Anand Sunderasan, the head of Indian operations of Schwing Stetter, the German concrete machinery manufacturer, rues the orientation the roof of the company’s factory in Sriperumbudur, near Chennai. The roof, like most others in the industrial suburb, slopes East and West from a rib in the middle but Sunderasan would have so much preferred it to be sloping south.

He could then populate the 7,00,000 sq feet of space with solar panels enough for at least 600 kW of capacity. The problem is not insurmountable, literally and figuratively, but a south-sloping roof would have been a desk-thumper.

Schwing Stetter’s factory is all about metal bashing and welding, and needs power—2.5 million kWhr. The company buys 1.6 million units from the state distribution company at an average cost of Rs 8.30 a unit. The rest of the power comes from its diesel gensets at a cost of Rs 17 a unit. The weighted average cost of power works out to Rs 14.40.

In contrast, electricity generated by a rooftop solar power plant will cost between Rs 7 and Rs 8 a unit. The economics has got Sunderasan and team hooked. At a suggestion of Tata Power Solar, the solar construction arm of Tata Power, Schwing Stetter recently commissioned a 100 kW rooftop plant, spending Rs 65 lakh, with a guaranteed generation of 1,30,000 units a year. And now, the company is looking at adding another 500 kW, and perhaps more later.

What is happening today on the ground looks like a ‘rooftop revolution’. While small rooftop plants on residential units are still not very attractive, the larger ones that can be put up on factories and commercial establishments like shopping malls make eminent sense and this realisation is growing.

Grundfos Pumps India, which makes a variety of pumps, has also found rooftop solar sensible. Last year, its average cost of power worked out to Rs 12 a unit—solar at Rs 7 was attractive. The company has put up a 52 kW rooftop unit and intends to add another 6 kW, as much as the roof would allow.

While solar makes sense straightaway, an added advantage is the tax sop, ‘accelerated depreciation’, which allows a company to write-off 80 per cent of the cost of the solar plant as expenditure for calculating income tax-so, the money that would have gone to the taxman goes to the creation of a revenue generating asset, instead. Since only the debt portion of the cost of the plant would have to be recovered from revenue flows, the payback is much shorter about five years for Schwing Stetter, for instance.

Not all industrial establishments buy costly power, though. Loyal Textiles, one of the country’s larger textile exporters, consumes 300,000 units of power a day and has a dedicated exclusive line (built at the company’s cost) supplying power to it.

Manickam Ramasamy, the Chairman and Managing Director, says the average cost works out to a little over Rs 6, a rupee lesser than solar power. Nor does ‘accelerated depreciation’ a deal-maker, because “there are other options for saving tax.”

Yet, Loyal Textiles has put up a 100 kW rooftop and intends to add twice as much. Reason: the cost of grid power will rise, but solar will be stable. Besides, industrial units are ‘obligated entities’, legally obliged to buy 0.25 per cent of their power consumption from solar sources.

So, whichever way you look at it, solar plants on the roofs of factories, offices and malls are attractive. There is a danger lurking on the horizon, though. There is a distinct possibility of the Ministry of Commerce bringing in an anti-dumping duty on imported solar panels from the chief suppliers - China, Taiwan, Malaysia and the US - at the behest of Indian manufacturers. This could upset the party, though the inevitable rise in conventional power will over time make solar attractive once again, say industry experts.

(This article was published on May 8, 2014)
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