On Grid Solar System For Home: Prices, Subsidy, ROI & Working

On Grid Solar System For Home: Prices, Subsidy, ROI & Working

About SolarSquare

 

SolarSquare started in 2015 with the desire to escalate the mass adoption of solar in India.

We're now the third-largest EPC contractor in the Country, having served 4000+ homes. Our services include:

  • The installation of on-grid rooftop solar systems for homes and housing societies.
  • After-installation care.
  • Many EMI options for our customers.
  • Using prefabricated mounting structures for the installation of solar panels.

 

We closely work with our customers and build a legacy that will last for as long as your solar system will last (at least 25 years).

 

Overview of on-grid solar systems

An On-grid solar system aka a grid-tied solar system is connected to the grid. Most Indian households with a reliable grid connection count on the on-grid solar system for their electricity needs. And we, at SolarSquare, specialize in installing on-grid rooftop solar systems for both independent homes and housing societies.

The on-grid solar power plant for home is a careful arrangement of different components:

  1. Solar panels
  2. Solar inverter
  3. Mounting structures
  4. Bi-directional meter
  5. Solar accessories

 

When it comes to categorization, an on-grid solar power system installed for smaller applications like an individual home has different capacities: 2 KW, 3 KW, 5KW, 10 KW, and so on.

A solar system, in general, can have a capacity much higher than 10 KW, but the government provides a subsidy on residential installations for solar systems up to 10 KW only. An average Indian household with a monthly electricity bill of Rs. 1500 to 3000 has a requirement of 2 to 3 kW only.

 

The working of an on-grid solar system for home

The generation of electricity in an on-grid solar system starts with solar panels and then goes through several steps to keep your house powered up during the day as well as at night.

Here's what happens when you install an on-grid solar system:

Solar panels absorb sunlight and convert it into direct current (DC)

The DC current goes into the inverter that converts it into alternating current (AC)

The alternating current is fed into a bidirectional meter

The bi-directional meter supplies AC power to your home to run all household appliances

This meter supplies excess electricity (units that are not consumed) to the grid

When the exported units are needed later (eg. at night), the bi-directional meter imports them from the grid

The exchange of electricity back and forth from the grid via the bi-directional meter is called net metering.

 

Components of the residential on-grid solar system

#1. Solar panels

Solar panels in a solar grid for home are the most visible parts. They’re installed on the rooftop, facing the South direction. When sunlight falls on these panels, they absorb that sunlight and convert it into electricity.

The solar electricity directly from the panels is in the form of DC power. Since homes require alternating current (AC), there’s the need for a solar inverter to convert direct current into alternating current.

#2. Solar inverter

The entire solar system would have been an impractical model had there been no solar inverter. The solar inverter takes up the role of converting DC into AC.

This conversion is essential because that’s the only way to convert electricity generated from an on-grid solar panel into a usable form (AC) that can run household appliances.

#3. Solar mounting structures

These are the pillars that carry the weight of solar panels. They have to be of a standard grade so that they can withstand heavy winds during storms & cyclones and hold the weight of the solar panels for 25 years (that’s the life of a solar system).

The best solar mounting structures are prefabricated in precision labs. They’re coated with hot-dip galvanizing on steel to make them rust-proof.

They must be designed to sustain the wind speeds as defined for the installation location and height of the building.

#4. Solar accessories

These include the AC and DC cables that are required for wiring solar panels and connecting different parts to make the entire solar grid functional.

The next most important accessories required to set up an on-grid solar system are DC combiner boxes and AC combiner boxes.

A DC combiner box works like an isolation box. All the cables carrying DC current from the panels are isolated in this box. DC power coming from the panels can be as high as 1000 volts, even more. It’s dangerous (potentially lethal); hence, the requirement of a DC combiner box.

This box feeds the DC current into the solar inverter and the solar inverter produces alternating current. This AC power is fed into an AC combiner box (all cables carrying the AC current from multiple inverters are combined in this box.)

Once the entire on-grid solar system is set up, earthing is done using earthing strips and wires.

Please note: all the DC cable connections are made using MC4 connectors.

#5. Bi-directional meter

This is a smart tracking meter that is basically designed to keep a track of:

  1. Electricity supplied to the grid
  2. Electricity imported from the grid

 

An on-grid solar system does not get functional until and unless the regular meter is replaced with a bi-directional meter.

 

Net metering on on-grid solar system

The entire concept of an on-grid solar system works on the principle of net metering.

Net metering can be best understood as a means for the discom to keep a track of the power that was generated by the solar plant, the power that was consumed, the power that was supplied to the grid, and the power that was imported.

