Solar plant generation and income formula
8,760 is the number of hours in a year, and 1 MWh is 1,000 kWh (units). Plant size is the AC capacity, the figure in the power purchase agreement (PPA), and CUF is measured against it.
Worked example: 1 MW at ₹3 per unit
- Year-1 generation = 1 × 8,760 × 20% = 1,752 MWh, or 17.52 lakh units.
- Year-1 revenue = 1,752 × 1,000 × ₹3 = ₹52.56 lakh, an average of ₹4.38 lakh a month.
- After O&M of ₹4 lakh: ₹48.56 lakh in year 1.
- Year 25, after 0.6% degradation a year: 1,752 × 0.994^24 = about 1,516 MWh, so revenue falls to about ₹45.5 lakh.
- Simple payback on capex of ₹3.5 crore: about 7.4 years. Over 25 years the plant sells about 40,787 MWh for about ₹12.2 crore.
A 5 MW plant with the same inputs is exactly five times larger on every line: 8,760 MWh in year 1 and about ₹2.63 crore of revenue.
What CUF means
Capacity utilisation factor is the energy a plant actually delivers in a year divided by what it would deliver running at full AC capacity every hour. Solar plants produce nothing at night and less on cloudy days, so Indian ground-mounted plants usually land between about 17% and 25%. Sunny, dry sites in Rajasthan and Gujarat, single-axis trackers and a higher DC-to-AC ratio push CUF up; dusty panels, monsoon cloud and grid outages pull it down. Each percentage point of CUF on 1 MW is 87.6 MWh a year, which at ₹3 is about ₹2.6 lakh.
| CUF | Units a year per MW | Revenue a month at ₹3 |
|---|---|---|
| 17% | 14.89 lakh | ₹3.72 lakh |
| 19% | 16.64 lakh | ₹4.16 lakh |
| 20% | 17.52 lakh | ₹4.38 lakh |
| 22% | 19.27 lakh | ₹4.82 lakh |
| 24% | 21.02 lakh | ₹5.26 lakh |
Why the tariff depends on who buys the power
- Central auctions (SECI, NTPC and similar agencies): large plants bid for 25-year PPAs, and recent auctions have cleared at roughly ₹2.5 to ₹2.7 per unit. The buyer is creditworthy, but the price is low.
- State utilities (discoms): tariffs vary by state and by the year the PPA was signed, and older contracts are often higher. Some discoms pay late, which matters as much as the headline rate.
- Commercial and industrial buyers (open access or captive): a factory or business buys directly, often at ₹3.5 to ₹5 per unit because that is still cheaper than its grid tariff. Contracts are usually shorter and depend on that buyer's finances.
Why real income differs from this estimate
The calculator assumes every unit generated is sold and paid for on time. In practice:
- Payment delays. Some state utilities have paid generators months late. Revenue you have billed but not collected does not pay O&M or loan instalments, and late-payment rules help only partly.
- Degradation. Panels lose output every year, typically 0.4% to 0.7%, faster in the first year and in hot climates. After 25 years a plant may produce 85% to 90% of its year-1 energy.
- Curtailment and outages. Grid operators sometimes ask plants to cut output, and inverter or transmission faults stop generation.
- Costs left out. Loan interest, land lease, insurance, inverter replacement around year 10 to 15, and income tax all reduce what the owner keeps.
Buying an already-running plant of 5 MW or more? See India Solar's guide to buying an operating solar plant in India.
Frequently asked questions
What is the income of a 1 MW solar plant per month?
How many units does a 5 MW solar plant produce?
How many units does a 1 MW solar plant generate per day?
What is the cost of a 1 MW solar plant in India?
Is this calculator investment advice?
Last updated . How we check our tools.