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The Essentials of Business Based on Solar Energy 

Solar energy is radiant light and heat from the Sun that is harnessed using a range of ever-evolving technologies such as solar heating, photovoltaics, solar thermal energy, solar architecture, molten salt power plants and artificial photosynthesis.It is an important source of renewable energy and its technologies are broadly characterized as either passive solar or active solar depending on how they capture and distribute solar energy or convert it into solar power. Active solar techniques include the use of photovoltaic systems, concentrated solar power and solar water heating to harness the energy. Passive solar techniques include orienting a building to the Sun, selecting materials with favorable thermal mass or light-dispersing properties, and designing spaces that naturally circulate air.


What is Power  ? 

We are trying to explain as simply as possible since we know Solar Entrepreneurs are not necessarily rocket scientists or physicists.  Power is defined as the "Capacity" or "Ability" to cause or prevent an action, to make things happen. That is quite simple. Isn't that ? Let's elaborate a little further.....  "Power" is the rate of doing work. It is the amount of energy produced or consumed per unit time (say second or minute or hour). The unit of power is the joule per second (J/s), known as the "watt" in honour of James Watt, the eighteenth-century developer of the steam engine.

As a physical concept, power requires both a change in the physical universe and a specified time in which the change occurs. This is distinct from the concept of work, which is only measured in terms of a net change in the state of the physical universe. The same amount of work is done when carrying a load up a flight of stairs whether the person carrying it walks or runs, but more power is needed for running because the work is done in a shorter amount of time.

The dimension of power is energy divided by time. The SI unit of power is the watt (W), which is equal to one joule per second. Other units of power include ergs per second (erg/s), horsepower (hp), metric horsepower (Pferdestärke (PS) or cheval vapeur (CV)), and foot-pounds per minute. One horsepower is equivalent to 33,000 foot-pounds per minute, or the power required to lift 550 pounds by one foot in one second, and is equivalent to about 746 watts. 

In the Solar Energy scenario, Power is defined as "Watt-Peak"or wp which means the maximum (peak) capacity to convert radiant light into electrical energy per second under the most favourable or ideal physical universe. The physical universe consists of the following:

1. Solar Irradiance (or simply the Brightness of the Sun at a given point in time. Seasons play major role  in deciding solar irradiance. A clean autumn sky would be be more conducive than an overcast or cloudy rainy season),
2. Efficiency of the Solar Cells which constitute the  solar or Photovoltaic panel , The Solar cells have their limitations while converting the radiant sunlight into electricity. Not all of radiant sunlight reaching the Solar Panel can be converted to electricity. Only a percentage of that radiant sunlight or solar insolance is converted into electricity (Direct Current or DC). That percentage of conversion is the efficiency of the Solar Cell or the Solar Panel. More the efficiency of the Solar Cells, better the volume of electricity produced.
3. Insolation (the amount of solar energy received per square centimeter per minute. This varies between geographical locations. Some locations would receive more solar insolation than others),
4. The Angle Of Incidence (which is the angle at which the sun rays hit the solar panel),
5. Ambient Temperature (the performance of the Solar Panel varies with rising or falling temperature),
6. Transmission loss of energy within the Solar Panel due to inherent resistance of the intra-panel transmission system,
7. Humidity level surrounding the Solar Panel. 
8. Elevation of the installation site also affects energy production. There is definite difference between energy produced by sea level solar installation and those installed on higher grounds such as hills or mountains.
9. Orientation of the Solar panels would greatly affect the energy production process. A Solar tracker device mount which enables the panels to face the direct sunrays for more time is a much better option than a Fixed Mount.
10. Other factors affecting solar energy production include (but not necessarily limited to) inverter efficiency, shading, aging, module mismatch, etc

So, when we are talking about power of the Solar Cell or the Solar Panel, or the Solar Array, or the entire Solar installation at a particular site you are basically talking about its capacity to produce maximum electricity in the most ideal or conducive physical universe. 