At the end of every month when the electricity bill is generated, the readings from the bidirectional meter give an account of:

  1. How many units were supplied to the grid
  2. How many units were taken from the grid

 

If you supplied more than you consumed, those units will be deducted from your bill. It will reduce the bill further.

If you had to use extra units from the grid on top of what your solar plant generated, those units would be added to your bill.

 

Top 8 benefits of using an on-grid solar system

A solar system is of 3 types: on-grid, off-grid, and hybrid

Although there are three types, it’s the on-grid solar system that’s used and trusted by most homeowners in India.

Naturally, there ought to be some extraordinary benefits of an on-grid solar system for home.

Those are the benefits we’re focusing on:

  1. It’s easy to keep a track of the units of electricity that your solar system generated
  2. It’s easier to understand the solar electricity bill
  3. Once the solar on-grid system’s price breaks even in 3 to 5 years, you get free solar electricity for the next 20-21 years
  4. The monthly electricity bill reduces substantially
  5. There’s no battery requirement. Your grid plays the role of the battery. The system will directly supply excess units to the grid and take them back when needed
  6. Since there’s no battery, there are no battery replacement charges involved.
  7. Out of all the 3 types of solar systems, the on-grid solar system for homes is the most affordable option.
  8. The government offers a subsidy only on an on-grid solar system for residential homes.

 

Power outages on on-grid solar systems

Every system has benefits as well as certain limitations - an on-grid solar system is no different.

Although its connection with the grid is a sure benefit, it's also a limitation. When there's a power cut from the grid, the on-grid solar system automatically shuts down.

This interruption in the supply of power is known as a power outage. Nevertheless, on-grid solar systems in urban areas with a reliable grid are unbeatable when it comes to meeting all the power requirements of a home.

The main reason that an on-grid solar inverter is designed in a way that it automatically shuts down if the grid fails is to eliminate safety risks. This particular feature that differentiates on-grid inverters from all other types is called Anti-Islanding Protection.

During power outages, an on-grid inverter will stop generating AC power immediately. Otherwise, the electrical maintenance personnel working directly with the wiring at the location of the electrical fault may suffer from electric shocks.

 

On-grid Solar system types based on their capacities

In terms of subsidy, the government offers a subsidy for an on-grid solar system that does not exceed the capacity of 10 KW.

Let’s find out the basics since the calculations will also help you in finding out the size of the solar system that you should install at your home.

 

1 kW on-grid solar system

A 1 kW grid-tied solar system produces roughly 1400 units of electricity on an average/year, which means:

  • The approximate units generated by a 1 KW on-grid solar system in a month will be 116 units (1400/12)
  • If the average electricity tariff/unit in your city is Rs. 8, you will save approximately Rs. 11,200 in one year (1400 X 8)

 

2 kW on-grid solar system

A 2 kW grid-tied solar system will produce roughly twice the units produced by a 1 KW system i.e., 2800 units on an average/year. It means:

  • The approximate units generated by a 2 KW on-grid solar system in a month will be 232 units (116 x 2)
  • If the average electricity tariff/unit in your city is Rs. 8, you will save approximately Rs. 22,400 in one year (2800 X 8)

 

3 kW on-grid solar system

A 3 kW grid-tied solar system will roughly produce three times the units produced by a 1 KW system i.e. 4200 units on an average/year. It means:

  • The approximate units generated by a 3 KW on-grid solar system in a month will be 348 units (116 x 3)
  • If the average electricity tariff/unit in your city is Rs. 8, you will save approximately Rs. 33,600 in one year (4200 x 8)

 

5 kW on-grid solar system

A 5 kW grid-tied solar system will produce roughly 5 times the units produced by a 1 KW on-grid solar system i.e., 7000 units on an average/year. It means:

  • The approximate units generated by a 5 KW on-grid solar system in a month will be 580 units (116 x 5)
  • If the average electricity tariff/unit in your city is Rs. 8, you will save approximately Rs. 56,000 in one year (7000 x 8)

 

10 kW on-grid solar system

A 10 kW grid-tied solar system will produce roughly 10 times the units produced by a 1 KW on-grid solar system i.e., 14,000 units on an average/year. It means:

  • The approximate units generated by a 10 KW on-grid solar system in a month will be 1160 units (116 x 10)
  • If the average electricity tariff/unit in your city is Rs. 8, you will save approximately Rs. 112,000 in one year (14,000 x 8)

 

On-grid solar system price without subsidy

The price range of an on-grid solar system depends on many factors. It varies based on:

  • The type of solar panels
  • The type of inverter
  • The type of panel mounting structures
  • Whether the solar installation company provides a maintenance service with the installation

 

Here's a reference table concerning the price range of a grid-tied solar system:

