Behind the model
How the solar model works
Every number in the model is worked out from your inputs; nothing is hidden. Below is each formula, paired with a worked example from the default 1 MWp factory-rooftop plant running at 16% of its maximum output (CUF), saving ₹8 a unit on the factory’s grid bill. Change any input in the model and the same formulas apply.
Plant size, CUF and output
The plant’s peak capacity (MWp) and its capacity utilisation factor (CUF: average output as a share of running at full rating every hour) set the first year’s output. The plant runs at full output from the day it starts, with no ramp-up; panel ageing (degradation) trims output a little each year after that.
Output in year 1
MWp × CUF% × 8760 h × 1000
1 × 16% × 8760 × 1000 = 1,402 MWh
Units per kWp (specific yield)
CUF% × 8760 (kWh per kWp)
1,402 kWh/kWp
Panel ageing (degradation, compounding)
gen × (1 − degradation%)^(age−1)
yr 2 = 1,395 MWh (−0.5% a year)
Lifetime output
Σ yearly output over the years modelled
33,016 MWh over 25 years
Set-up cost (CapEx)
The installer’s turnkey price per peak watt (EPC: panels, inverters, mounting, cabling and installation) sets the main cost. Land, the grid connection line and a buffer for surprises (contingency) go on top, then the loan interest during construction (IDC) is added. The all-in cost per watt is worked out from these, not assumed.
Installation (EPC)
MWp × 1,000,000 Wp × cost/Wp
1M Wp × ₹38 = ₹3.8 Cr
Other costs (grid connection, approvals…)
Σ line items (unit cost × qty)
₹3 L
Base cost
EPC + land + lines
₹3.8 Cr + ₹0 + ₹3 L = ₹3.83 Cr
Buffer for surprises (contingency)
base × 3%
₹11.5 L
Interest during construction (IDC)
total × debt% × interest% × (months ÷ 12) × ½
3 mo → ₹3.62 L
Total project cost
base + contingency + IDC
₹3.98 Cr
Set-up cost per watt (worked out)
total project cost ÷ (MWp × 1e6)
₹39.81/Wp
Running costs (OpEx)
Upkeep (operation and maintenance, O&M) grows with the capacity running; insurance is a share of the set-up cost; the land lease is a fixed amount. Each rises every year.
Upkeep (O&M)
online MWp × ₹6,00,000/MWp × (1+4%)^(yr−1)
yr 1: ₹6 L
Insurance
base CapEx × 0.25% × (1+esc)^(yr−1)
yr 1: ₹98,623
Land lease
₹0 × (1+esc)^(yr−1)
yr 1: ₹0
Total running costs
O&M + insurance + land lease
yr 1: ₹6.99 L
Revenue: tariff or savings per unit
Revenue is output × the price per unit, rising each year if you set a tariff rise. The price covers three Indian cases: selling under a power purchase agreement (PPA), where utility auctions settle at ₹2.5–2.6 a unit; the grid tariff you no longer pay with a rooftop or captive plant (₹7–9 for commercial users); or the grid tariff less ₹1.5–2.5 of charges when power travels over the grid to your site (open access). A phased build adds capacity over time, each phase ageing on its own clock.
Revenue / savings
generation × tariff/savings rate × (1 + esc%)^(yr−1)
yr 1: 1,402 MWh × ₹8 = ₹1.12 Cr
Tariff rise
rate × (1 + 3%)^(yr−1)
3% a year (grid tariffs tend to rise)
Phased build
each phase starts in its own year; its set-up cost and loan are timed to its start
all at once by default
Loan, repayment holiday, tax and depreciation
A long project loan with an interest-only repayment holiday (moratorium) at the start, then the principal is repaid over the rest of the loan term. Depreciation defaults to the Indian income-tax rate for solar under section 32: 40% a year on the reducing balance (written-down value, WDV). This fast write-off is the main tax benefit for a profitable company; a straight-line option is also offered. Land is never depreciated. Tax losses carry forward.