For your reference: 

1000 Wp = 1kWp
1000kWp = 1 MWp
1000MWp = 1 GWp
1000GWp = 1 TWp

This simply means when you have 1Mwp of installed power capacity , your system will be able to produce energy equivalent to  1 million joules per second.



What is usable or salable Solar Energy then ?

Once you have all the equipment in place it is time to count your fruits which in the solar business comes in the form of solar energy produced by the system you have so painstakingly put in place. 


How do you count or calculate your energy production ? 


Energy produced is a simple math. Just multiply the Total Capacity (Power) of your entire system (Total Number of installed panels x power of individial panels) with the number of hours they have been exposed to the sunrays. 

A 20MWp solar plant working for 6 hours in a sunny day will produce 20 x 1000 x1000 x 6 (hrs) x 60 (minumtes) x 60 (seconds) = 4320000000000 Joules- Second or 120,000 KWh 0r 120,000 salable units. Multiply it by the rate (Rupees/KWh) and that will be the net receivable amount for you. If the going rate is Rs.5.00/KWh, your daily earnings(peak) would be 5 x 120,000 = Rs. 600,000.00 (Rupees Six Lakhs). We from here you will quickly arrive at the annual figures. 

A 1 MW solar plant will deliver 1 MWhr of energy in an hour of continuous operation at full load, considering no losses.

Simply put, if a friend of yours asked you about your car's top speed. your answer would be 100 or 200 Kmhr. Which means when you drive your car for an hour at a constant speed of 100 Km/hr, you will cover a distance of 100 km.
Similarly if a solar plant of 1 MW capacity runs for an hour at full rated capacity it will deliver 1 MWhr of energy.
Further in case of solar plants we do not write plant capacity as just 1MW, it is always suffixed with a letter "p" to mention peak capacity. Since the output power rating of a solar plant will vary throughout the day/year depending upon the solar intensity.
Remember that a kWh is a unit of energy, while W (whether kW or MW) is a unit of power (or energy / time).  So 1MW * 1hour = 1MWh, or 1000 kWh.
When energy is bought or sold, the price paid is per kWh. One kWh is also called one salable unit in India.

To be able to sell the energy to a Power Distribution Company (DISCOM) you need to transfer the energy your plant has produced to the GRID. This process of transferring Energy to the grid is also called evacuation. This means you'll have to make sure there is a DISCOM substation in the near vicinity so that there is minimal energy loss through the evacuation process. 

For spot selling of energy, you can also hook up to the Indian Energy Exchange



The Next Thing You Must Understand is What is PPA


A power purchase agreement (PPA), or electricity power agreement, is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The PPA defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination. A PPA is the principal agreement that defines the revenue and credit quality of a generating project and is thus a key instrument of project finance. There are many forms of PPA in use today and they vary according to the needs of buyer, seller, and financing counterparties. PPAs facilitate the financing of distributed generation assets such as photovoltaic, microturbines, reciprocating engines, and fuel cells.


A power purchase agreement (PPA) is a legal contract between an electricity generator (provider) and a power purchaser (buyer, typically a utility or large power buyer/trader). Contractual terms may last anywhere between 5 and 20 years, during which time the power purchaser buys energy, and sometimes also capacity and/or ancillary services, from the electricity generator. Such agreements play a key role in the financing of independently owned (i.e. not owned by a utility) electricity generating assets. The seller under the PPA is typically an independent power producer, or "IPP."

In the case of distributed generation (where the generator is located on a building site and energy is sold to the building occupant), commercial PPAs have evolved as a variant that enables businesses, schools, and governments to purchase electricity directly from the generator rather than from the utility. This approach facilitates the financing of distributed generation assets such as photovoltaic, micro-turbines, reciprocating engines, and fuel cells.

