-specific w eather d ata record s, PV m odule configuration (angle, orientation, etc.),
efficiency, losses, array d esign, cell tem peratures, inverter characteristics and so on. The
generic estim ations are useful in prelim inary project feasibility assessments, and are useful
since they provid e quick and easy estim ations. These estim ations provid e year -w ise
generation d ata in the project life; they cannot be used for m onthly/ d aily/ hourly generation
estim ates. H ow ever, these are d iscard ed for m ore accurate estim ations using specialized
softw are prod ucts in the d esign phase of the project. These d etailed estim ations require a lot
m ore d ata for obtaining the d esired generation estim ates, but they provid e very d etailed
generation estim ates as w ell, includ ing m onth-w ise, d ay-w ise and hour-w ise generation.
Energy generation calculation exam ples of both generic estim ations and softw are -based
sim ulations are provid ed in this section for reference by lend ers.

Figure 7: Typical energy losses in a grid-connected rooftop solar PV system

Generic estimation
Generic estim ations use a sm all number of param eters to give a rough approxim ation of the
generation perform ance of a PV system . These can be m ad e m ore realistic by incorporating
m ore param eters into the calculation. There are also d ifferent m eans of calculati on, using
d ifferent input param eters. Generally, the follow ing param eters are considered :

14
 System size (in kWp or MWp)
Deration (%):
Deration refers to various factors in PV system s w hich cause pow er losses, includ ing
inverter loss, slight m anufacturing inconsistencies in m od ules, electrical
im ped ance/ resistance, tem perature, d ust and other environm ental conditions, aging
and m aintenance issues.
Peak sun hours (hours/ day):
Peak sun hours refers to the average hours of full solar rad iation (1000 W/ m 2)
received in a d ay at a location; this am ounts to an equivalent of the am ount of solar
rad iation actually received over the year
N o. of effective sunshine d ays in year (d ays/ year):
This refers to the num ber of d ays in a year for a location that can be assum ed to h ave
full solar radiation (1000 W/ m 2) for the peak sun hours d uration
Mod ule d egrad ation rate (%):
PV m od ules suffer from d egrad ation, d ue to a variety of reasons, over the prod uct
life, w hich causes the generation capacity per m od ule to d ecrease over tim e; this
d ecrease in generation is captured in an annual d egrad ation rate, usually about 0.2-
0.5%
These estim ates can also be used for project econom ic and financial analysis, such as
payback, NPV, etc. for the financial feasibility assessm ent of projects.
Table 3: General assumptions for estimating generation from crystalline silicon PV modules

Parameter Unit Value

System size kW 50
Degrad ation rate % 0.50%
Peak sun hours hrs/ d ay 5
N o. of sunshine d ays in year d ays/ yr 300
Deration % 20%
Project life years 25
A short calculation using the above param eters is illustrated below (Table 3 & Figure 8):
Such m ethod s of generic energy generation estim ation are typically used in project pre -
feasibility assessm ents to evaluate the rough en ergy generation, revenue, payback, NPV, etc.

Energy generation (@ 0.75% degradation per-year)

1,400
Degradation
Yearly generation (kWh/yr)

1,200
loss

1,000
800
600
400
200
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Year
Figure 8: Typical annual energy generation trend over project life

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Software-based generation estimation

There are a num ber of softw are prod ucts (listed in Table 2) available in the m arket that are
used for PV project planning and d esign. N early all of them includ e d etailed estim ations of
energy generation over the life cycle of the system , includ ing hourly, daily and m onthly
generation, using large am ounts of input d ata.
Figure 9 show s a typical PVSYST report show ing the estim ate of norm alized energy
generation (in kWh/ kW/ d ay) of a PV system for every m onth of a year. Such energy
generation estim ates are prod uced d uring the design phase of the project, after the initial
phases of feasibility assessm ent, site selection, etc. have been carried out.

