The Four Inputs You Need
To calculate solar street light ROI, you need: (1) Installed cost per light (product + pole + civil + labour). (2) What you are comparing against: grid LED installed cost per light, OR grid infrastructure cost per point if extending the grid. (3) Grid electricity rate (₹/kWh) and daily burning hours. (4) Any applicable subsidy percentage. With these four numbers, the rest is arithmetic.
Scenario 1 - Replacing Existing Grid Lights with Solar
You have 40W grid LED lights. You want to switch to solar (same 40W). Solar installed cost: ₹15,000 per point. Grid light annual electricity: 40W × 10h × 365 = 146 kWh × ₹7 = ₹1,022/year per light. Solar electricity cost: ₹0/year. Annual saving: ₹1,022/light. Simple payback: ₹15,000 ÷ ₹1,022 = 14.7 years. This scenario has a poor payback - replacing working grid lights with solar only makes sense where electricity rates are very high (₹10+/unit) or power reliability is poor. Solar makes the strongest financial case when it replaces the NEED to build grid infrastructure.
Scenario 2 - New Road, Solar vs New Grid Connection
New village road, 1 km, 40 lights. No existing grid - new connection needed. Solar option: 40 × ₹15,000 installed = ₹6,00,000. Annual opex: ₹5,000 (maintenance). Grid option: 40 × ₹6,000 light = ₹2,40,000 + ₹2,50,000 infrastructure (cable, transformer, connection) = ₹4,90,000 upfront + 40 × ₹1,022 electricity = ₹40,880/year. Year 1 comparison: solar ₹6,00,000, grid ₹5,30,880. Solar costs more upfront but: by year 5, total solar cost = ₹6,25,000 vs grid ₹6,95,200. Solar breaks even around year 3 and saves ₹35,000+/year after that. Over 10 years: solar total ₹6,50,000 vs grid ₹8,59,680. Solar saves ₹2.09 lakh. With 40% subsidy on solar: payback under 2 years.
Impact of Subsidy on Payback
Government subsidies dramatically improve solar ROI: 30% subsidy: reduces solar upfront by ₹1.8 lakh in the Scenario 2 example → payback in ~1.5 years vs grid. 50% subsidy (available under some MNRE/state schemes): payback in under 1 year vs grid extension. 100% funded (tribal area schemes): infinite ROI - the gram panchayat pays nothing and gets free lighting forever. For private projects (housing societies, industries), MNRE capital subsidies are not available, but the comparison against grid electricity at ₹8–12/unit for commercial/industrial consumers still gives payback in 3–5 years.
