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Business Houses are looking for Sustainable Alternatives, to Reduce their Energy costs.

Increasing electricity demand and rising grid tariffs for commercial and industrial customers are driving business users to rooftop solar, which is not only cleaner and cheaper but also gives them tariff certainty for 25 years. I rooftop solar has vast potential, and already accounts for 70-80% of all the country’s rooftop solar installations. Biggoz powered by Natural Solaris leads with its state of the art solutions. Your investment in Biggoz industrial rooftop solution ensures return on investment by reducing your electricity bills. Biggoz powered by Natural Solaris customized rooftop solutions have helped multiple industrial, commercial and institutional customers implement sustainable solar power solutions, thereby reducing their carbon footprint while making prudent fiscal sense for them with quick Return on Investment (ROI).



Accelerated Depreciation Benefit

The MNRE (Ministry of New and Renewable Energy – Central Government) has set a target of installing 227 Gigawatts (22,70,00,000 kilowatts) of renewable energy by 31 March 2022. To accomplish this, they are encouraging solar in a variety of ways, one of which is by giving commercial clients with accelerated depreciation tax benefits. The government of India is also promoting solar energy in the corporate and private sector through tax relief by allowing them to claim a higher rate of depreciation, more commonly referred to as accelerated depreciation / AD Benefit, under section 32 of the Income Tax Act. Solar power is being promoted in corporates and private sector by Govt of India through Tax relief by allowing them to avail higher rate of depreciation more often termed as accelerated depreciation / AD Benefit, under section 32 of Income Tax act. The normal depreciation rate for any general plant and machinery is 15%. For commercial and industrial electricity consumers, the Government of India's accelerated depreciation tax benefits on solar energy installations are extremely advantageous and help make solar energy a viable and sustainable option for commercial customers. To encourage the use of solar energy in commercial and industrial sectors, the Indian government grants accelerated depreciation on solar power plant fixed assets. At the moment, the maximum rate of acceleration that may be claimed in a year is 40%. Comparatively, the normal rate of depreciation for general plant and machinery is 15%. The benefit of accelerated depreciation enables commercial and industrial consumers of solar energy in India to discount their investment in a solar power plant at a rate significantly higher than that of other fixed assets. This allows the user to claim tax benefits on the value of the asset depreciated during the year.

Scenario Uptil 31 st March 2017

31st march 2017 allowed to claim maximum up to 80% depreciation in first year of commissioning of solar power plant. Also as per Section 32 (1) (ii A)of Income Tax Ac 1961, an additional depreciation of 20% of actual cost can be
claimed if new plant and machinery is installed for purpose of manufacturing. Hence, one could claim 100% depreciation for a solar power project, if the asset is in use for more than 180 days of the fiscal year. If the solar power plant is commissioned for a period of less than 180 days, then the depreciation benefit is split over two financial years. This applied to projects commissioned in fiscal year 2016-17 or earlier.

Scenario After 31 st March 2017

1st April 2017.Hence considering the new budget policy, all solar power plants commissioned after 1 April 2017 will be eligible for following benefits : 1. Solar plant commissioned for more than 180 days in a financial year: – It will be eligible for 40 + 20 % depreciation. Hence the asset owner can claim 60% depreciation in first year. This itself is a very big benefit as it incentivizes investment in solar power systems. 2. Solar power plant commissioned for less than 180 days in a financial year will be eligible for half of full year depreciation rate


Given below is an illustration showing the payback and IRR in both scenarios considering the project is commissioned
for more than 180 days in a year.

General Assumptions :-

S.N. Particular Value
1 Cost of solar system Rs. 1,00,00,000/-
2 Electricity tariff (Landed inclusive of ED & Cess) Rs. 6.50/ KWh
3 Estimated solar energy generation in first year 275650 KWh
4 Debt Equity ratio * 30% equity 70% debt
5 Interest rate 9.75% per annum

* Based on general project finance norms of banks /FIs

Computation of ROI (Return on investment) :-

S.N. Particular As per AD policy from Apr 2017 onwards As per old AD policy prior to Apr 2017 onwards
1 Depreciation Rate (%) 60 % 100 %
2 Depreciation amount (Rs.) Rs. 60 Lacs Rs. 100 Lacs
3 Tax saved on above amount Rs. 20.40 Lacs Rs. 34 Lacs
4 Hence, Net investment Rs. 79.60 Lacs Rs. 66 Lacs
5 Equity IRR 46.3% 55.5 %

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