Unlock Savings & Earnings with Solar Energy
On July 15, 2023, the Public Utilities Commission of Sri Lanka (PUCSL) approved a revised electricity tariff structure that included an overall 14.2% reduction in electricity tariffs. This reduction was implemented in response to lower global fuel prices and an increase in the proportion of electricity generated from renewable sources.
The following table summarizes the tariff reductions for different consumer categories:
As we are all aware, solar power is the energy we get from the sun. Imagine using sunlight to make electricity or heat – that’s what solar power is all about. It’s a clean and friendly way to power things without harming the environment. The shift towards solar energy is not just a trend; it’s an important step towards a sustainable future. This blog dives into the basics of solar power—what it is, how it works, and the good things about it. It further explains why considering a switch to solar is a smart idea, what net metering is all about, and the recent government incentives and loans that are making solar power more accessible and beneficial in Sri Lanka.
So, What is Solar Power & How Does it Operate?
Solar power is a form of energy derived from the sun’s rays. The process involves harnessing sunlight and converting it into either electricity or heat for various applications. At the heart of solar power are solar panels, which are designed to capture and convert sunlight into usable energy. These panels contain photovoltaic cells that absorb sunlight and generate an electric current, producing electricity. Alternatively, solar thermal systems use sunlight to heat a fluid, creating steam that drives turbines to generate power.
Advantages of Using Solar Power
Opting for solar power brings several benefits, including:
- Renewable Energy Source: Solar power is a renewable resource, meaning it is inexhaustible and can be replenished naturally.
- Environmentally Friendly: Solar power is a clean and green energy source, producing minimal to no greenhouse gas emissions, which helps reduce air pollution and combat climate change. This renewable energy option significantly contributes to lowering the carbon footprint, making it an environmentally friendly and sustainable choice.
- Reduced Electricity Bills: By generating your solar power, you can significantly reduce or eliminate your dependence on traditional electricity sources, leading to lower electricity bills. The cost of solar electricity in Sri Lanka varies depending on several factors, including the size of the system, the type of panels used, and the location of the property. However, as a general rule of thumb, you can expect to pay between Rs. 16.50 and Rs. 28.00 per kWh for solar electricity in Sri Lanka.
- Low Operating Costs: Solar power systems generally have low operating and maintenance costs once installed, making them a cost-effective long-term investment.
- Energy Independence: Utilizing solar power reduces reliance on external energy sources, contributing to greater energy independence for individuals, businesses, and countries.
- Incentives and Rebates: Many governments and utilities offer financial incentives, tax credits, and rebates to encourage the adoption of solar power, making it more financially attractive.
- Low Environmental Impact: Solar power systems have a minimal impact on the environment compared to other forms of energy production, such as fossil fuels or nuclear power.
- Scalability: Solar power systems can be designed to meet various energy needs, from small residential installations to large-scale solar farms, providing flexibility in application.
- Technological Advancements: Ongoing advancements in solar technology continue to improve efficiency, making solar power an increasingly viable and competitive energy option.
Sri Lanka is blessed with a wealth of sunshine, making it an ideal place for using solar power to generate electricity. The country receives an average of 365 sunny days a year, and its tropical climate is perfect for solar panels to operate efficiently. Additionally, solar power is a great option for remote areas of Sri Lanka, as it can be installed and maintained without the need for a connection to the national grid. Solar power is also a clean and environmentally friendly energy source, which helps to reduce Sri Lanka’s reliance on fossil fuels.
Why Consider Switching to Solar Power?
You should consider switching to solar power not only for financial gain but also for a cleaner and more sustainable energy source. Solar power is environmentally friendly, producing minimal greenhouse gas emissions compared to traditional energy sources. By capturing energy from the sun, you contribute to reducing your carbon footprint and combating climate change. Moreover, solar power can lead to significant cost savings over time, as it allows you to generate your electricity and potentially eliminate or reduce your reliance on conventional power grids. Making the switch to solar not only benefits the environment but also offers economic advantages, making it a smart and responsible choice for the future.
The amount of savings you can expect per kWh will vary depending on your location, electricity consumption, and solar system size. However, in general, you can expect to save monthly electricity bills apart from the earnings you can make with the extra electricity production.
The return on investment (ROI) for solar panels is typically between 5 and 10 years. This means that it will take you between 5 and 10 years to save enough money on your electricity bills to offset the cost of your solar system. However, the actual ROI can vary depending on the factors mentioned above.
Here are some factors that can affect your ROI for solar panels:
- Location: Solar panels are most effective in areas with plenty of sunshine.
- Electricity consumption: If you have a high electricity consumption, your ROI will be higher.
- Size of your solar system: The larger your solar system, the higher your ROI will be.
- Cost of your solar system: The lower the cost of your solar system, the higher your ROI will be.
In addition to saving money on your electricity bills, solar panels can also increase the value of your home. Studies have shown that homes with solar panels can sell for up to 20% more than comparable homes without solar panels. Overall, solar panels are a sound investment for many homeowners. They can help you save money on your electricity bills, increase the value of your home, and reduce your environmental impact.
