How Government of India (GoI) and SBI can install solar for free

There is an old saying “There ain’t no such thing as a free lunch” but I believe we can have free things by proper planning and implementation. In the next couple of pages I will demonstrate how India can have free solar power installed.

Mother Nature has truly blessed India with a great climate and particularly 300 rains free sunny days. Legendary Thomas Alva Edison famously quoted in conversation with another legendary Henry ford “I’d put my money on the sun and solar energy. What a source of power! “. Now it’s the turn of Government of India to put their money on solar and get the enormous benefits on free.

Now not taking a long I will try to justify how GoI can install solar for free. Currently if we look installation of solar is costly (as per CERC it costs a whooping 6.5 Cr as compare to 3-4 Cr for Coal). But the long term cost of solar is very low (infact lower than coal as no input cost). Solar power plants have a life cycle of 25 years and once installed there is no input cost with a very small operational cost. The cost of solar per unit is now reaching INR 5.5 (way below Industrial rates) and by 2015 it will achieve retail level grid parity as well.

Capacity(W) 1000000 1MW
Cost(INR) 65000000 6.5Cr

To install 1 MW GoI needs money and this money can come from any Financial Institution like SBI. Solar PV plant installation doesn’t take a long time (less than 6 months). Meanwhile in these 6 months GoI should replace or purchase 1066 Mahindra E20 at a cost of  68.2 Cr (E20 will cost 6,40,000). This replacement is not necessary for employees and GoI can tie up Mahindra /Individual to meet this target.

Average Monthly travel 1000 KM
Cars needed per MW 1066
Cars cost (INR) 682240000 68.2 Cr

After the solar plant is installed it will start generating electricity which can be used by these cars. Now the best part of these Electric vehicles is that they don’t use Petrol/DieselJ. Also any automobile engineer can tell you that internal combustion engines are very inefficient as compared to electric counterpart. This results in having difference in the average of Petrol/Diesel and Electric cars. The average efficiency of petrol car is 15KMPL while electric car can drive 100 KM in 10 units. Currently I am comparing apples with oranges but to compare on the level ground lets move to expenses i.e money spend for travelling.

In general 1 MW solar plant produces 1.6 Million units (1600000) in full year. Currently E20 has the efficiency of 100 KM per 10 units so these 1.6 Million units are sufficient to drive 1066 E20 for 1 year with monthly average of 1000 KM. Basically by installing 1 MW you can drive 1066 cars for free in entire year. Now we look how much it will cost to run petrol cars. Assuming a 15KMPL petrol car with a monthly run of 1000 KM will cost INR 5000 per month with petrol at Rs 75. So in a year it will cost INR 60000 and all 1066 cars would cost INR 6, 40, 00,000 i.e 6.4 Cr.

Efficiency of electric car 10 E20 (100 KM /10 units)
Conversion loss 20% (DC to AC to DC)
Distance travelled by solar electricity 12800000 KM
Petrol car efficiency (KMPL) 15 KMPL
Petrol saved (L) 853333.33 L
Cost of petrol saved (INR) 64000000 INR @75PL

Here I am even not considering the health benefits or employment benefits. Generally a petrol car emits 0.465 Kg/Ltr of Co2 and by running these electric cars we can stop 396800 Kg of Co2 emission.I assume till this point you would have guessed why I was saying that installation of solar is free for GoI. It saves around 6.4 Cr in running cost in 1st year only which can be used to pay back to SBI. However this is just one variable of the profitable equation. GoI will also earn from the excise duty, sales duty & various taxes on sales of 1066 E20. Assuming these taxes to be 10% of the car cost GoI will earn 6.8 Cr.

Cars cost 682240000 68.2 Cr
Taxes on cars excise, sales, etc (10%) 68224000 6.8 Cr

Overall Summary

Capacity(W) 1000000 1MW
Cost(INR) 65000000 6.5Cr
Production(KWH) 1600000 Units
Efficiency of electric car 10 E20 (100 KM /10 units)
Conversion loss 20% (DC to AC to DC)
Distance travelled by solar electricity 12800000 KM
Petrol car efficiency (KMPL) 15 KMPL
Petrol saved (L) 853333.33 L
Cost of petrol saved (INR) 64000000 INR @75PL
Return of investment 98.46%
Time to get back initial cost 1.02 Years
Added benefits
Average Monthly travel 1000 KM
Cars needed per MW 1066
Cars cost 682240000 68.2 Cr
Taxes on cars excise, sales, etc (10%) 68224000 6.8 Cr
Income tax and health benefits 3350000 1.35 Cr
Total Other benefits 71574000 7Cr
Co2 prevented 396800 KG @0.465 Kg/Ltr

Obviously people will say that GoI needs to spend 68.2 Cr for these cars but the running cost savings will pay for themselves (EMI) in next 8 years. Since electric cars have less number of moving parts hence the maintenance cost is also very less which increase more savings. Only cost is the replacement of battery in 6 -8 years which is 1,00,000 per car and can be recouped in very next year by the car.

In all it’s a WIN WIN situation for everybody including GOI (Reducing fiscal deficit & Forex by reducing oil consumption), SBI (Loan book of 68.2 Cr) & Rest of India (less pollution, more jobs)

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