Switching to solar energy is a smart investment for businesses looking to cut electricity costs and take advantage of tax benefits. Let’s break down the numbers for a solar power plant with a 200 kWp capacity and understand its financial impact in simple terms.
Understanding the Solar Power Plant’s Performance
- Solar Power Plant Size: 200 kWp
- Tentative Annual Power Generation: Each kWp generates 1,190 units per year, resulting in a total annual generation of 237,773.9 units.
- Electricity Cost per Unit: ₹5.45 per kWh (depends on local tariff)
- Tentative Annual Electricity Savings: ₹12,96,106
- Total Project Cost: ₹59,94,300 (Tentative)
- Return on Investment (ROI) Without Tax Benefits: 4.62 years (Tentative)
Tax Savings and How They Reduce Costs
Governments provide tax depreciation benefits to encourage solar adoption. This particular project benefits from accelerated depreciation, significantly reducing taxable income and lowering the effective project cost. Here’s how it works:
- Total Tax Savings Over 10 Years: ₹17,87,416
- Effective Project Cost After Tax Benefits: ₹42,06,884
- Revised ROI (Including Tax Benefits): 3.25 years (Tentative)
Why This Matters for Businesses
Investing in solar energy isn’t just about sustainability—it’s about long-term cost savings. With government incentives, businesses can recover their investment within 3.25 years, thanks to both electricity savings and tax benefits. This ensures a higher return and lower operational costs moving forward.
Conclusion: The Smart Financial Choice
Going solar is not just an environmentally responsible decision—it’s a financially sound one. With an upfront investment of ₹59.94 lakh, the actual cost after tax benefits drops to ₹42.06 lakh, significantly boosting the ROI. Given that the system continues generating free electricity for years after the payback period, businesses can enjoy long-term profits while reducing their carbon footprint.
Thinking of making the switch to solar? Now is the best time to invest!
Contact KSL Cleantech Limited at +918100104486/87 or mail us at sales@kslcleantech.com