Figure 9: I llustrative PV SYST report for normalized energy generation for a PV system

Bu siness m od els
There are prim arily tw o business m od els for grid -connected rooftop solar PV projects:
CAPEX and PPA-based . Both business m od els have their m erits and d em erits; choice of
business m od el for a particular project d epends upon a num ber of factors, such as roof
ow ner priorities, d esirable operating conditions, profitability, etc. Table 4 lists som e of the
key features of both business m od els.
Table 4: Key features of CAPEX and PPA-based business models

CAPEX PPA-based

Project ow ned by roof ow ner/ consu m er
Roof ow ner/ consu m er resp onsible for O&M of
system after initial 1-2 year p eriod
Cant be converted to OPEX m od el at a later d ate
Pow er to be u sed for cap tive consu m p tion;
su rp lu s p ow er can be sold to d istribu tion u tility
Project ow ned by p roject d evelop er/ su p p lier
Roof ow ner/ consu m er not resp onsible for O&M;
O&M is resp onsibility of p roject d evelop er
Can be converted into CAPEX at a p re-d ecid ed
d ate (op tion to bu y back)
Pow er can be sold to roof ow ner;
Pow er can be sold to d istribu tion u tility;
Pow er can be sold to third p arty**

*project developer is usually a Renewable Energy Service Company (RESCO)

16
**some state regulations do not permit this mode of operation; should be checked at the time of project
conception/planning

Central and State policies

In late 2014, the Governm ent of Ind ia expand ed the initial 20 GW target to 100 GW of grid -
connected solar capacity by 2022; com prising 40 GW through grid -connected rooftop solar
and 60 GW through ground m ounted installations. To achieve the planned ram p -up of solar
capacity from the existing 3 GW to 100 GW by 2022, m any opportunities for investm ent
have been created through a variety of schem es launched by the Governm ent. These
schem es includ e provisions to exped ite the existing m echan ism of project d evelopm ent, by
red ucing the am ount of clearances required and provid ing land to d evelopers on a plug -
and -play basis.
In 2011 by the am end ment in the N ational Tariff Policy 2006, an increase in Solar Renew able
Purchase Obligation (Solar RPO) com pliance has been prescribed from a m inim um of 0.25%
in 2012 to 3% in 2022. Und er the revised target, the solar RPO com pliance has increased to
10.5% by 2022 for all state utilities and other obligated entities. The central governm ent is
actively supporting the d evelopm ent of solar projects by d eveloping attractive schem es for
d evelopers and pow er consum ers installing solar PV projects. The incentives offered by the
central governm ent are segm ent specific and aim to attract investm ent by provid ing suitab le
policies. Various other direct and ind irect incentives currently offered by the governm ent to
prom ote solar energy are illustrated in Table 5.
Table 5: D irect and indirect incentives offered by Government of India

Policy Measure Beneficiary Brief D escription

100% foreign - 100% foreign investm ent as equ ity in solar p ow er

investm ent in equ ity p rojects is allow ed , w ith an aim to attract foreign
investors and d evelop ers and bu ild u p solar p ow er
generation cap acity.
10-year tax holid ay System Ow ner / Und er Section 80-IA of the Incom e Tax Act, 1961 the
Pow er Generator Central Governm ent p rovid es a 10-year tax holid ay,
in w hich the beneficiary has the freed om to choose a
10-year continu ou s p eriod in the first fifteen years of
the p roject life to avail the tax benefit. The p rojects are
taxed u sing the Minim u m Alternate Tax (MAT) rate,
w hich is significantly low er than the corp orate tax
rate.
Incom e tax benefits System Ow ner / Solar p ow er generation p rojects have the op tion of
throu gh accelerated Pow er Generator p rofiting from Accelerated Dep reciation benefit by the
d ep reciation Central Governm ent, as p er Section 32 of the Incom e
Tax Act, 1961. Com p anies can u se this to su bstantially
red u ce tax bu rd en in the first few years of the p roject ,
u p to 100% of the p roject cost (80% accelerated
d ep reciation and 20% ad d itional d ep reciation).
Concessional cu stom Project Develop er The Central Governm ent has m and ated concessions
d u ty on im p orts and exem p tions on sp ecific m aterials im p orted for
m anu factu re of solar p ow er generation p rod u cts as
w ell as for u se in solar p ow er generation p rojects.

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

Policy Measure Beneficiary Brief D escription

Central Financial System Ow ner / Both Central and State Governm ents frequ ently
Assistance (CFA) as a Pow er Generator p rovid e su bsid ies on cap ital costs of solar p ow er
cap ital su bsid y on (Resid ential / p rojects throu gh variou s schem es and p rogram m es.
solar PV p rojects Institu tional /
Social consu m er)

In ad d ition to the policy push by the Central Governm ent, a num ber of State Governm ents
have also com e out w ith p olicies and regulations concerning grid -connected rooftop solar
PV pow er. So far, 15 states have released relevant policies and 21 states have released
regulations on grid -connected rooftop solar PV pow er.

