Commercial Solar ROI & Accelerated Depreciation in MP: The Full Working

Commercial solar is a better financial deal than residential solar, and the reason is simple: businesses pay more for grid power and get to write the asset off against tax. A home pays roughly ₹7.50 a unit at the higher slabs; a shop, office or factory in Madhya Pradesh pays ₹8-9 a unit once duty is added. So every unit a business generates and consumes is worth more, and on top of that a profitable firm claims 40% accelerated depreciation in year one. This guide walks the full working for three common sizes — 20 kW, 50 kW and 100 kW — and answers the objections a finance head will raise before signing off. Every figure here is an estimate to show the method; your real quote depends on your roof, tariff and load.

Start with generation, because everything hangs off it

Bhopal gives about 5.2 peak sun hours a day, and a rooftop plant runs a useful roughly 300 days a year once you allow for monsoon and cleaning downtime. That gives you a clean rule of thumb: annual units equal system size in kW times 5.2 times 300. A 50 kW plant makes 50 × 5.2 × 300 = 78,000 units a year — the same number our commercial solar page works from. Scale it up or down and the ratio holds, which is exactly why payback stays similar across sizes. The variable that actually moves your return is not the system size, it is how much of that generation you consume yourself in daylight hours versus export to the grid.

The payback table: 20 kW, 50 kW, 100 kW

Here is the same method applied at three sizes, valuing each unit at a deliberately conservative ₹7.50 (commercial tariffs run higher, so if anything you save more) and using a turnkey cost estimate of ₹40,000 per kW. Larger plants tend to land a little lower per kW as fixed costs spread, but I have held the estimate flat to keep the comparison honest.

System	Units / year	Yearly saving @ ₹7.50	Cost (est. ₹40,000/kW)	Simple payback
20 kW	31,200	₹2,34,000	₹8,00,000	≈ 3.4 years
50 kW	78,000	₹5,85,000	₹20,00,000	≈ 3.4 years
100 kW	1,56,000	₹11,70,000	₹40,00,000	≈ 3.4 years

The payback looks flat because generation, saving and cost all scale in step. What breaks the tie between sizes is your own consumption profile and the depreciation benefit, which we come to next. After the payback window, the power is effectively free for the remaining 20-plus years of a 25-year panel life.

The tax angle, where a profitable business pulls ahead

Under accelerated depreciation you can write off 40% of the solar asset value in the first year. Take the 50 kW plant at ₹20,00,000: that is 40% × ₹20,00,000 = ₹8,00,000 of depreciation booked in year one. At a 25% corporate tax rate, that shields 25% × ₹8,00,000 = ₹2,00,000 of tax in the first year alone. Knock that off and your effective outlay is nearer ₹18,00,000, which pulls simple payback down to roughly 3.1 years. The same proportions apply at every size, so the effective post-shield payback lands near 3.1 years whether you install 20 kW or 100 kW.

System	Year-1 depreciation (40%)	Year-1 tax shield @ 25%	Effective payback
20 kW	₹3,20,000	₹80,000	≈ 3.1 years
50 kW	₹8,00,000	₹2,00,000	≈ 3.1 years
100 kW	₹16,00,000	₹4,00,000	≈ 3.1 years

One honest caveat: the year-one figure is only the first slice. The remaining book value keeps depreciating in later years, so there is more shield to come — I have left that out to keep the headline number conservative rather than flattering. Your chartered accountant will confirm the exact schedule against your tax position and the commissioning date, which matters because the year-one claim depends on the asset being put to use before your year-end.

Net metering versus captive consumption

This is the decision that quietly determines your real return, and it is where sizing goes right or wrong. A self-consumed unit offsets your full commercial tariff of ₹8-9; an exported unit is credited by the DISCOM at a lower rate under the net metering rules published via MPMKVVCL. A factory or office that runs its loads in daylight consumes almost everything it makes, so it captures the full tariff on nearly every unit. A business that is dark by 6 pm but sized a large system will export a chunk at the lower credit rate and dilute its own payback. The rule is straightforward: size to your daytime load first, and treat net-metered export as a useful spillover, not the core of the case. If your daytime demand is genuinely large and you are chasing more, that is when open access becomes the conversation.

LT and HT commercial tariffs, and why they help solar

Smaller commercial sites — shops, clinics, small offices — sit on low-tension (LT) commercial tariffs. Larger loads move to high-tension (HT) supply, which carries a demand charge on your sanctioned kVA plus an energy charge per unit. Either way, the energy charge a business pays is meaningfully higher than a household's, and that is the whole point: solar cancels your most expensive units. The bigger and more daytime-heavy your bill, the faster the asset pays back. Note that an HT consumer's demand charge does not vanish because you install solar — the panels cut your energy consumption, not your sanctioned demand — so the saving concentrates on the per-unit energy component. We model that split explicitly when we size an HT plant, because pretending demand charges disappear would overstate the return.

GST input credit, in plain terms

Solar equipment carries GST, and a GST-registered business installing the system for its own commercial use can generally claim that as input tax credit, setting it off against its output tax liability. In cash terms that lowers your effective net cost further, on top of the depreciation shield. This is genuinely business-specific — it depends on your registration, whether the output is taxable, and how the invoice is structured — so treat it as a real but separate benefit and confirm the exact set-off with your accountant rather than baking an assumed figure into the headline payback.

The CFO objections, answered straight

Finance heads are right to push, and the good objections have clean answers. "We do not want to lock up capital" — then look at the OPEX/RESCO model, where an investor owns the plant and you buy its power at a discounted tariff with zero upfront outlay; you trade some savings for no capital exposure. "What if we move premises?" — a rooftop plant is an asset with residual value, and the lease or sale can be structured around it; for a business unsure of its site horizon, OPEX again de-risks this. "Panels will be obsolete in five years" — panels degrade slowly, not obsolete; a 25-year performance warranty and gradual degradation curve mean the physics is well understood, unlike consumer electronics. "Maintenance will eat the savings" — rooftop solar has no moving parts beyond the inverter; cleaning and an annual check are the bulk of it, and an AMC caps that cost predictably. "The payback assumes today's tariff" — that is the conservative case; commercial tariffs have historically risen, which shortens payback rather than lengthening it, so today's number is the pessimistic one.