The SELLER under a PPA, is the entity that owns the project. In most cases, the seller is organized as a special purpose entity whose main purpose is to facilitate non-recourse project financing.
The BUYER under a PPA, is typically a utility that purchases the electricity to meet its customers' needs. In the case of distributed generation involving a commercial PPA variant, the buyer may be the occupant of the building—a business, school, or government for example. Electricity traders may also enter into PPA with the Seller.
PPAs are subject to regulation at the Union or State Government level to varying degrees depending on the nature of the PPA and the extent to which the sale of electricity is regulated where the project is sited

Power purchase agreements (PPAs) may be appropriate where:
  1. the projected revenues of the project is uncertain and so some guarantees as to quantities purchased and price paid are required to make the project viable;
  2. protection from cheaper or subsidized domestic or international competition (e.g., where a neighboring power plant is producing cheaper power) is desired;
  3. there is one or a few major customers that will be taking the bulk of the product - for example, a government may be purchasing the power generated by a power plant - the government will want to understand how much it will be paying for its power and that it has the first call on that power, the project company will want certainty of revenue;
  4. purchaser wishes to secure security of supply.
  5. with solar power projects in non-profit companies in order to reduce costs for installation of the solar energy system

The PPA is often regarded as the central document in the development of independent electricity generating assets (power plants). Because it defines the revenue terms for the project and credit quality, it is key to obtaining non-recourse project financing.

One of the key benefits of the PPA is that by clearly defining the output of the generating assets (such as a solar electric system) and the credit of its associated revenue streams, a PPA can be used by the PPA provider to raise non-recourse financing[6] from a bank or other financing counterparty.
The PPA is considered contractually binding on the date that it is signed, also known as the effective date. Once the project has been built, the effective date ensures that the purchaser will buy the electricity that will be generated and that the supplier will not sell its output to anyone else except the purchaser.

Before the seller can sell electricity to the buyer, the project must be fully tested and commissioned to ensure reliability and comply with established commercial practices. The commercial operation date is defined as the date after which all testing and commissioning has been completed and is the initiation date to which the seller can start producing electricity for sale (i.e. when the project has been substantially completed). The commercial operation date also specifies the period of operation, including an end date that is contractually agreed upon.

termination of a PPA ends on the agreed upon commercial operation period. A PPA may be terminated if abnormal events occur or circumstances result that fail to meet contractual guidelines. The seller has the right to curtail the delivery of energy if such abnormal circumstances arise, including natural disasters and uncontrolled events. The PPA may also allow the buyer to curtail energy in circumstances where the after-tax value of electricity changes. When energy is curtailed, it is usually because one of the parties involved was at fault, which results in paid damages to the other party. This may be excused in extraordinary circumstances such as natural disasters and the party responsible for repairing the project is liable for such damages. In situations where liability is not defined properly in the contract, the parties may negotiate force majeure to resolve these issues.

Maintenance and operation of a generation project is the responsibility of the seller. This includes regular inspection and repair, if necessary, to ensure prudent practices. Liquidated damages will be applied if the seller fails to meet these circumstances. Typically, the seller is also responsible for installing and maintaining a meter to determine the quantity of output that will be sold. Under this circumstance, the seller must also provide real-time data at the request of the buyer, including atmospheric data relevant to the type of technology installed.

The PPA will distinguish where the sale of electricity takes place in relation to the location of the buyer and seller. If the electricity is delivered in a "busbar" sale, the delivery point is located on the high side of the transformer adjacent to the project. In this type of transaction, the buyer is responsible for transmission of the energy from the seller. Otherwise, the PPA will distinguish another delivery point that was contractually agreed on by both parties.

Electricity rates are agreed upon as the basis for a PPA. Prices may be flat, escalate over time, or be negotiated in any other way as long as both parties agree to the negotiation. In a regulated environment, Electricity Regulator will regulate the price. A PPA will often specify how much energy the supplier is expected to produce each year and any excess energy produced will have a negative impact on the sales rate of electricity that the buyer will be purchasing. This system is intended to provide an incentive for the seller to properly estimate the amount of energy that will be produced in a given period of time.

The PPA will also describe how invoices are prepared and the time period of response to those invoices. This also includes how to handle late payments and how to deal with invoices that became final after periods of inactivity regarding challenging the invoice. The buyer also has the authority to audit those records produced by the supplier in any circumstance. There is a defined timeline when PPA Provider has to send invoice to the Generator or vice versa and if that timeline is not met then it has its own consequences, which varies from one PPA Provider to another.