On-going schemes and programs

The Govt. of India h as provid ed a range of m easures for im plem enting rooftop solar PV
installations in the country for the successful im plem entation of the N ational Solar Mission.
1. Off-Grid & D ecentralized Solar Applications:
In continuation of "Off-grid & Decentralized Solar Applications" d uring the 12th
Period und er JN N SM, MN RE issued guid elines for im plementation of " Grid
Connected rooftop and Sm all Solar pow er plants program m e" in the year 2014. It is
being im plem ented by m ultiple agencies, comprising of SN As, SECI, and ot her
governm ent organizations such as PSUs/ State Departm ents/ Local
Governm ents/ Municipal Corporations/ N H B/ IREDA/ Metro Rail Corporations of
d ifferent States, etc. Und er the program m e, a grant of 30% of the project cost is
provid ed by MN RE as CFA. The schem e is for projects size in betw een 1kWp to 500
kWp.
2. Installation of Grid-connected Rooftop Solar PV pow er plants w ith aggregate 52
MW through Multi Government Agencies (MGAs) through N ational Clean Energy
Fund (N CEF):
The project size w ill range from 10 kW to 500 kW. For resid ential/ small office sector,
project size m ay also vary betw een 1 kW to 10 kW. The project w ill be im plem ented
by MN RE in Governm ent/ com m ercial/ Institutional/ resid ential build ings through
Multi Governm ental Agencies (MGAs). The MGAs w ould consist of Governm ent
Institutions, Public Sector Und ertaking (PSUs), DISCOMs, DMRC, Com m ercial
Banks, N ational H ousing Bank, Railw ays, Army, Financing Institutions/ Financial
Integrators etc. Central Financial Assistance w ould total to Rs. 143.20 cror es (USD 23
m illion) for the 52 MW of aggregate capacity ad d ition in various states across the
country.
3. Installation of Grid-connected Rooftop Solar PV Pow er plant w ith aggregate 54
MW capacity through State N odal Agencies (SN As) through N ational Clean
Energy Fund (N CEF):
The project size w ill range from 10 kW to 500 kW. For resid ential/ small office sector,
project size m ay also vary betw een 1 kW to 10 kW. The project w ill be im plem ented
by MN RE in Governm ent/ com m ercial/ Institutional/ resid ential build ing s through
State N od al Agencies (SN As) in every state and Union Territories (UTs) und er the
control of State Governm ents/ UT ad m inistration. Central Financial Assistance
w ould total to Rs. 149.85 crores (USD 24 m illion) for the 54 MW of aggregate capacity
ad d ition in various states across the country.

18
 4. Installation of Grid-connected Rooftop Solar PV Pow er plant w ith aggregate 73
MW capacity in Warehouses in various states across the country through N ational
Clean Energy Fund (N CEF):
The project size w ill range from 500 kW to 5 MW size. The projects w ill be
im plem ented in the w arehouses ow ned by various organizations like Warehousing
Corporation of Ind ia, Food Corporation of Ind ia, State Government Organizations
and som e private com panies w hich have huge vacant roof space and vacant land in/
around the w arehouses. SECI w ill be the nod al agency for MNRE for the
im plem entation of the schem e. Central Financial Assistance w ould total to Rs. 148.92
crores (USD 24.17 m illion) for the 73 MW of aggregate capacity ad dition in various
states across the country.

Financial and economic analysis

What is the stand ard project life of a grid -connected rooftop solar PV
system ?
PV m od ules generally have a prod uct life of about 25 years, w hich is w hy solar PV projects
are also generally consid ered to have a 25-year project life. CERC, in its renew able energy
tariff d eterm ination ord ers, also assum es a 25-year useful life in the calculations for solar PV
projects.

What are the project lifecycle costs of a grid -connected rooftop solar PV
system ?
Solar PV system s have a high upfront cost and low operational costs, d ue to there being no
fuel requirem ent or usage. For grid -connected rooftop solar PV system s, operational costs
are very low , as there is no need for battery replacem ent. Gene rally, operational costs for
grid -connected rooftop solar PV system s includ e general up -keep and m aintenance, inverter
replacem ent, and replacem ent of other BOS com ponents (m eters, junction box, cables, etc.).
Table 6: Typical Capital Cost breakdow n for a grid-connected rooftop solar PV system

PV system component %age of Capital Cost

PV m od u les 45-55%
Inverter 20-30%
Mou nting stru ctu re 15-20%
Other BOS (Ju nction box, cables, m eters, etc.) 5-10%

Table 6 show s the general breakup of the capital cost for a sm all-m ed ium sized grid -
connected rooftop solar PV project. The average capital cost for grid -connected rooftop solar
PV system s is ~ Rs. 80/ W p . With increase in system size, econom ies of scale may allow cost
red uction, d ow n to an average capital cost of Rs. 70-75/ W p . Generally, annual operational
costs are assum ed to be ~ 2% of the capital cost in m ost financial analyses.
Table 7 gives the general assum ptions used for the financial analysis of a grid -connected
rooftop solar PV system .

