Is Rooftop Solar Power Cheaper than Diesel/Grid Power?

Rooftop Solar vs. Diesel

Rooftop solar power is much cheaper than power from diesel generators. Compared to solar power’s Rs.4.0-5/kWh, diesel generators generate power at about Rs. 17/kWh (a litre of diesel generates around 3-4 kWh). Diesel power can be even more expensive once other losses such as pilferage, evaporation, etc. are considered. In some applications, such as rural telecom towers, diesel power can cost as much as Rs. 40/kWh!

The cost of diesel power has seen a steep increase over the last decade, shown in this chart:


The price of diesel has seen a sudden decrease towards end 2014. We believe that this reduction is temporary and the cost of diesel will continue to increase in the present decade, similar to the previous decade. The price of diesel had increased by around 210% from 2002 to 2014 and 145% from 2010 to 2014. This is a serious cause for concern for many businesses and residences that depend on diesel power.If the price were to increase by 10% a year (which has been the trend), diesel would cost about Rs. 83/litre in 2020 and the cost of power from diesel would be close to Rs. 25/kWh!

This continuing upward trend in cost of diesel power makes a compelling case for residences and industrial/commercial units that consume a lot of diesel to switch to solar power.

Moreover, diesel generators were favored as a backup to ensure continous power supply to upscale societies and industries during power outages. Hoever, under the current scenario, power outages in major cities in India works out to be less than an hour per day on average. This again, makes the use of diesel generators more or less redundant in major cities.

Rooftop Solar vs. Grid

Whether rooftop solar is more expensive than grid power depends on your current tariff.

  • Commercial/industrial tariff – Rooftop solar may be cheaper than grid power, depending on the state and the specific consumer category
    • A Commercial Consumer in Mumbai consuming greater than 500 kWh in a billing cycle will pay Rs. 11.91/kWh which is much more expensive than rooftop solar power
  • Other consumers – Grid power is likely to be cheaper than rooftop solar power
    • An LT I Residential Consumer in Mumbai consuming less than 100 kWh in a billing cycle will pay Rs. 3/kWh (drawing from BEST utility) which is cheaper than the cost of rooftop solar power
Grid tariffs in Indian cities – Industrial, Commercial, and Residential

A comparison of grid tariffs for different consumers in 5 cities is given below:

Sample State-City grid tariff comparison (Rs./kWh)
Industrial/Commercial Residential
State-City Category Industrial Tariff Commercial Tariff Consumption Tariff
Andhra Pradesh – Hyderabad
11 kV 7.42 7.42
33 kV 6.77 6.77
132+ kV 6.51 6.51
50 kWh 2.01
200 kWh 4.33
400 kWh 5.72
600 kWh 6.54
Gujarat – Ahmedabad
500 kva 4.67 4.37
500-2,500 kva 5.00 4.70
> 2,500 kva 5.10 4.80
50 kWh 4.92
200 kWh 4.61
300 kWh 4.89
Karnataka – Bengaluru
1-1,00,000 kWh 5.75
>1,00,000 kWh 6.15
1-2,00,000 kWh 7.35
>2,00,000 kWh 7.65
1-30 kWh 8.40
31-100 kWh 5.24
101-200 kWh 5.17
201+ kWh 5.49
Maharashtra – Mumbai
Express feeder 7.32 11.91
Non Express feeder 6.58 11.18
Seasonal 8.17
100 kWh 5.65
300 kWh 5.44
500 kWh 7.10
600 kWh 7.07
Tamil Nadu – Chennai
5.98 7.61
99 kWh 1.30
199 kWh 1.70
499 kWh 2.76
600 kWh 4.13

Note: The above tariffs are only indicative and calculated as an average for each type of consumer. Actual tariffs vary based on several factors such as supplying utility and proportion of variable to fixed charges.

As can be seen, there are several categories of consumers in some regions for whom rooftop solar power is cheaper than grid power.

Rooftop solar PV offers an opportunity to fix a part of your energy cost for the next 25 years. The levelised cost* of power from your solar PV plant remains constant through the lifetime of the plant, but the cost of both grid and diesel power will keep on increasing. A rooftop solar power plant installed today will provide cheaper-than-grid power in a few years’ time once the grid tariffs rise beyond the cost of solar power.

* Levelised cost is the cost per unit of power generated, calculated taking into account all costs incurred over the lifetime of the plant adjusted for time value of money.

  • Solar PV offers power at Rs. 4.5-5/KWh
  • Diesel
    • Diesel power costs Rs. 17-40/KWh, making solar power much cheaper
    • The price of diesel fuel has increased 300% from 2002 to 2015
  • Grid
    • Solar power may be cheaper than grid power, depending on the customer category and jurisdiction e.g., Mumbai LT II Commercial consumers pay Rs. 11.25/KWh which is more expensive than solar


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