Install 3 KW Solar under PM Surya Ghar Yojana and Earn up to Rs. 30 Lacs

Installing a solar project on your rooftop can seem like a big investment, but it can save you a lot of money in the long run. Let's break down the costs and benefits of installing a 3 KW solar project in simple terms.

1. Total Project Cost: Rs. 1,80,000

2. Subsidy from PM Surya Ghar Muft Bijli Yojana: Rs. 78,000

3. Loan Amount: Rs. 1,80,000 (full project cost)

4. Net Loan Amount after Subsidy (credited after one month): Rs. 1,02,000

5. Interest Rate on Loan: 7%

6. Loan Tenure: 5 years

7. Project Life: 25 years

8. Average Monthly Generation: 375 units

9. Discom Tariff: Rs. 8 per unit

10. Yearly Tariff Escalation: 2%

Loan Repayment:

Initially, you take a loan of Rs. 1,80,000 to cover the project cost. After one month, the subsidy of Rs. 78,000 is credited to your loan account, reducing the loan amount to Rs. 1,02,000.

With an interest rate of 7% over 5 years, your monthly EMI (equated monthly installment) will be approximately Rs. 2,016.67. So, for 5 years, you will pay around Rs. 2,016.67 per month to repay the loan.

Savings Calculation:

Monthly Savings on Electricity Bill:

Your 3 KW solar project will generate about 375 units of electricity per month. With a discom tariff of Rs. 8 per unit, this means you save Rs. 3,000 per month on your electricity bill.

Annual Savings on Electricity Bill:

Over a year, this monthly saving adds up to Rs. 36,000.

Savings During Loan Repayment (First 5 Years):

For the first 5 years, your savings will be your electricity bill savings minus your monthly EMI.

• Monthly Savings: Rs. 3,000

• Monthly EMI: Rs. 2,016.67

• Net Monthly Savings: Rs. 3,000 - Rs. 2,016.67 = Rs. 983.33

So, during the loan repayment period, you still save Rs. 983.33 per month.

Total Savings During Loan Repayment:

Over 5 years, this amounts to:

• Rs. 983.33 per month × 12 months = Rs. 11,799.96 per year

• Rs. 11,799.96 per year × 5 years = Rs. 58,999.8

Savings After Loan Repayment (Years 6 to 25):

Once the loan is paid off in 5 years, you no longer have the EMI to pay, so you save the full amount from your reduced electricity bill.

Monthly Savings After Loan Repayment:

From year 6 onwards, you save the full Rs. 3,000 per month.

Annual Savings After Loan Repayment:

This amounts to Rs. 36,000 per year. With a 2% yearly increase in the electricity tariff, your savings will also increase each year.

Cumulative Savings Over 25 Years:

By the end of the 25-year project life, your total savings will be substantial, thanks to the increase in electricity tariffs over time. Without getting into complex calculations, this cumulative saving can be roughly estimated at over Rs. 12,26,531.

Investing Savings in SIP Mutual Funds:

If you invest the amount you save from your electricity bill each month in SIP (Systematic Investment Plan) mutual funds, you could earn even more. Let's say the average return on SIP mutual funds is 12%.

After the loan repayment period, you start investing Rs. 3,000 per month in SIPs.

Estimated Returns from SIP Investment:

• Monthly Investment: Rs. 3,000

• Annual Return: 12%

Over the next 20 years, this investment can grow significantly. Without getting into detailed calculations, this could potentially grow to around Rs. 30,94,134.

Conclusion:

1. Total Savings over 25 Years: More than Rs. 12,26,531 (without SIP investment).

2. With SIP Investment: Potentially around Rs. 30,94,134.

Key Takeaways:

• Payback Period: Less than 5 years, considering subsidy and savings on electricity bills.

• Return on Investment: Significant savings on electricity bills, with potential for substantial returns if savings are invested in SIP mutual funds post loan repayment.

This case study demonstrates that installing a 3 KW solar project under the given conditions is a smart and beneficial investment, offering significant savings and returns over the project’s lifetime.