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Table 7: General assumptions used in financial analysis of grid -connected rooftop solar PV projects
Parameter
Installed cap acity
Op erating d ays d ays/ yr
Average Cap acity
Utilization Factor
(CUF)
Average Cap ital Cost
Equ ity investm ent
Debt investm ent
O&M exp enses
Escalation in O&M
exp enses
Mod u le ou tp u t
d egrad ation rate p er
year
Interest on loan term
Loan tenu re
Moratoriu m
Insu rance charges on
cost
Book d ep reciation rate
lim it
Dep reciation as p er IT
Act WDV
Accelerated
Dep reciation rate
WDV
Incom e Tax (regu lar)
Minim u m Alternate
Tax (MAT)
Tax H olid ay
Discou nt rate
Unit Value Comments
kW 1
365 Ind u stry norm
As p er MN RE d ata on solar PV p ow er p lant
% 20.5% energy generation for Phase-I of JN N SM
(available on MN RE w ebsite)
Rs./ kW 80,000 CERC gu id elines
Assu m p tion;
% 30% Also assu m ed in CERC (Term s and cond itions
for tariff d eterm ination from Renew able Energy
Sou rces) Regu lations, 2012
% 70% Assu m p tion
% 2% Typ ical
As p er CERC (Term s and cond itions for tariff
% 5.72% d eterm ination from Renew able Energy
Sou rces) Regu lations, 2012
Typ ical;
% 0.5%
May vary for d ifferent m anu factu rers
In CERC (Term s and cond itions for tariff
d eterm ination from Renew able Energy
% 12.3%
Sou rces) Regu lations, 2012, an interest rate of
12.3% is assu m ed
As p er CERC (Term s and cond itions for tariff
yrs 12 d eterm ination from Renew able Energy
Sou rces) Regu lations, 2012
0.5 years As p er CERC (Term s and
yrs 0-0.5 cond itions for tariff d eterm ination from
Renew able Energy Sou rces) Regu lations, 2012
% 0.1% Assu m p tion
% 90% Of book valu e
% 15% As p er Incom e Tax Act, 1961
As p er Incom e Tax Act, 1961 for Incom e Tax
% 80%
benefit
% 33.99%
% 20.01%
yrs 10 Acc. to Section 80-IA of Incom e Tax Act, 1961
In the CERC (Term s and cond itions for tariff
d eterm ination from Renew able Energy
Sou rces) Regu lations, 2012, the d iscou nt rate
% 10.81
equ ivalent to Post-Tax Weighted Average Cost
of Cap ital is u sed for the p u rp ose of levelized
tariff d eterm ination
20
Major lifecycle costs in a grid -connected rooftop solar PV project generally com prise the
follow ing:
1. InitialCapital Cost
o PV m od ules
o Inverter
o Mounting structure
o Other BOS (Junction box, cables, m eters, etc.)
In large-sized projects, there m ight be a need for purchase of a transformer as
w ell, w hich can ad d to the cost.
o Site assessm ent and d evelopm ent cost
For sm all-m ed ium sized projects, site assessm ent and d evelopm ent costs are
not significant, since the PV system only need s to be procured , placed and
fixed at the selected positions as per d esign. H ow ever, for large-sized
projects, som etim es site assessm ent and d evelopm ent can become a
significant cost com ponent, such as in the case w hen roof extension or other
civil w ork is desired .
o Licensing
In som e projects, there m ight be a need to procure licenses for start of
com m ercial operation that has a stand ard cost.
2. Scheduled replacement costs
o Inverter replacem ent
Solar inverters generally have a life of ~ 10 years; although som e high quality
prod ucts m ay continue to function w ell for a few m ore years. After this
period , inverters need to be replaced .
3. O&M cost
Annual O&M costs are generally assum ed to be ~ 2% of the initial capital cost, w ith
an escalation rate of ~ 5.72% as per CERC after the first year of operation.