The buyer will, in most cases, require the seller to guarantee that the project will meet certain performance standards. Performance guarantees let the buyer plan accordingly when developing new facilities or when trying to meet demand schedules, which also encourages the seller to maintain adequate records. In circumstances where the output from the supplier fails to meet the contractual energy demand by the buyer, the seller is responsible for reimbursing such costs. Other guarantees may be contractually agreed upon, including availability guarantees and power-curve guarantees. These two types of guarantees are more applicable in regions where the energy harnessed by the renewable technology is more volatile.


Let's Now Try and Explain How Solar Home Systems Work


Solar home systems and lamps use photovoltaic (solar-electric or PV) cells and rechargeable batteries to provide electrical power away from the mains grid. Lamps provide a single light (and sometimes phone charging) and are portable. Solar home systems are fixed in a home and can supply several lights, phone charging and other small appliances.

PV cells are made from semiconductor materials, such as silicon, and generate dc electricity from sunlight. A number of cells can be connected together and sealed in a weatherproof casing to form a PV module.


PV cells and modules are specified by their ‘watt-peak’ (Wp) rating, which is the power generated under standard conditions, equivalent to bright sun in the tropics (they still work at lower light levels though). Solar home systems use between about 5 and 100 Wp of PV, solar lanterns between about 0.5 and 2 Wp.

The rechargeable batteries store electricity, so that it is available at night and on cloudy days, as well as when the sun is bright, and they also provide a stable voltage for the appliances that use the electricity. Larger solar home systems normally use lead-acid batteries designed specifically for solar use – standard car batteries don’t last long with the deep levels of discharge needed in a solar system. Nickel-cadmium and nickel-metal-hydride batteries have been used in lanterns and smaller systems because they are easier to make portable and in small sizes. But lithium-ion batteries are rapidly becoming the most popular because, with good electronic controllers, they last longer.

An electronic charge-controller protects the battery from being overcharged (when it is very sunny) or over-discharged (when people try to get too much electricity from the system). Other features can also be built into the controller, like different brightness setting for lamps.

Appliances that are powered directly must operate at the dc voltage of the battery but an inverter (dc to ac converter) can be included in a larger system so that standard mains-voltage equipment can be used.


The PV module of a solar home system should be fixed in a position that collects as much sunlight as possible, ideally on an unshaded roof – this also reduces the risk of theft. The battery is kept indoors with the terminals covered so that they cannot accidentally be touched. The PV, battery, lights and sockets for appliances are wired to the charge-controller.

Customers usually buy solar systems based on the service that they provide (for example: ‘charge one phone and run two lights for six hours each day’). It’s up to the supplier to make sure that there is sufficient PV capacity to provide this service throughout the year, and sufficient battery capacity to keep the supply running even when there are several cloudy days in a row. It pays to use the most efficient lights and appliances, so LED lights are now most commonly used, although larger systems also use fluorescent lights.


Ten years ago, most systems were provided as individual components, and installed on site by a trained electrician. However, small systems are increasingly produced as ‘plug-and-play’ kits for DIY installation. The advantage of kits is that the manufacturer is responsible for the sizing, matching and quality of all components. Increasingly, kits are designed so that they can be upgraded.


In a solar lamp, the LED light, battery and charge controller are all in a casing which is easy to carry and can stand on a table, or hang from the ceiling. Some have small plug-in PV modules, like solar home systems, but others have the PV cell mounted on the casing. This cuts the cost, but has the disadvantage that the whole lamp has to be out in the sun to recharge the battery.

Solar-home-systems and lamps can be very reliable and need little maintenance, although in many countries there are cheap, poor quality products on the market as well. Users must be trained to check the battery, keep the PV module clean and make sure that connectors are secure. Even with careful use, batteries deteriorate and need to be replaced every few years.


The amount of electricity provided by solar home systems and lamps is surprisingly small: the 20 Wp module supplies about 50 watt-hours (0.05 kWh) per day, and the cell on a small lamp only about one watt-hour (0.001 kWh). However, the benefits can be huge.

