1 MW Solar: Cost per Unit of Electricity vs Your Grid Tariff

On the site's published assumptions, a 1 MW rooftop solar plant produces electricity at roughly ₹0.9 per unit if you simply divide lifetime cost by lifetime units, and at roughly ₹1.9 to ₹2.3 per unit once the cost of money is counted at 8% to 10%. Compare that figure with the energy charge on your own HT bill, not with a state average.

How does the capex become a rupee per unit?

The levelised cost of electricity, or LCOE, is the total cost of owning the plant over its life divided by the units it generates over the same life. The inputs below come from the published 1 MW cost page and the site's solar calculators.

The ₹/kW band behind the capex is the published one; this article adds no new price. Everything else in the table is arithmetic on stated assumptions, not a quotation.

What does the arithmetic give?

With no discounting, lifetime cost is the ₹2.50 crore capex plus 25 years of O&M at ₹2.5 lakh a year, about ₹3.1 crore. Lifetime generation with a 0.5% annual decline is about 3.39 crore units. The ratio is about ₹0.92 per unit. That is the lowest honest number, and it ignores the time value of money.

Discounting both costs and units at the owner's cost of money is what a finance team will do. At 8% the LCOE comes to about ₹1.87 per unit; at 10% about ₹2.16. Moving capex across the published band, ₹2.40 crore to ₹2.60 crore, changes the 10% figure between about ₹2.08 and ₹2.25 per unit.

Which assumptions move the answer most?

Yield and the cost of money move the result more than the capex band does. If the plant generates 10% less than 120 units per kW per month, perhaps from shading, soiling or a foggy winter, the 10% LCOE rises to about ₹2.41. If it generates 10% more, as sites in Rajasthan and Gujarat can, it falls to about ₹1.97. The cost of money matters because almost all the cost is paid in year one while the units arrive over 25 years.

Things this model leaves out, each of which a real appraisal should add: inverter replacement during the plant life, land or roof lease, insurance, loan interest if the plant is debt-funded, taxes and depreciation benefits, and the value of units exported to the grid. Treating exported units as zero, as the site's payback model does, is conservative where export is paid and generous where it cannot be absorbed.

How does this compare with your grid tariff?

An HT industrial bill is not one number. The energy charge per unit, the demand charge per kVA, the fuel and power purchase cost adjustment, electricity duty and any time-of-day factors all differ by state and by DISCOM, and they are revised through the regulator's tariff orders. Solar replaces the units you would have bought in daylight, so compare the LCOE with your avoidable energy charge per unit, not with your average bill divided by units. Fixed and demand charges are usually not avoided.

The site's payback model uses a blended ₹9 per unit as its default tariff; it is a default, not a state figure. Read the current tariff order on your state commission's site, such as those linked from the Central Electricity Regulatory Commission and the state regulators, and use your own bill for the real figure. If your avoidable energy charge is well above the LCOE, solar saves money on every unit it supplies. If it is close, the cost of money and yield decide.

What if the plant is bigger than your daytime load?

LCOE assumes every unit has value. A plant larger than daytime demand exports, and the value of exports depends on the state's net-metering or banking rule and may be much lower than the avoided tariff. The solar payback calculator shows payback at 100%, 80% and 60% self-use so you can see how sensitive the result is. Above the net-metering cap the question moves to captive or open access, covered in the open-access solar guide.

Worked comparison with a placeholder tariff

Suppose, purely as a placeholder, that your avoidable energy charge is ₹8 per unit. A plant that delivers 14.4 lakh units in year one then offsets about ₹1.15 crore of purchases, if every unit is used on site. Against that, the 10% cost-of-money LCOE of about ₹2.16 per unit means the plant produces those units at roughly a quarter of the purchase price. The gap, about ₹5.8 per unit before tax effects, is the margin that pays for the capital. Replace ₹8 with the number on your bill; if your tariff is lower, the margin shrinks, and the self-use share starts to matter more than the capex band.

The same arithmetic shows why an unused unit is expensive. A unit exported at a low credit is still a unit you paid to produce, so the cost per useful unit rises with the share you cannot use.

What should you ask each bidder?

1. Year-1 generation in kWh for your site, and the basis.
2. The guaranteed performance ratio and the annual decline in the module warranty.
3. What the price includes: HT bay, cabling, CEIG approval and net-metering.
4. O&M scope and cost after the first year.
5. Whether the inverter replacement is priced into the lifecycle.

How Secured Engineers helps

For a 1 MW enquiry the company models generation, tariff and self-use on your own bills before quoting, and covers the HT works, CEIG approval and DISCOM file. Design is done in-house, and approvals such as Fire NOC, CEIG and DISCOM net-metering are filed in-house. Mechanical, electrical, plumbing, fire and solar work can sit under one contract. The company works from offices in Noida and Ludhiana and reports 535+ projects across 18+ states and an 89.77% repeat-client rate.

To discuss your site, WhatsApp or call +91 70099 85817, or request a free quote. The relevant page is 1 MW solar plant cost.