What is the typical payback period for grid -connected rooftop solar PV
projects?
A grid -connected rooftop solar PV system generally has a payback period of 6-8 years.
H ow ever, this is highly d epend ent on the business m od el of the project. Since there is not a
lot of variation in the cost structure of w ell-designed and im plem ented grid -connected
rooftop solar PV projects, the revenue m od el becom es very im portant in ascertaining the
projects financial health. For instance, states in Ind ia have their ow n policies and
regulations for grid -connected rooftop solar PV projects, such as Feed -in Tariff (FiT) and N et
Metering. The FiT as w ell as the tariff structure can vary as d ecid ed by the State Electricity
Regulatory Com m ission (SERC), w hich can lead to big differences in the financial viability
of grid -connected rooftop solar PV projects in d ifferent states. Also, other business m od els
such as those based on Pow er Purchase Agreem ents (PPAs) or roof leasing can have w id ely
d ifferent m echanisms for d eterm ining the financial viability.
It m ay be noted that m ost grid -connected rooftop solar PV project financing in Ind ia relies
on the financial health of the balance sheet of the project d eveloper as this red uces the risk
exposure of the lend ing institutions.

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

What are the risks involved in lend ing to a grid -connected rooftop solar
PV project?
There are various risks involved in lend ing project d ebt to a grid -connected rooftop solar PV
project. These can vary d epend ing upon the size of the project, state, etc. In this section,
these risks have been briefly explained and possible risk mitigation options explored .

Technology risks
Since the grid -connected rooftop solar PV ind ustry and the solar PV pow er ind ustry itself, is
relatively new and yet to m ature, there is som e risk in the selection of PV system
com ponents. PV m od ules have a prod uct life of 25 years, but the d omestic ind ustry itself
d oes not have a lot of experience w ith 25-years of operation of PV system s, includ ing the
lifecycle perform ance of PV m od ules and other system com ponents w ith respect to m od ule
failu re, perform ance d egrad ation, etc. This contributes to som e uncertainty in the projects
financial viability over the project life. Also, like in any ind ustry, there are a num ber of low -
quality prod ucts available in the m arket, w hich m ay hold the attraction of initial cost
red uction opportunities. Use of such com ponents ad d s to the technology risk in a project.
Technology risks can be m itigated to a large extent w ith a few m easures early on in a project.
These can be:
Careful screening of project experience of d eveloper/ prom oter
Usage of high-quality system com ponents from w ell-established m anufacturers
Statem ent of generation guarantee by the project d eveloper
It m ay be helpful to d evelop a list of preferred suppliers for reference in evaluation of loan
applications.

Solar resource d ata risk

Availability of good -quality solar resource d ata is essential to the estim ation of energy
generation by the PV system . In Ind ia, solar resource d ata is not easily available. There have
been som e efforts tow ard the d evelop m ent of a nation -w id e netw ork of solar resource
m easurem ent stations, w ith the establishm ent of 115 solar resource m easurem ent stations
across the country, but site-specific solar resource d ata for rooftop solar projects is d ifficult
to get. Satellite-based solar resource d ata is available, but the accuracy of that d ata is not
very reliable, as per m arket experience. The only w ay to get reliable data is through on -site
m easurem ent, although full-year d ata is d ifficult to obtain this w ay.
In the absence of site-specific reliable solar resource d ata, it is generally best to cond uct
analyses of energy generation using d ata from d ifferent sources.

Pow er off-taker risk

Pow er off-taker risk in FiT- or N et Metering- based projects is one of the biggest concerns in
a num ber of states. This is caused by a num ber of reasons, such as:
Poor financial health of distribution utilities
Poor record of enforcement of regulations in some states
Delay in paym ents by distribution utilities
In projects based on PPAs also, the cred ibility of the pow er purchaser should be carefully
assessed before signing of the PPA. This includ es risk associated w ith roof ow ners; the cred it
profile of the roof ow ner should also be carefully assessed .

22
Poor financial health of d istribution utilities and poor enforcem ent of regulations put the
financial viability of the project at risk. Id eally, lend ers can avoid this risk by focussing
lend ing operations in states w ith a proven track record of paym ent by distribution utilities.
In PPA-based projects, apart from an in -d epth evaluation of the pow er purchasers
cred ibility, the specific term s and cond itions of the contract are also very im portant.

