Guides

Commercial Solar ROI: Shops, Offices & Factories

No residential subsidy applies to commercial connections, but the numbers often work out even better. Here's why.

Most solar content online is written for homeowners, but a large share of the enquiries we get in Gorakhpur are from shop owners, office managers and small factory operators. The economics are genuinely different for a business than for a home, in several ways that work in your favour. This guide walks through why, and how to actually think about payback.

No subsidy, but a bigger bill to offset

The PM Surya Ghar residential subsidy specifically applies to home connections, not commercial, office or industrial ones (see our subsidy guide). But commercial and industrial electricity tariffs in Uttar Pradesh are typically higher per unit than residential tariffs, and commercial consumption is usually much larger to begin with. A bigger bill means each unit of solar generation you offset is worth more in absolute savings, which is a major part of why commercial solar often pays back faster than residential solar, even without a subsidy.

Accelerated depreciation: the real commercial incentive

Businesses in India can generally claim accelerated depreciation on solar assets under the Income Tax Act, which allows a much larger portion of the system's cost to be written off in the early years compared to standard asset depreciation. This directly reduces taxable income in the years it's claimed, which is a meaningful part of the total return for a registered business, though the exact rate and how it applies to your specific business structure is something to confirm with your chartered accountant, since tax rules and applicable rates can change.

How to actually think about payback

Payback period is simply: total installation cost, divided by annual savings on your electricity bill. For a business, annual savings depend on how much of your solar generation you actually use during your operating hours, a shop or office open during daylight hours captures nearly all of its solar generation directly, while a business that's mostly closed during the day (or runs night shifts) will export more to the grid via net metering and rely more on the net-metering credit rather than direct use. Both work, but knowing your actual daytime consumption pattern gives a much more accurate payback estimate than a generic number.

Sizing for a business is different from sizing for a home

Factories and larger offices often have significantly higher and more consistent daytime loads than a home, which usually means a larger system makes sense, and the cost per kW tends to improve slightly at larger sizes. We cover the general sizing logic in our system sizing guide, but for commercial sites we always recommend an on-site load assessment rather than sizing off the electricity bill alone, since actual daytime usage patterns matter more for businesses than for homes.

Net metering for commercial connections

Commercial connections go through the same DISCOM net metering process described in our how solar works guide, surplus generation is exported and credited, and you're billed on the net difference. The application and inspection process is broadly similar to residential, just scaled to a larger sanctioned load.