Loan and your own money
debt = total cost × debt% ; equity = remainder
₹2.79 Cr loan · ₹1.19 Cr your money (70/30)
Repayment holiday (moratorium)
interest-only for the first N years after the plant starts, then repay principal
1-year holiday, 10-year loan
Equal-principal repayment
debt ÷ (tenor − moratorium) each amortising year
₹31 L
Fixed EMI option
debt × r ÷ (1 − (1+r)^−(tenor−moratorium))
level-payment alternative
Interest
outstanding balance × interest rate
yr 1: ₹29.3 L
Depreciable base (land excluded)
total project cost − land
₹3.98 Cr
Depreciation: 40% reducing balance (WDV, section 32)
base × 40% × 60%^(yr−1) (declining balance)
yr 1: ₹1.59 Cr · yr 2: ₹95.5 L
Depreciation: straight-line option
base ÷ 15 yrs
₹26.5 L a year for 15 years
Tax (with loss carryforward)
max(0, PBT − losses) × 25% ; losses carry forward
accelerated depreciation shelters early-year profit
Returns and loan cover
The project cash flows (before any loan) give the project return; the cash flows to you, after loan repayments, give the return on your money. The project return uses its own tax figure that ignores loan interest, so it doesn’t depend on how the plant is funded. A build longer than a year pushes back the first revenue.
Operating profit (EBITDA)
revenue − operating cost
yr 1: ₹1.05 Cr (94% margin)
Project cash flow
EBITDA − project tax − CapEx (project tax excludes interest)
Project IRR 25.4%
Cash to you
PAT + depreciation − principal − equity-funded CapEx
Equity IRR 50.9%
Value above your hurdle (NPV)
Σ unlevered FCF ÷ (1 + discount)^t
@ 10% = ₹5.42 Cr
Build delay
ceil(months ÷ 12) − 1 extra zero-revenue years before generation
none (3 mo ≤ 12)
Payback
year cumulative unlevered cash flow first turns positive
3.8 yr
Loan cover (DSCR)
CFADS ÷ debt service ; CFADS = EBITDA − tax (amortising years only)
min 1.79× · avg 2.21× (yr 2 = 1.79×)
Loan-life cover (LLCR)
PV(CFADS over loan life) ÷ debt
2.23×
Money back per ₹1 you put in (equity multiple)
Σ equity cash returned ÷ equity invested
19.57×
Break-even tariff
tariff at which project NPV = 0
₹3.45/kWh
Cost per unit (LCOE) and carbon
The levelised cost of energy (LCOE) is what each unit costs to make over the plant’s life, in today’s money, so you can compare it directly with a PPA price or your grid tariff. Below it, the carbon the plant saves by replacing grid power.
Cost per unit (LCOE, discounted)
(capex + PV of OpEx) ÷ PV of generation, at the 10% discount rate
₹3.96/kWh (vs ₹8 tariff/savings rate)
Carbon avoided (annual)
year-1 generation × grid emission factor ÷ 1000
995 tonnes CO₂ a year
Carbon avoided (lifetime)
Σ generation × grid emission factor ÷ 1000
23,441 tonnes CO₂
Area used
MWp × 2 acres/MWp
2 acres
These are planning estimates you can check line by line, not a quote. The typical Indian figures are assumptions from public sources, not ClarWorks data, and every one can be changed in the model. Open the model →
Advisory · Project report and bank finance
Taking this to a bank? Get the numbers checked first.
We go through your model with you: the assumptions, the costs, the loan structure and the risks. If you need one, we write the detailed project report your bank will appraise. The loan decision is always the bank’s; our job is to make your case clear and complete.
- Free 30-minute first call, online
- Paid work quoted before it starts
- Direct with the person doing the work
Replies within 24 hours. Prefer WhatsApp? Message us
Funded and getting ready to open? We also build the software a business runs on: orders, billing, stock, and WhatsApp ordering. Fixed scope, fixed price, in writing before work starts.