Policy & regulatory uncertainty

The Ind ian solar PV m arket has seen a num ber of d ifferent policies and schem es so far.
Despite the m ajor focus given to the solar PV pow er sector by the Governm ent of Ind ia,
there has been a notable lack of consistency in policy. H ow ever, this policy uncertainty is not
as strongly present in the grid -connected rooftop solar PV segm ent, w hich has seen
com paratively greater policy stability and consistency, apart from the difficulty in
d isbursem ent of capital subsid y on project cost till late last year d ue to shortage of fund s.
Currently, that issue stand s resolved and the term s for d isbursal of subsid y have been
clarified by MN RE.

Developer/ Prom oter risk

The grid -connected rooftop solar PV m arket in Ind ia is still in its nascent phase; so, there are
a large num ber of d evelopers and prom oters w ithout sufficient experience. Thus, it is o f
utm ost im portance to do an in -d epth evaluation of the technical and financial capability of
the d eveloper and / or prom oter of the project. Id eally, a d eveloper should have prior full
project d evelopm ent experience from start to finish for m ultiple project s as w ell as a team of
sufficient experienced manpow er to carry out the tasks of the project. The experience of the
d eveloper also m atters in obtaining the requisite clearances and approvals for the project to
m ove forw ard , w hich can otherw ise cause unnecessary d elays in project developm ent.

Theft and vand alism

Although not m uch observed in rooftop solar installations, m aybe due to the lim ited
num ber of systems installed till date, theft and vand alism are causes for concern for lend ers.
Currently, there is no stand ard facility in grid -connected rooftop solar PV installations that
guard s against this risk.

Low cred it profile of borrow ers

The grid -connected rooftop solar PV technology is a d ecentralised and d istributed pow er
generation technology w hich targets individ ual consum ers, w hether com m ercial/
ind ustrial/ resid ential/ institutional etc. By d efinition, the consum er base is characterized by
a large pool size w ith sm all investm ent sizes. In India, many of these consum ers have little
experience w ith long-term financing, w ith a m ajority having w orking capital relationships.
This poses an issue in lend ing long-tenure project d ebt to these borrow ers.
Also, it is found that a m ajority have insufficient free business cash flow s w ith w hich to
service their d ebt sched ule.
Lastly, inad equacy of KYC (Know Your Custom er) d etails of the potential borrow ers
increase the risk assessment of lenders.

Security coverage
Grid -connected rooftop solar PV system s by them selves have untested and possibly low
resale value in the m arket, w hich m akes it d ifficult to use the PV system as security for the

23
Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

project d ebt. There is also an uncertainty regard ing continued availability of the roof space
over the 25-year project life w ith no security interest. In ad dition, potential borrow ers m ay
have inad equate business assets for holding as collateral on the loan.
Table 8 illustrates some im portant characteristics of the risks d escribed here.

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Table 8: Brief analysis of technology and project-related risks

Probability of Magnitude of
Risks Possible Mitigation Measures
Occurrence Impact

Procu rem ent of equ ip m ent as p er qu ality stand ard s and sp ecifications
1. Technology risk Low Low
notified by MN RE (Technical Du e Diligence)
Verification of p erform ance p rojections w ith m u ltip le solar resou rce
2. Solar resou rce d ata risk Low Low d ata sou rces, inclu d ing site-sp ecific resou rce d ata, if available (Technical
Du e Diligence)
3. Pow er off-taker risk Med iu m H igh Carefu l screening of p ow er off-taker cred it history
4. Policy & regu latory u ncertainty Low Low Low reliance on p olicy and regu latory incentives for p roject viability
Carefu l screening of p roject d evelop er / p rom oter exp erience
5. Develop er / Prom oter risk Low Med iu m Evalu ation of p rop osed p roject (feasibility rep ort, ind ep end ent
consu ltant)
Debt servicing cond ition in term s of loan agreem ent in the event of
6. Theft and vand alism Low Low
theft or vand alism
7. Low cred it p rofile of borrow ers Med iu m Low Exp and KYC d atabase in com m ercial and ind u strial sectors
8. Secu rity Coverage Low Med iu m Determ ining alternate m eans of secu rity

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Annexure 1: General project development process for grid-
connected rooftop solar PV projects in India
The project d evelopm ent process for grid -connected rooftop solar PV projects in Ind ia d oes
not follow any established protocols/ proced ures, since the m arket is yet to m ature so not
enough project d evelopm ent has taken place, and there are a num ber of governm ent
schem es/ program s and im plem entation m od els w hich have d ifferent m od es of
im plem entation. H ow ever, there is a general set of stages that m ost project d evelopm ent
processes follow , w hich includ es (i) Project Planning/ Preparation, (ii) System Design, (iii)
Im plem entation, and (iv) Operation & Maintenance.
This set of steps has been illustrated to show the com m on aspects of grid -connected rooftop
solar PV project d evelopm ent in India. It is to be noted that the project d evelopm ent process
d escribed here is for the purpose of und erstanding only, and m ay differ from state -to-state.