The main use of a solar home system is to provide better lighting. Many homes without access to grid electricity use kerosene lamps, which are dangerous - producing health-damaging fumes and a constant risk of fires. Children are particularly at risk, so selling solar study lamps, which can be used on a table for homework. Even these smallest solar lamps give more light than a kerosene lamp. And it is not just studying that is easier and safer with better light. Housework is faster, midwives can deliver babies more safely, shopkeepers can display goods, cattle can be tended and farm produce sorted and packed.

Mobile phones keep people in touch with family and friends, and give access to information, entertainment and mobile money. Being able to charge a mobile phone at home with solar power enables people in off-grid homes to stay connected to the world, without the cost and effort of sending phones to be charged in town. Solar systems can also power radios, providing entertainment and information, and larger systems run TVs as well.


In India where three quarters of the population have grid power within reach, the supply is unreliable with frequent and lengthy power cuts in many places. Solar home systems don’t provide the level of power that the grid offers – you can’t run a refrigerator or power tools on 50 Wp of PV – but they have huge potential to provide reliable access to electric lighting, communications and mobile money. System costs will decrease as the global PV market continues to grow, and the improving efficiency of lights and appliances will provide increasing better services.


Let's Also Explain How A Grid Connected Solar System Works:


PV modules use semiconductor materials to generate dc electricity from sunlight. A large area is needed to collect as much sunlight as possible, so the semiconductor is either made into thin, flat, crystalline cells, or deposited as a very thin continuous layer onto a support material. The cells are wired together and sealed into a weatherproof module, with electrical connectors added. Modern modules for grid connection usually have between 48 and 72 cells and produce DC (Direct Current) voltages of typically 25 to 40 volts, with a rated output of between 150 and 300 Wp.

In order to supply electricity into a mains electricity system, the DC output from the module must be converted to ac at the correct voltage and frequency. An electronic inverter is used to do this. Generally a number of PV modules are connected in series to provide a higher DC voltage to the inverter input, and sometimes several of these ‘series strings’ are connected in parallel, so that a single inverter can be used for 50 or more modules. Modern inverters are very efficient (typically 97%), and use electronic control systems to ensure that the PV array keeps working at its optimum voltage. They also incorporate safety systems as required in the country of use.

PV modules are specified by their ‘watt-peak’ (Wp) rating, which is the power generated at a solar radiation level of 1000 W/m2, equivalent to bright sun in the tropics. They still work fine with less solar radiation. The voltage produced by a PV module is largely determined by the semiconductor material and the number of cells, and varies only slightly with the amount of solar radiation. The electrical current and the power generated are proportional to the amount of solar radiation.

Many grid connected PV systems are installed on frames which are mounted on the roof or walls of a building. Used in this way the PV does not take up land that could be used for other purposes. Ideally the PV faces towards the equator (i.e. South in the northern hemisphere) but the exact direction is not critical. However, it is important to make sure that there is minimal shading of the PV. The inverter is housed inside the building and connected to the mains electrical supply, usually with a meter to measure the kWh generated. If the PV electricity production exceeds building demand then the excess can be exported to the grid, and vice versa.

A grid connected system rated at 1 kWp (1000 Wp) has an area of between 5 and 14 m2, depending on the type of semiconductor. 

If the PV system is installed during construction or refurbishment, it can sometimes be used as part of the building fabric, such as a roof or wall-cladding. 

Where space and sun are available, large stand-alone PV arrays can be built and connected to the public grid. 

Grid-connected systems do not usually include batteries for storage, because the mains grid can accept or provide power as needed. However, if rechargeable batteries are included, a grid-connected PV system can be used as a standalone ac supply in the event of a power cut, to allow essential loads to keep working. 

By reducing the need for fossil-fuel generation, grid-connected PV cuts greenhouse gas emissions (and other air pollution), because no emissions are produced during PV operation.

In the past there has been concern about the greenhouse gases emitted (‘embodied’) in the manufacture of PV systems, particularly in the production of ultra-pure semiconductors. With current production techniques, these embodied greenhouse gases are saved within two to four years of use of grid-connected operation, depending on the amount of sunlight.

