Solar Panel ROI Calculator — India

Solar Panel ROI Calculator

How Solar ROI Works in India

Rooftop solar in India now offers some of the strongest residential ROI anywhere, because a central subsidy removes over a third of the capital cost while retail tariffs keep climbing. The calculator uses the standard formula — net cost after subsidy ÷ annual bill savings — with Indian defaults. Worked example: a 3 kW grid-connected rooftop system in Maharashtra costs ₹2,00,000 installed. The PM Surya Ghar central subsidy of ₹78,000 lands in your bank account after commissioning, cutting net cost to ₹1,22,000. At roughly 4 units per kW per day, the system generates about 12 units daily — 4,380 kWh a year. If those units would otherwise be billed at ₹7 each (a mid-slab urban tariff), annual savings are ₹30,660, and payback = ₹1,22,000 ÷ ₹30,660 ≈ 4 years. Panels are warranted for 25 years, so a 4-year payback implies two decades of essentially free power — the reason rooftop ROI in India routinely exceeds 20% a year on a cash-flow basis, ahead of FDs, PPF and most market instruments. Slab tariffs make the math even better for heavy users: offsetting units billed at ₹8 or more shortens payback further, which is why the calculator asks for your marginal (top-slab) tariff, not your average one.

PM Surya Ghar: Muft Bijli Yojana Subsidy

PM Surya Ghar: Muft Bijli Yojana, launched in February 2024 with a ₹75,021 crore outlay and a target of one crore (10 million) solarised homes, is the subsidy engine behind India's rooftop boom. The central financial assistance is tiered: ₹30,000 per kW for the first 2 kW, then ₹18,000 for the third kW, capping at ₹78,000 for systems of 3 kW and above. So a 1 kW system gets ₹30,000, a 2 kW system gets ₹60,000, and 3 kW or larger receives the full ₹78,000 — which is why 3 kW has become the sweet-spot residential size. Group housing societies and resident welfare associations receive ₹18,000 per kW for common facilities up to 500 kW. The process is fully online: register on the national portal (pmsuryaghar.gov.in) with your electricity connection details, choose a DISCOM-empanelled vendor, and the subsidy is transferred by direct benefit transfer after installation, net-meter commissioning and inspection. Several states stack their own top-ups on the central amount — enter any state subsidy in the calculator's subsidy field. The scheme also enables collateral-free loans of up to ₹2 lakh at around 7% interest for residential installations up to 3 kW, which lets households go solar with no capital of their own.

Net Metering: Your DISCOM Sets the Terms

Net metering is what converts midday generation into round-the-clock bill savings: a bidirectional meter records exports to the grid, and the DISCOM offsets them against your imports at settlement. But the terms are set state by state — each State Electricity Regulatory Commission writes its own net-metering regulations, and your DISCOM administers them — so two identical systems in different states can produce different returns. Key variables to check in your state: the capacity ceiling (most states permit net metering up to the sanctioned load of your connection, and central consumer rules simplified approvals for systems up to 10 kW), the settlement cycle (monthly versus annual), and what happens to surplus units at settlement — many DISCOMs pay out excess generation at a lower rate, such as the average power purchase cost, rather than the retail tariff, which makes oversizing far beyond your own consumption uneconomic. The metros illustrate the spread: Delhi's BSES and Tata Power-DDL, Mumbai's Adani Electricity and MSEDCL, and Bengaluru's BESCOM each run their own empanelment lists, application queues and inspection timelines. Under PM Surya Ghar, the national portal routes your net-metering application to the DISCOM automatically, and commissioning typically completes within a few weeks of physical installation.

Costs and Generation: Typical 3 kW Numbers

As of 2026, a standard 3 kW grid-tied rooftop system costs ₹1.8–2.2 lakh before subsidy — ₹60,000–₹73,000 per kW covering panels, a string inverter, mounting structure, cabling, the net meter and installation. DCR (domestic content requirement) modules, mandatory for subsidy eligibility, price slightly above imported panels. Generation averages about 4 units (kWh) per kW per day nationally — roughly 1,450 kWh per kW per year — with real regional spread: Rajasthan and Gujarat routinely see 4.3–4.5 units per kW daily, while Kerala, coastal Maharashtra during monsoon and the Northeast run 3.3–3.8. A 3 kW array therefore produces around 12 units a day, about 4,380 a year. Physical requirement: roughly 100 sq ft of shadow-free roof per kW, so 300 sq ft for 3 kW. Panels degrade around 0.5% per year — output at year 25 remains near 88% of original — and quality string inverters last 8–12 years, so budget one inverter replacement (₹15,000–₹30,000) over the system's life. Monsoon months produce 30–50% less than peak summer months, which is why annual, not monthly, generation drives the ROI math; the calculator works from an annual figure for exactly this reason.

Payback: 4–6 Years After Subsidy

Post-subsidy payback for a 3 kW residential system lands between 4 and 6 years in most of India. The tariff you offset is the biggest variable, because domestic slabs rise steeply with consumption. At a net cost of ₹1,22,000 (₹2,00,000 minus the ₹78,000 subsidy) and 4,380 units a year: at ₹6 per unit, savings are ₹26,280 and payback is 4.6 years; at ₹7, savings are ₹30,660 and payback is just under 4 years; at ₹8, savings are ₹35,040 and payback is 3.5 years. A costlier ₹2.2 lakh install offsetting a ₹6 tariff stretches to about 5.4 years (₹1,42,000 ÷ ₹26,280). Financing shifts the picture only modestly: the scheme's collateral-free loans at around 7% on ₹1.22 lakh cost roughly ₹8,500 in first-year interest, adding about a year to payback if you borrow the full amount. Compare that with the alternatives the same money could buy — PPF at government-set rates or bank fixed deposits — and rooftop solar's effective 20%+ annual cash return after payback stands out, with the honest caveat that the asset is illiquid and tied to your roof. Households on subsidised low tariffs (some states bill early slabs below ₹4) should run the numbers carefully before assuming the national average applies.

RESCO vs CAPEX: Who Owns the System

CAPEX and RESCO are the two ways to put solar on an Indian roof. Under the CAPEX model you buy the system outright (cash or loan), own the asset, claim the PM Surya Ghar subsidy, and keep 100% of the savings — the 4–6-year payback math above is CAPEX math. Maintenance (occasional panel cleaning, one inverter swap) is on you. Under the RESCO model — Renewable Energy Service Company — a developer installs, owns and maintains the system on your roof, and you sign a long-term agreement to buy its output at a fixed per-unit rate below your DISCOM tariff, typically in the ₹3–5 range as of 2026, varying by state and contract. You pay nothing upfront, but your saving is only the gap between the RESCO rate and the grid tariff, and the developer — not you — captures the asset's long-term value. PM Surya Ghar includes a payment-security mechanism specifically to make RESCO viable for households and housing societies. The decision rule: if you have ₹1.2–1.5 lakh available, or can borrow at the scheme's roughly 7% rate, CAPEX returns several times more over 25 years; RESCO suits tenants, institutions, housing societies and capital-constrained households that would otherwise install nothing.