26
27
Annexure 2: Web links of State N odal Agencies (SN As)
State / Union Territory Website

And hra Prad esh http :/ / ned cap .gov.in/ H om e.asp x

And am an & N icobar
http :/ / electricity.and .nic.in/
Island s
Aru nachal Prad esh http :/ / w w w .ap ed a.org.in/
Assam http :/ / w w w .assam renew able.org/
Bihar http :/ / bred a.in/ abou r_u s.htm l

Chhattisgarh http :/ / w w w .cred a.in/

Delhi http :/ / d elhi.gov.in/ w p s/ w cm / connect/ d oit_eerem / EEREM/ H om e/

Goa http :/ / ged a.goa.gov.in/
Gu jarat http :/ / ged a.gu jarat.gov.in/

H aryana http :/ / hared a.gov.in/

H im achal Prad esh http :/ / him u rja.nic.in/

http :/ / jaked a.nic.in/
Jam m u & Kashm ir
http :/ / lad akhenergy.org/
Jharkhand http :/ / w w w .jred a.com /

Karnataka http :/ / kred linfo.in/

Kerala http :/ / anert.gov.in/

Lakshad w eep Island s http :/ / w w w .lakp ow er.nic.in/
Mad hya Prad esh http :/ / w w w .m p nred .com / H om e/ Ind ex.asp x

Maharashtra http :/ / w w w .m ahau rja.com /

Manip u r http :/ / m anired a.com /

Meghalaya http :/ / m nred a.gov.in/
Mizoram http s:/ / zed a.m izoram .gov.in/

N agaland http :/ / w w w .nrengl.nic.in/

Od isha http :/ / w w w .ored aod isha.com /

Pu njab http :/ / p ed a.gov.in/ m ain/
Rajasthan http :/ / w w w .rrecl.com / Ind ex.asp x

Sikkim http :/ / sred a.gov.in/

Tam il N ad u http :/ / ted a.in/

Telangana http :/ / tg.ned cap .gov.in/
Trip u ra http :/ / tred a.nic.in/

Uttarakhand http :/ / u red a.u k.gov.in/

Uttar Prad esh http :/ / ned a.u p .nic.in/

West Bengal http :/ / w w w .w bred a.org/

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Annexure 3: Frequently Asked Questions
What is the rate of subsidy?
Accord ing to the latest notification by MN RE2, subsid y of 30% on Benchmark Capital Cost is
available for all consum ers (except for Com m ercial & Ind ustrial consum ers), includ ing the
follow ing consum er categories:

Resid ential All types of build ings

Institutional Schools, health institutions includ ing m edical colleges & hospitals,
ed ucational institutions (both private and public), R&D institutions, etc.

Governm ent Both Central & State Governm ents buildings covering all Governm ent
offices, Governm ent PSUs, all build ings ow ned by Gover nm ent d irectly or
by any Governm ent-ow ned societies, com panies, corporations or
organizations.
All Panchayati Raj build ings.
Governm ent organizations ow ned system s anyw here includ ing on private,
com m ercial and ind ustrial organizations w ill also be eligible.

Social Sector Com m unity centers, w elfare hom es, old age homes, orphanages, com m on
service centers, com m on w orkshops for artisans or craftsm en, facilities for
use of com m unity, any establishm ent for com m on use, etc.

It is to be noted that the subsid y w ill be ad m issible for the above categories even if the
pow er connection is classified und er ind ustrial or com m ercial category.
Private, com m ercial and ind ustrial buildings w ill not be covered und er this subsid y unless
the solar PV system is ow ned by a Governm ent organization.

