Turn Your Electricity Bill Into an Investment Plan
Nirvahana Ventures LLP, Delhi
Introduction
As any commercial or industrial (C&I) business knows, electricity is not simply another monthly bill. It is an operating expense that can quickly balloon out of control.
That is why, as electricity prices rise and cost certainty becomes a priority, solar and storage are increasingly seen as attractive propositions.
However, picking the right size of solar plant or battery is not as straightforward as it sounds.
Instead, the more relevant question is not “How many kW of solar should I install?” but “Will the investment be worth it for my facility?”
This depends on the facility’s electricity consumption pattern, its tariff, the available rooftop area for solar, the potential for solar generation, the requirement for battery storage and, critically, the manner in which the investment will be financed.
This is where Solar + Storage Investment Advisory comes in.
At Nirvahana Ventures LLP, Delhi, we believe that businesses should understand the economics of their electricity consumption before they think about investing in solar or battery.
The Problem: A High Electricity Bill Is Only the Starting Point
A quick glance at an electricity bill will confirm that a business’s energy costs are high – but it will provide little insight into what can be done to address the problem.
Two similar-sized factories, hotels or commercial buildings – one with a monthly bill of, say, ₹20 lakh and the other with a bill of ₹25 lakh – could have very different energy requirements.
One may consume most of its electricity during the day, while the other has a significant share of its consumption in the evenings and at night.
This illustrates the limitations of discussing a business’s electricity requirements in terms of how many kW of solar it should install.
- Electricity costs can erode business margins
Electricity is typically a major operating expense for C&I consumers. Shifting tariffs, demand charges and patterns of electricity consumption can combine to make electricity costs highly unpredictable.
Renewable energy can be a way to hedge against rising electricity prices – but the value of such an investment needs to be carefully analysed. - More solar is not always a better investment
One of the easiest – but not necessarily the best – ways to generate renewable energy is to utilise all available rooftop space for solar panels.
However, the economics of a solar investment depend on a facility’s ability to consume the electricity it generates.
If the roof of a factory, for instance, is large enough to generate, say, 500 kW of solar power, but the facility can only use 200 kW of that power, then the economics of the 500 kW system will not be as attractive as those of the 200 kW system.
The emphasis, therefore, should be on finding the right size of investment for each facility, rather than focusing on maximising the size of the installed capacity. - Solar generation and electricity consumption don’t always match up
Solar power is generated during the day, while most businesses’ electricity consumption extends well into the evening and night.
Factories often have multiple shifts in a day; hotels have a significant share of their electricity consumption after sunset.
In such cases, battery storage could be a way to utilise daytime solar generation to meet evening and night-time electricity demand. It could also be used for peak-demand management and load-shifting applications.
However, it is important to recognise that battery storage is itself an investment with a cost.
The question businesses should be asking, therefore, is not “Should we invest in a battery?” but “Will the battery create enough value to justify its cost?”
From Electricity Data to an Investment Decision
A better way to approach the task of analysing a business’s energy requirements is to view the facility in its entirety.
Instead of starting the conversation with a quotation for a particular size of solar plant or battery, the discussion should begin with the electricity data of the business.
The pathway can be as simple as the following:
Electricity bills → Energy consumption → Load profile → Solar assessment → Storage assessment → Financial analysis → Financing → Implementation
Each of these steps addresses one important question. - Start With the Electricity Bill
As mentioned earlier, the electricity bill serves as the first piece of information in the assessment.
It can provide insight into the business’s overall electricity consumption pattern, including:
Monthly electricity consumption
Electricity expenditure
Tariff
Maximum demand
Demand-related charges
Seasonality
Operational patterns
Analyzing a set of bills – not just a single bill – provides a much better idea of how a facility consumes electricity. - Understand When the Facility Uses Electricity
While the total electricity consumption of a business is important, it is just as vital to analyse the timing of that consumption.
For example, two facilities – one consuming 100 units of electricity during the day and the other 100 units at night – will have very different solar investment economics, despite having the same overall electricity consumption.
Understanding a facility’s load profile is therefore a crucial step in assessing whether solar, storage or a combination of the two is a viable investment. - Assess the Solar Opportunity
With a general understanding of the facility’s electricity consumption pattern, the focus can shift to assessing its solar generation potential.
This includes considerations such as the available rooftop area, the roof’s orientation and condition and the level of solar irradiation in the region.
It also involves understanding the facility’s existing electrical infrastructure and its electricity consumption pattern.