The capacity of the solar system

Cost of the solar system

1 KW

Rs. 45,000 to Rs. 70,000

2 KW

Rs. 90,000 to Rs. 1,40,000

3 KW

Rs. 1,35,000 to Rs. 2,10,000

5 KW

Rs. 2,25,000 to Rs. 3,50,000

10 KW

Rs. 4,50,000 to Rs. 7,00,000

 

Subsidy on an on-grid solar system

The government of India offers a subsidy on the installation of a solar system, but there are a few conditions:

  • The subsidy is offered for the installation of a solar system for residential installation only.
  • The subsidy is applicable only for made-in-India (dcr) solar panels.
  • As of now, only polycrystalline solar panels are manufactured in India. So, a subsidy is available on polycrystalline solar panels only.
  • The government offers a subsidy for a solar system up to 10 KW only.

 

Subsidy on polycrystalline solar panels:

First things first, a subsidy is offered on L1 prices only (the lowest rate quoted when installation companies file a tender with the discom).

If you buy a 3 KW tier-1 module, you won’t get a 40% subsidy on the price of that high-end module. You will get a 40% subsidy on the L1 rates.

That said, let’s now take you through the figures:

Solar System Capacity

Subsidy for residential installation

1 KW to 3 KW

40% of L1 rates

4 KW to 10 KW

20% of L1 rates

 

There’s no subsidy offered for solar systems above 10 KW for residential installation. However, for housing societies, there’s a different subsidy category. Let’s have a look.

 

Solar System Capacity

Subsidy for housing societies

10 KW to 500 KW

20% of the L1 rate

 

National DBT Program for Subsidy

PM Narendra Modi launched a National Solar Portal to apply for a subsidy on solar panels on the 30th of July, 2022. This subsidy scheme is known as DBT (Direct bank transfer).

Consumers apply for the subsidy through the National Portal. There is one fixed subsidy rate card. Consumers get their subsidies credited to their bank accounts within 30 days after the commissioning of the solar system.

The key benefit of the DBT scheme is, even if your state doesn’t have a subsidy program yet, you can still apply for a subsidy through the National Portal.

 

ROI on the on-grid solar system, India

The return on investment depends on a lot of factors: the type of solar panels you chose, the amount of sunlight your house receives, the discovered rate (L1 rate) in your state, and much more.

 

Let's walk you through an example:

Let's assume, you installed a 5 KW solar system worth Rs. 2,50,000, the electricity tariff in your state is Rs. 8, and your average monthly power consumption is 750 units.

The electricity bill you will pay without a solar system will be approximately Rs. 6000.

When you install a 5 KW solar system, you get an average of 580 units/months from solar. It will be a bit higher in the summer months and lower in the monsoon season.

Now you have to pay the discom for just 170 units per month on average, i.e., Rs. 1360.

You'll save approximately Rs. 4640/month. Your yearly savings will be about Rs. 55,680. Within approximately 4 to 5 years, the initial investment will break even.

For the next 20 years, you'll save Rs. 11,69,280. This is the minimum return you'll get after investing just Rs 2,50,000.

 

Conclusion:

Since the stakes are already high – pollution is swallowing the planet and electricity bills are robbing customers – you don’t want to get stuck with the wrong company.

We, at SolarSquare, make solar installation hassle-free.

We deliver more than just promises:

  1. Our prefabricated mounting structures are designed to easily withstand wind speeds as high as 150 Kmph.
  2. Our solar consultants offer a free rooftop inspection.
  3. We offer our customers financing options such as easy loan approvals and zero-cost EMI schemes.

 

Register now to book a free consultation with our solar consultants.

 

FAQs

 

1. What is an on-grid solar system?

An on-grid solar system, as the name suggested, is grid-tied. It uses a net meter (bidirectional meter) to transfer bulk units of electricity generated by the solar system during the day. The same meter also imports units from the grid.

The benefit of an on-grid system is that if you need more electricity than your solar system produces, you can use the electricity from the grid.

 

2. How does an on-grid system work?

The working of an on-grid system is quite simple:

  • Solar panels churn electricity from sunlight.
  • The electricity from the solar panels is in the form of DC power.
  • The DC power is supplied to a solar inverter.
  • The solar inverter converts the DC power into AC power.
  • AC power is used to run all appliances.
  • The extra power that the solar panels produce during the daytime is transferred to the grid via a net meter.
  • When the solar panels aren’t producing electricity at night, the transferred units are imported to keep the house running.

 

3. Which is best - on-grid or off-grid solar system?

If you reside in urban cities that have a reliable electricity grid, an on-grid system is the best.

If you reside in rural areas where there’s no grid, an off-grid solar system is the only option.