PV is the easiest renewable electricity source to incorporate into buildings. The electricity is supplied at the point of use, thus avoiding the losses which occur in electricity distribution. It can be used at any scale – from less than a kWp on an individual home up to MWp scale systems on large public buildings - and is simple and reliable. Because of this, it is a valuable way to raise awareness of electricity supply and use, and helps highlight the potential for renewable energy.

The price of PV modules is decreasing rapidly. For crystalline cells, new ways of processing silicon and increased volume manufacture are driving down prices. The market share of thin film PV is growing rapidly as materials which have been proved in the laboratory go into volume production, and these promise even greater price reductions. However, there is less potential for price reduction in the ‘balance of system’, and these costs will soon dominate the overall system cost.

Because of the decreasing prices, the rapid growth in the market for grid-connected PV is expected to continue even if government support is reduced. The market will really take off when electricity from PV becomes cheaper than other grid sources. When PV feeds directly into a building supply, this grid-parity price is the consumer purchase price



Here Is A Step By Step Procedure to setting up a PV Power Plant in India :


1. Select the capacity of project you want to set up. (For Example, 1MW or 20 MW or 100 MW)

2. Selection of land- It should be within 2km of power substation to reduce the power evacuation charges. Land requirement per 1MW varies from 4.5 acres to 6.5 acres.

3. Getting approval from government and owner for land clearance.

4. Choose mode of power plant setup-

    a. Off-Grid Captive Consumption for domestic premises

    b. Off-Grid Captive Consumption for commercial premises

    c. Grid Connected (Net Metered) Captive Consumption for domestic premises

    d. Grid Connected (Net Metered) Captive Consumption for commercial premises

    e. Sale of Power generated to local Distribution Company (DISCOM)

    f. Sale of Power generated to 3rd Party consumer (Industry or Commercial entity)

5. Check for government policy for selected mode.(Refer to MNRE (Union Ministry of New & Renewable Energy)  or State Energy Development Agency)

6. Look for financial back-up. (Private Equity participation, Crowdfunding, Bank loans, NBFC Loans and/or government subsidies)

7. Submit Solar Application Form and Solar Connectivity Application Form to the concerned authorities.

8. Clear the process no 7  and get the sanction letter.

9. Apply for PPA (Power Purchase Agreement).

10. Obtaining RFP (Request for proposal) document for Government E-Procurement/ E-tendering or Private Tenders)

    Participate in the Bidding process

    Submission of various legal and financial documents.

    Other evaluation process.

11. Successful bidders would get The Letter of  Intent/ Letter of Approval 

12. Contact a EPC company for design and installation.

13. Complete the Installation before COD( Comerical operation date mentioned in the PPA or the Bid Document)

14. Commissioning of your plant   


What are the mandatory/Legal documents that you would need prior setting up your Solar Power Plant ?

1.Industrial Clearance

2.Land conversion (Agricultural to Non-Agricultural)

3.Environmental Clearance Certificate from state PCB (Pollution Control Board)

4.Contract Labour License from state Labour Department

5.Fire Safety certificate from Fire Department

6.Latest tax receipt from the Municipal/Gram Panchayat for the factory land.

7.Auditor compliance certificate regarding fossil fuel utilization

8.Approval from Chief Electrical Inspector

9.Clearance from Environment/ Forest department

10.Registered Land purchase/Lease Documents 

11.Power Evacuation arrangement/permission letter from DISCOM (Distribution Company)

12.Confirmation of Metering Arrangement and location

13.ABT meter type, Manufacturer detail, Model, Serial No. details for Energy Metering.

14.Copy of PPA (important as Preferential PPA projects are not eligible for REC mechanism)

15.Proposed Model and make of plant equipment

16.Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE (Ministry of New & Renewable Energy)

17.Details of Connectivity with DISCOM

18.Connectivity Diagram and Single Line Diagram of Plant

19.Details of pending court cases with the Supreme Court of India or the High Court of state or any other lower courts.

20.Any other documents requested by SLDC (State Load Dispatch Center).



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