What w ill be the process of subsidy; w ho w ill act as nodal agency for release of subsidy
and w hether any MOU has to be signed betw een the Bank and the N odal Agency?
MN REs inform ation notice id entifies the follow ing nod al agencies for subsidy
d isbursem ent:
State N od al Agencies (SN As), State Departm ents, SECI (Solar Energy Corporation of Ind ia),
IREDA (Ind ian Renew able Energy Development Authority), em panelled Governm ent
agencies, PSUs of Central and State Governm ent etc. and participating Banks.
There are m ultiple m echanism s for subsid y d isbursem ent that are currently operational.
These are d escribed below :

2MNRE Information Notice No. 5/34/2013-14/RT (web source: http://mnre.gov.in/file-

manager/UserFiles/CFA-Notice-Grid-Connected-Rooftop-19112015.pdf)

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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power

N odal Agency Beneficiary Remarks

Banks are also eligible to act as N od al Agency for

su bsid y d isbu rsem ent. This w ou ld requ ire
em p anelm ent of banks w ith MN RE for this task;
w ork is cu rrently u nd er w ay to facilitate this rou te.
MN RE w ill transfer su bsid y am ou nt for a p re-
Banks System ow ner
d eterm ined cap acity to the em p anelled bank, w hich
w ill d isbu rse the fu nd s fu rther. The m ethod of
su bsid y d isbu rsem ent m ay be d ecid ed by the bank;
the bank m ay w rite a letter to MN RE for fu rther
clarifications.
In case of RESCO bu siness m od el, SECI w ill transfer
su bsid y am ou nt d irectly to roof ow ner/ electricity
consu m er, w ho w ill fu rther transfer the am ou nt to
SECI System ow ner RESCO.
In case of EPC/ CAPEX bu siness m od el, SECI w ill
transfer su bsid y am ou nt d irectly to the system
ow ner, w ho is also the roof ow ner.
All eligible categories of su bsid y beneficiaries can
ap p ly for su bsid y at relevant SN A. The SN As are
SN As System ow ner
p rovid ed w ith fu nd s for su bsid y d isbu rsem ent by
MN RE on an annu al basis.

As of now , there is no requirem ent for a MoU to be signed betw een the Bank and the N od al
Agency.

What shall be the maximum loan limit for financing the rooftop PV equipment?
There is no m axim um loan limit specified by MN RE for grid -connected rooftop solar PV
projects. Generally, project loan w ill constitute 70% of project CAPEX. The Grid Connected
Rooftop and Sm all Solar Pow er Plants Program m e und er im plem entation by MN RE
specifies system sizes in the range of 1 kWp to 500 kWp on a single roof. Consid ering an
approxim ate cost of Rs. 75 / Wp for a 500 kWp project, the loan am ount for 70% of project
CAPEX could be as m uch as Rs. 2.8 crore.
Aggregator projects: In projects w here several roofs are aggregated to increase system size
(w hich gives opportunity to red uce per-Watt costs d ue to econom y of scale), aggregate
project sizes can reach 1 MWp or m ore. For exam ple, in the low -cost loan scheme recently
launched by IREDA 3 for grid -connected rooftop solar PV projects, aggregator -based projects
of m inim um 1 MWp size are eligible for loans covering 70-75% of project CAPEX. In the
sam e w ay as above, the loan am ount for a 1 MWp project m ay be as m uch as Rs. 5.6 crore.
For resid ential projects, system size generally d oes not exceed 10 kWp. Cons id ering an
approxim ate cost of Rs. 90 / Wp for a 10 kWp project, the loan am ount for 70% of project
CAPEX could be as m uch as Rs.6.3 lakhs.

3 Web source: http://mnre.gov.in/file-manager/UserFiles/IREDA-Solar-PV-Loan-Scheme.pdf

30
Whether the subsidy is upfront, if so, w hether loan is to be released after receiving
subsidy from the nodal agency
Subsid y d isbursal is generally d one in a phased m anner. As stated in the schem e d ocum ent
of the on-going Grid Connected and Sm all Solar Pow er Plants Program m e of MN RE 4,
release of fund s for subsid y d isbursem ent by financial institutions w ill follow the pattern
hereund er:
Up to 30% of the eligible CFA and service charges [shall be disbursed] at the time of sanction of the
proposal in the project/programme mode
Balance 70% [of the eligible CFA and service charges shall be disbursed] after successful
commissioning of the projects after sample verification on submission of requisite claims.

4Web source: http://mnre.gov.in/file-manager/UserFiles/Scheme-Grid-Connected-Rooftop-&-small-solar-

power-plants.pdf

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Concerned divisions / project related brief note to be included here