How Much Can You Save With Solar Power? Cost, Subsidies & Payback Explained

Switching to solar energy isn’t just an environmentally responsible choice; it’s a financially beneficial decision that can save homeowners lakhs of rupees over time. With rising electricity costs, government subsidies, and net metering benefits, solar power can drastically reduce monthly bills while increasing property value.

Understanding the Costs and Savings of Solar Energy

Upfront Costs vs. Long-Term Savings

The initial investment in a solar system includes:

Solar Panels – Convert sunlight into electricity
Inverter – Converts DC electricity from panels to AC for home use
Battery (optional) – Stores extra power for use at night or during outages
Installation & Permits – Labor, wiring, and certification costs

Example Cost Breakdown (For a 5kW system)

Item	Cost (₹)
Solar Panels	2,00,000
Inverter	50,000
Installation & Wiring	50,000
Government Subsidy	(-78,000)
Final Cost	₹2,22,000

2. How Much Can You Save? (Math Explained)

A 5kW solar system generates around 600 units of electricity per month.

Assuming the electricity rate is ₹5.50 per unit:

Monthly savings: 600 units × ₹5.50 = ₹3,300
Yearly savings: ₹3,300 × 12 = ₹39,600
Total savings over 25 years (lifespan of panels): ₹39,600 × 25 = ₹9,90,000 🚀

That means after just 5.5 years, your system pays for itself, and for the next 19+ years, your electricity is practically free!

How Subsidies Reduce Your Costs Further

3. Government Subsidies in India

The Indian government offers subsidies under the PM Surya Ghar: Muft Bijli Yojana:

₹30,000 per kW for systems up to 2kW
Flat ₹78,000 for systems of 3kW and above
Available for residential grid-connected rooftop solar systems
Subsidies are given through Direct Benefit Transfer (DBT)

Example: If your 5kW solar system costs ₹3,50,000, a ₹78,000 subsidy brings the effective cost down to ₹2,22,000.

4. Net Metering: Sell Extra Power to the Grid

Net metering lets you sell excess electricity back to the grid, reducing your bills further.

Example Calculation:

Your system generates 600 units per month but you only use 500 units.
100 extra units go to the grid at ₹5.50 per unit.
You earn ₹550 per month (or ₹6,600 per year) in credits.

This means your savings could be even higher than ₹39,600 per year!

Payback Period & Return on Investment (ROI)

5. How Long Before You Break Even?

Factor	Calculation
Initial Cost (after subsidy)	₹2,22,000
Annual Savings	₹39,600
Break-even time	₹2,22,000 ÷ ₹39,600 = 5.6 years

After 5.6 years, your electricity is free for 19+ years!
ROI over 25 years: ~400% returns on your initial investment.

Real-Life Examples

Apartment Complex in Pune (66kW Solar)

Savings: ₹2.6 lakh annually on power bills
Used for: Common area lighting, lifts, water pumps

Mumbai High-Rise (19 Floors, 40 Panels)

Savings: ₹2.6 lakh per year
Used for: Lifts, fans, and common lighting

These examples prove that even in shared housing, solar power leads to huge financial benefits.

Dos and Don’ts of Going Solar

Dos

Check Subsidy Eligibility: Apply via the government’s national portal
Use Net Metering: Sell extra electricity for more savings
Choose Quality Panels: Opt for brands with at least 25-year warranties
Install in the Right Location: Ensure full sun exposure for maximum output
Calculate Your Load: Match solar panel capacity to your daily electricity usage

Don’ts

Don’t buy cheap, low-efficiency panels – Low quality leads to poor performance
Don’t install without permits – Check your state’s solar regulations
Don’t ignore maintenance – Clean panels regularly to maintain efficiency
Don’t delay installation – Prices are rising; the sooner you switch, the more you save!

Conclusion: Solar is a Smart Financial Choice

Save up to ₹9.9 lakh over 25 years
Break even in just 5.6 years
Government subsidies reduce costs by ₹78,000
Increase your property value
Protect against rising electricity prices