Gujarat is blessed with an abundance of sunshine – the entire state has a global horizontal irradiance of above 5.5 kWh/m²/day, which is high even by global standards. Gujarat pioneered innovative concepts like solar panels on top of irrigation canals. As of 31st March 2016, Gujarat had 1100 MW of installed solar photovoltaic plants. This year, GEDA kicked off the rooftop solar scheme for individual electricity consumers as per its 2015 policy.

Rooftop solar is a great way to invest your money – as this article will show, if you have shadow free roof space, you can install a solar power plant, save money on your electricity bill and thereby earn handsome returns on your investment.

Gujarat Electricity Distribution Companies (DISCOMs)

Gujarat has geographically allocated electricity distribution companies – four public sector and one private.

  1. Uttar Gujarat Vij Company Ltd (UGVCL) serves Banaskantha, Patan, Mehsana, Sabarkantha and parts of Amdavad and Gandhinagar.
  2. Madhya Gujarat Vij Company Ltd (MGVCL) serves Anand, Vadodara, Kheda, Mahisagar, Dahod, Chhota Udaipur and Panchmahal
  3. Paschim Gujarat Vij Company Ltd (PGVCL) serves Saurashtra (Rajkot, Jamnagar, Junagadh, Bhavnagar, Porbandar, Amreli, Surendranagar, Devbhoomi Dwarka, Morbi, Gir Somnath) and Kutch regions.
  4. Dakshin Gujarat Vij Company Ltd (DGVCL) serves Bharuch, Narmada, Surat (except part of Surat City), Tapi, Dangs, Navsari and Valsad in South Gujarat
  5. Torrent Power Ltd serves Ahmedabad, Gandhinagar and Surat cities.

Salient features of Gujarat rooftop solar policy

The GERC regulations for net metering are applicable across the five DISCOMs.

  1. 25 year Power Purchase Agreement (PPA)
  2. Rooftop solar size limited to 50% of sanctioned / contract load. Minimum system size of 1 kWp, upper limit of 5 kW for 1 phase connections, 100 kW for 3 phase LT connections and 1 MWp for HT connections.
  3. Net metering with settlement at billing cycle: The units generated from the solar plant are subtracted from the consumed units and the prosumer has to pay the bill for the net units consumed.
  4. If more energy is generated by the rooftop plant than consumed, then the prosumer gets a zero bill and the excess energy is purchased by the DISCOM at the average power purchase cost (APPC) for the year the plant was commissioned. For example, for a rooftop solar PV system commissioned during 2016-17, the APPC rate determined by GERC for FY 2015-16 shall be applicable. This is different from other state policies which change the buyback rate every year to the prevailing APPC. Due to this clause, there is revenue visibility for the plant owner over 25 years and they do not suffer if the APPC falls. (However, they also do not benefit if the APPC rises) The APPC for 2016-17 is ₹3.76 per unit (kWh)
  5. Capital subsidy from the state of Gujarat for residential prosumers of ₹ 10,000 per kW of solar installed, subject to a maximum of ₹20,000.


Since the APPC is quite low, oversizing the rooftop solar plant does not give much financial benefit. We recommend that Gujarat electricity consumers size their system so as to generate only as much as their average monthly consumption. Practically, the limit set by 50% of sanctioned load is likely to be reached before the consumption-based size.

Consumers who use air conditioners have large differences between summer and winter electricity bills. If the solar plant is sized on their average usage, such prosumers will end up paying electricity bills at higher tariffs in the summer and compensated for extra production at lower tiered tariff or APPC rates in the winter months. Such prosumers could find it worthwhile oversizing their solar system slightly, based on how much they desire to lower their summer bills by.

Use our convenient solar sizing calculator and quote generator to find the appropriate plant size and costs for your requirement.

Sample Returns Calculation

If you have a residential general purpose (RGP) urban connection with a 4 kW sanctioned load, and average monthly electricity usage is 600 units, your bi-monthly bill from DGVCL under the RGPU tariff code would look like

Units 1200
Fixed charge ₹ 50
Energy charge ₹ 5,550
Fuel charge ₹ 1,728
Electricity Duty (ED) charge ₹ 1,099
Meter charge ₹ 20
Total billed amount ₹ 8,447

You decide to install the maximum allowable solar photovoltaic plant on your roof, which is half of your sanctioned load or 2 kW. This costs you ₹ 1,68,000. You get the maximum subsidy of ₹ 20,000 from the state government, making the effective cost of your solar system ₹ 1,48,000.

This plant will generate on average 250 units of electricity every month and feed it to the grid. Because of net metering, you will now be charged for 600 – 250 = 350 units a month, and thus your new bi-monthly bill after installing solar will look like

Units 700
Fixed charge ₹ 50
Energy charge ₹ 2,950
Fuel charge ₹ 1,008
Electricity Duty (ED) charge ₹ 601
Meter charge ₹ 20
Total billed amount ₹ 4,629

h/t Viral for helping with tariff calculations!

The rooftop solar has reduced your electricity bill by ₹ 8,447 – ₹ 4,629 = ₹ 3,818 every two months, or ₹ 22,908 every year. This implies a simple return on investment (ROI) of 15.5% per annum.

Some additional financial benefits of installing rooftop solar:

  1. Electricity tariffs in India have risen by 5-10% every year in recent years. Going in for net metering hedges or shields you from future rate increases over the 25 years of the PPA.
  2. Non-domestic consumers can take advantage of accelerated depreciation (AD) benefits

To be conservative, we can assume the following:

  • Panel output degradation of 1% per year
  • Maintenance / wear and tear budget of ₹150 per month with inflation at 3% per year
  • Zero salvage value at the end of the PPA

The net effect of the above allowances would decrease effective returns by ~2.5% per year. Considering a 5% inflation in electricity tariffs, the adjusted returns remain extremely attractive at ~18% per year. Due to economics of scale, the returns on larger solar plants will be higher than this.

Starting from system design all the way to commissioning, Oorjan can provide a turnkey solution for you to go solar. If you are low on liquidity, Oorjan can also assist you with bank financing.

Contact us today to get started on rooftop solar in Gujarat!


Go green and save!
Click on the button below to get started.


Signup and get notified when we publish new articles.

Similar Posts

solar powered garden lights
May 18, 2018
Solar power plant
May 18, 2018

Leave a Reply

Your email address will not be published. Required fields are marked *


Go Green and Save!

Please fill the form below for Oorjan product updates via Email/SMS