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Best way to 'Go Solar'

Frequently Asked Question

Project Related
    • You can install solar panels on roof of any building including factory sheds. Solar energy generated from such projects can be consumed by the host building. Such projects are known as rooftop solar projects.
    • Roofs made of RCC / concrete / Galvanised Iron (GI) metal sheds are most suitable for building rooftop solar projects.
    • In some cases, installation is also possible on roof made of Mangalore Tiles. This will depend on the strength of the tiles. You need to work with specialized solar EPC contractors that have a demonstrated experience on working with such roofs.
    • The weight of the solar project is transferred to the underlying structures that support the GI sheet roof. The underlying structure of Truss & Purlins should have sufficient load bearing capacity to be able to withstand the weight of solar panels and structures. The same needs to be assessed by an expert before installation of solar panels.
    • Most structures supporting GI roofs at factories have sufficient load bearing capacity unless the same have been made with lower specification to save costs. Further, re-enforcement of structures is possible in most cases, though at an additional cost.
    • As a thumb rule, if an average adult can walk on the roof for maintenance, etc., you should be able to implement a rooftop solar solution.
    • Roofs made of Asbestos sheet are not suitable for rooftop solar power projects. This is because once the sheets age, they may rupture and need replacement. Replacement of such roofs will require dismantling of solar power project. This will require you to incur additional costs in removing the solar panels, structures, cabling, etc. and later on installation of the same.

    • During period of power cuts/ load shedding or if you do not have a regular electricity connection, your solar project has to be synchronized with alternate power source such as DG or UPS.
    • When the solar PV project is synchronized with DG set, it leads to lower consumption of diesel. However, the capacity and design of the solar project needs to consider your DG set capacity, number of DG sets and average load during load shedding, etc.
    • Further, fuel save controllers can be used to control solar project operating in synchronization with DG set. This will add to the project cost. It is recommended that the same is evaluated if you face significant hours of power cuts during the year or high number of hours of power cuts only during summer months.
    • Yes and No
    • China manufactures all quality of solar panels / modules. Solar industry classifies these as Tier 1, 2 or 3. Tier 1 solar panels have the highest quality and are priced in the range of USD 48 to 55 cents/ Wp (as on February 2016). Tier 2 solar panels will be available at slightly lower price and Tier 3 solar panels at very cheap price.
    • There is a significant difference in long term power generation capability of above qualities. You should prefer to use only Tier 1 quality of solar panels made in China. The compromise in quality may not be worth the savings in long run.
    • Made in China Tier 1 solar panels are usually of higher quality than most of the solar panels made by Indian manufacturers. Additionally these solar panels come with performance warranty from re-insurer. This means that if the solar panel manufacturer goes out of business over the next 25 years, reinsurance company will make good your losses owing to poor performance of the solar panels.
    • Yes please go ahead provided that you have done following due diligence in detail:
    • Credentials and capacity of the vendor solar EPC company - Claimed vs Actual
    • Make and specifications of the components to be used in the project -
      • Solar panel - make and capacity, degradation, PID, cell efficiency, warranty, re-insurance warranty, etc.
      • Inverter - String/ Central, make, MPPT, efficiency, after sale service support, market reputation, etc.
      • Structure - Material used, thickness, weight, protective coating, wind load bearing capacity, etc.
      • Cables - Specification, material, etc.
      • Workmanship
      • After sales service support - Promised vs Expected