The aim is not to determine how much solar power the facility can host but rather how much solar generation would be useful for the facility. - Is Battery Storage Actually Worth It?
Battery storage can provide significant value to a business – but only if it makes economic sense.
Depending on the facility’s load profile, it may be worth using battery storage to manage peak demand, shift load or utilise excess solar generation.
In other cases, however, it may provide little value.
Battery storage economics depend heavily on the facility’s load profile, tariff, the size and utilisation of the battery and its operating strategy.
This is why analysing the value of storage should not be based on perception but on objective financial analysis. - Look at the Numbers Before Making the Investment
With the technical assessment of the investment complete, attention can turn to its financial implications.
A proper assessment can examine the economics of various scenarios, including:
Business as usual: How much will the business spend on electricity if it continues to operate in the same way?
Solar only: How will the introduction of rooftop solar impact the business’s electricity costs?
Solar + Storage: Does adding battery storage justify the additional investment?
The analysis can look at the initial investment, energy savings, operating costs, financing costs, payback period, cash flows of the project, its returns and the assumptions about electricity prices, solar generation and battery utilisation and replacement.
Essentially, this gives the business an investment case for solar and/or battery storage, rather than simply a quotation for a particular system size.
Financing Is Part of the Solution
One of the biggest challenges that businesses face is not whether a particular project makes sense technically but rather how to finance it.
A business may want to use its own money to fund the investment; another business may prefer to raise debt; and a third business may want to explore a third-party ownership structure for the asset.
The right financing structure will depend on the business’s capital situation and its preferences with regards to the ownership of the asset.
This is why financing should be part of the project-design conversation, rather than an afterthought.
When the right financing structure is applied to a project that already looks attractive from a technical perspective, the overall investment can become even more compelling.
What Should a C&I Business Do?
Before investing in solar, storage or both, C&I businesses that want to reduce their electricity costs should ask themselves a few basic questions: - How much electricity are we actually consuming? Look beyond the total bill and understand the pattern of electricity consumption.
- When are we consuming electricity? Consumption during the day, in the evenings and during peak hours can have a major impact on investment economics.
- How much solar can we effectively use? Available rooftop space is only one consideration in determining the size of a solar investment.
- Do we really need battery storage? Storage should have a defined purpose and economic justification.
- What will the investment return? Beyond the initial cost, look at the savings, cash flows and long-term returns of the investment.
- How should the project be financed? The choice of financing structure can be as important as the technology.
The Bigger Opportunity: Building an Energy Strategy
Solar and battery storage should not be viewed as discrete investments.
Rather, they should be part of an overall energy strategy for a business.
For example, a business could begin its energy transition by conducting an energy audit, identifying efficiency opportunities, installing a solar plant and, eventually, adding battery storage as its energy requirements change.
This phased approach to energy transition can allow a business to avoid making an overly large initial investment while still benefiting from the advantages of renewable energy and storage.
After all, the point of any investment in renewable energy or battery storage is not to maximise the amount of technology installed but to make the most economically sensible investment.
How Nirvahana Ventures LLP Can Help
At Nirvahana Ventures LLP, Delhi, we work with businesses to look at their energy requirements from both a technical and a financial perspective.
Our Solar + Storage Investment Advisory can help a C&I consumer understand:
Its current electricity consumption and cost
Its solar generation potential
Whether battery storage is economically viable
The savings achievable with various configurations
The investment requirements
The financing options
The project returns
A practical implementation roadmap
Instead of analysing a business’s energy requirements from the perspective of a particular technology, we begin the conversation with the business and its energy needs.
The result can be a more informed choice about whether to proceed with a solar investment, battery storage, energy efficiency measures or a combination of the three.
Conclusion
For businesses, the path to renewable energy should not begin with the question “What size of a solar plant should I install?”
Rather, the conversation should begin with “What is my energy problem, and what investment can solve it?”
Understanding electricity consumption, analysing the load profile, assessing the solar generation potential, evaluating the role of storage and building a financial model can transform a routine electricity bill into a powerful tool – an investment roadmap.
For the right C&I business, solar and battery storage can be much more than an environmental initiative. They can be a way to manage energy costs, utilise energy more efficiently and plan for the future.
Turn Your Electricity Bill Into an Investment Plan
If you are considering the option of rooftop solar, battery storage or a complete energy transition for your business, Nirvahana can help you understand the opportunity before you make the investment.
Connect with Nirvahana Ventures LLP, Delhi, to begin your energy assessment and find out what makes economic sense for your facility.