Saving and Earning with Solar Power
The new solar tariff for rooftop Solar power systems in Sri Lanka is Rs. 37 per kWh for systems with capacities up to 500 kW and Rs. 34.50 per kWh for systems with capacities greater than 500 kW. This tariff applies to new customers coming under the “Net Accounting”, “Net Plus” and “Net Plus Plus” schemes. Once the Power Purchase Agreement (PPA) is signed, the relevant tariff will remain unchanged for the next 20 years.
- On-Grid Options
On-grid solar power systems are connected to the national grid; they generate electricity that is fed back into the grid. When you generate more electricity than you use, you can sell it back to the grid. Conversely, when you use more electricity than you generate, you buy it from the grid.
“Earn from Solar” is a program that enables you to earn money by generating electricity from your solar panels. The program compensates you for the electricity you produce, and you can also sell any excess electricity back to the grid.
1.1 Net Metering
Net metering is a billing system that enables you to sell the electricity generated by your solar panels back to the grid. The electricity sold back is credited to your account, and you are only charged for the electricity you use from the grid.
1.2 Net Accounting
This billing system, similar to net metering, provides a discount on your electricity bill instead of receiving credits for the electricity you sell back to the grid.
1.3 Net Plus
This billing system enables you to sell all the electricity you generate from your solar panels back to the grid, and you incur no charges for the electricity you use from the grid.
If you’re solely looking to save money through solar, then you can opt for:
- Off-Grid Options
Off-grid solar power systems operate independently from the national grid. They generate their electricity, which is stored in batteries for use when needed. This option is suitable for individuals in remote areas or those aiming for complete independence from the grid.
Individuals who acquire and install solar panels connected to the national grid on or after April 1, 2021, are eligible for a tax deduction of up to LKR 600,000 per year. This deduction encompasses the total expenditure incurred or amounts paid to a bank in connection with any loan obtained for the purchase and installation of the solar panels.
The cost of installing solar panels in Sri Lanka varies depending on several factors, including the size of the system, the type of panels used, and the complexity of the installation. However, as a general rule of thumb, you can expect to pay between Rs. 400,000 and Rs. 1,000,000 for a 2kW to 5kW system.
Empowering Solar Energy Adoption with Loans
Solar power has gained significant traction in Sri Lanka, offering homeowners and businesses substantial savings on electricity bills, enhanced environmental stewardship, and a commitment to a sustainable future. Individuals who acquire and install solar panels connected to the national grid on or after April 1, 2021, are eligible for a tax deduction of up to LKR 600,000 per year. This deduction encompasses the total expenditure incurred or amounts paid to a bank in connection with any loan obtained for the purchase and installation of the solar panels. However, the initial investment in a solar power system can pose a financial hurdle for some. To address this challenge, several Sri Lankan banks have introduced specialized solar power loans, making solar energy more accessible.
Solar Loan Guide: Easy Steps to Fund Your Solar Installation
Obtaining a loan for solar installation in Sri Lanka is a straightforward process. Several banks and financial institutions offer dedicated solar loans with attractive interest rates and flexible repayment terms. Here’s a step-by-step guide to help you get started:
- Choose a Reputable Solar Panel Supplier: Select a registered supplier accredited by the Sri Lanka Sustainable Energy Authority (SLSEA). This ensures quality and adherence to industry standards.
- Get Quotations: Obtain quotations from multiple suppliers to compare prices and services. Ensure the quotes include the cost of panels, installation, and any necessary equipment.
- Check Eligibility Criteria: Each bank or financial institution has specific eligibility criteria for solar loans. Typically, you’ll need to be a Sri Lankan citizen with a steady income and a good credit history.
- Gather Required Documents: Prepare the necessary documents, such as your National Identity Card (NIC), proof of income (pay slips or bank statements), and property ownership documents if applicable.
- Apply for the Loan: Visit the bank or financial institution of your choice and submit the completed loan application form along with the required documents.
- Loan Approval and Disbursement: The bank or financial institution will assess your application and creditworthiness. Upon approval, the loan amount will be disbursed to the solar panel supplier.
- Solar Panel Installation: The supplier will install the solar panels and provide you with a warranty and maintenance plan.
Banks Offering Solar Loans:
In Sri Lanka, multiple banks offer diverse solar loan options to cater to the varying needs of prospective homebuyers. Loan terms differ among banks, with some providing a maximum amount of Rs. 1.5 million and a repayment period of up to 7 years, while others accommodate borrowers seeking up to Rs. 3.5 million with a repayment period of up to 8 years. The choice of the ideal option depends on both the bank’s terms and the individual’s financial requirements and preferences. Building a strong relationship with the chosen bank is key to navigating the available options effectively.
To obtain a solar loan some of the eligibility criteria are as follows:
- Sri Lankan residency
- Proof of income
- Acceptable credit history
- Ownership of property with solar power installation
If you’re thinking about putting solar panels on your property, you can use the solar calculator. It helps you figure out how much energy you could generate, how much money you might save, and how it can impact the environment. It’s a handy tool to decide if solar energy is right for you.
To seamlessly integrate solar power into your new Sri Lankan home, consider these key steps during construction:
- Consult with your house builder or electrician to determine the best solar solution for your needs.
- Leave provision for solar wiring to streamline the installation process.
- Reinforce the roof structure if necessary to support the weight of the solar panels.
- Plan for future expansion by leaving extra space and wiring capacity.
- Obtain necessary permits and approvals to ensure compliance with local regulations.
Posted Date: 30th November 2023