Mining Electricity - 7 reasons why Solar Energy is hot

If Petroleum was found 5 feet under our house, needed no further refinement or processing to use, the Government allowed us to use for ourselves as much as we want, our capital investment for this was manageable. Would we bother to extract it? Don't think too much for an answer - Yes we would. In fact, we would take anything out of it if its saleable or usable.

In the case of industrial houses, there is much more to it than mining electricity and using it. They get an accelerated depreciation benefits of 40% - 40% - 20% in the first three years on their balance sheets. Its a great capital investment to set off against their earnings to get consistent returns over 25 years. 

Can you think of another safe instrument of investment in today's time which almost guarantees a return? Any other natural resource is subject to depleting. Needless to say, if sunlight were to finish, we won't need a return on investment any more.

So what hides behind this asset class -

1. High Capital investment but can be availed by easy financing. Since returns are immediate, servicing the finance is easy.

2. Quickest way to set off earnings by making this investment. It is way better than the market uncertainties, liquidation, cash flow & inflationary issues in other investments. You chartered accountant will help you more on why HNI are rushing into investing in solar. 

3. You make money while you sleep. Other investments require active monitoring of how they perform and if they need to be upgraded or liquidated. There is no effort which goes behind this investment. The O&M is managed by the EPC and sunlight is unlimited. 

4. Flexibility on how much you invest, whether you invest on your own roof or others or sell power to other industries through open access, there are so many modalities.

5. The investment has physical assets. The returns are predictable, accountable, quantifiable or measurable. Liquidation is easy.

6. Actual Depreciation is around 18-20% in 25 years while accounting depreciation is 100% in 3 years.

7. The investment can be made on owned or leased land or roof. It can be made on others' land or roof. The generated electricity can be used for captive consumption or sold to a third party through a PPA. The electricity generated in one place can be sold to another place far away through open access. There is always a way if one PPA fails you find another customer for your units or sell your asset. 

Its so unfortunate that the most important reason is not listed above - it is Renewable Energy and the investment is for our environment. If one cares about giving as much as receiving, it is a responsibility. 

For Finance/Investment/EPC/PPA/Consultancy in Solar Energy 

Email: support@touchlifegroup.in




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