    • Price competitiveness, taxes, etc.
    • We suggest that you engage a knowledgeable solar consultant that can advice you on these aspects. Though it may increase your project cost by a small amount, it will be worth the investment. The other alternative is that you can register with us and let exchange4solar assist you in choosing a right vendor, high quality and that too at a competitive price. There is no obligation to buy through solar suppliers registered on exchange4solar.com
    • exchange4solar will not charge any fee to you for its services related to solar EPC vendor and material selection.
    • We may charge a small fee on some transactions that involve arranging a bank loan for you. However, this is only for bank loans through some specific lenders. Some of the lenders will pay a nominal fee to exchange4solar for sourcing successful loan enquiries. In such cases, exchange4solar will not charge any fee to you.
    • Investment in solar projects is eligible for claiming 80% depreciation in the 1st year of its commissioning. This benefit is available under sec 80 IA of the income tax act.
    • Additionally you can claim 15% depreciation available in the 1st year of commissioning of plant and machinery.
    • The total available depreciation in 1st year is 80%+15% = 95% of the project cost.
    • Depending on applicable tax rate, investors can save their tax outgo. Thus investment in solar projects can provide an excellent tax saving tool for profitable companies and HNIs.
    • This is explained below with an illustration below:
    • Sample F.Y 2016-2017
      Company A Company B
      Profit before Depreciation and Tax 120 120
      Investment in solar during FY 16-17 0 70
      Depreciation available (existing plant & machinery) 20 20
      Accelerated depreciation available from solar investment 0 66.5
      Profit before Tax 100 33.5
      Tax payable @34% 34 11.39
      Profit after Tax (PAT) 66 22.11
      Tax Saved from solar investment 0 22.61
    • Both options have their own pros and cons. Selection of right options depends on your company and management. You can refer to following table to decide on the option best suited for you:
    • Parameter Buying rooftop solar project Buying solar power under PPA/ lease model
      Cost of generated solar power Lower (approx. 4/- pre unit Accelerated depreciation and tax benifit) Higher
      Investment Entire Project cost Small security deposit/Bank garantee
      Tax benifit Accelerated depreciation and Tax benifit available Might be available for larger size of 1MW or higher. Usually not available to user for smaller Projects.
      Technology risk and cost of maintenance and/or replacement To be born by user Borne by PPA provider/ Investor
      Ideal for 1. Profitble companies that can avail Accelerated Deperciation (AD) benifit 1. Companies do not want to avail Accelerated Deperciation (AD) benifit
      2. Can ensure regular cleaning of solar pannels 2. Companies that do not want to dedicated resource for plant performance monitoring and cleaning of modules
      3. Can dedicate a person of monitoring of plant performance 3. Companies that do not want to invest in non-core activitise
      4. Can invest own money or by borrowing from bank/lenders 4. Companies that have highly leveraged balance sheets
      5. companies with surplus cash in their balance sheets 5. Large companies where saving from solar are small part of their overall cost
      6. Large companies that want to do solar for meeting sustainability objectives
    • The above table is suggestive only. Actual decision may vary from company to company
    • Because we do not charge you any fee and will still ensure following:
      • Competitive pricing - lower than what you can get directly from vendors
      • Quality assurance - we will help you finalise the quality offered by your shortlisted vendor and will ensure delivery of the same
      • Bank finance - we will facilitate your bank loan application and sanction process

Bank and Financing Related
    • Government of India is promoting rooftop solar power projects for generation of electricity and self-consumption. Government aims to achieve a capacity of 40,000 MW of such projects by 2022
    • In order to support businesses, residential buildings, etc. government has classified loans to such project under Priority sector lending.This will drive banks to start lending to such projects and enable buyers to borrow at lower interest rates
    • Maximum loan amount for rooftop solar projects for industrial, commercial and other non-residential buildings is Rs. 15 crore per project. Loan can be provided for upto 70% of the project investment.
    • Maximum amount of Rs. 10 lacs for rooftop solar projects for residential buildings (to individual borrowers). This amount can be clubbed with home loans and borrowed at same interest rate as of home loan
    • Bank finance is available for rooftop solar projects although not very easily
    • If you are an existing borrower from a bank, your bank might be able to finance your solar project easily. If you face difficulty in availing finance from your bank, you can apply for the same here
    • Since this is a relatively new development, banks have not started lending actively for solar projects. Most banks will take some time before loans for solar are readily available
    • If you are buying a new house and plan to install rooftop solar, check with your home loan provider for additional loan amount to finance rooftop solar project
    • For non-residential solar projects, loan is usually available at rate of interest between 11%-12% and occasionally 13%. This will depend on lender, loan amount, your corporate credit rating, collateral security available (if required).
    • Since solar projects have been classified under Priority sector lending, we expect the rates to go down in near future once banks start passing the benefits of priority sector lending to borrowers. Unfortunately this is not happening now.
    • For residential rooftop solar projects, loans should be available at same rate of interest as your home loan, i.e. around 9%
    • We charge a processing fee for arranging the loan. This fee is payable once atleast one lender confirms a possible sanction and communicates indicative sanction terms including rate of interest, collateral security if any, processing fee, etc.
    • Prospective borrower has to deposit the fee with us or the lender as per lender's process before receiving final sanction from the lender
    • Fee deposited with us shall be fully refunded in case the loan is not sanctioned by any lender on our platform
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    • Documents to have handy

      • Business continuity proof-3 years income tax return and income statement
      • Last 2 year audit report and audited financials
      • Loan statements with Sanction Letters
      • 12 months bank statement
      • Project report/Business plan
      • Qualification certificate if qualified as a doctor
      • Copy of Quotations/Proforma Invoice of the equipment's to be purchased

*Disclaimer: We shall try to arrange loan for your solar project on best effort basis and the same will be subject to lender's discretion