India, with its rapidly growing economy and significant energy demands, is increasingly turning to renewable energy to meet its future energy needs. Solar energy, in particular, is at the forefront of this transition, and 1 MW solar plants play a significant role in this effort. These solar plants, while relatively small compared to utility-scale projects, offer numerous advantages for India’s renewable energy goals.
1 MW Solar Plants: An Overview
A 1 MW solar plant generates 1 megawatt of electricity, which equates to approximately 1,500 MWh annually, depending on location and climatic conditions. While larger utility-scale solar farms capture the headlines, smaller-scale solar projects, such as 1 MW plants, are ideal for specific user groups, such as factories, schools, hospitals, and small businesses.
Cost of Setting Up a 1 MW Solar Plant in India
The cost of setting up a 1 MW solar plant in India has decreased significantly in recent years, thanks to technological advancements, economies of scale, and increased government support. As of 2023, the cost to set up a 1 MW plant hovers between ₹3.5 crore to ₹5 crore (approximately $425,000 to $600,000 USD), depending on the technology, location, and type of installation (ground-mounted or rooftop). This cost includes:
- Solar PV modules: The most critical and expensive component, accounting for about 60% of the total cost.
- Inverters: Converting DC to AC power, accounting for around 10-12% of the cost.
- Balance of systems: This includes mounting structures, wiring, switches, etc., which account for 20-30%.
- Installation and labor: Around 10-15%.
The payback period for such installations ranges from 5 to 7 years, depending on electricity tariffs, incentives, and energy consumption patterns.

Maintenance and Breakdown of 1 MW Solar Plants
A key attraction of solar power is its low operational and maintenance (O&M) costs compared to other forms of energy production. Once installed, solar plants generally have minimal maintenance needs. However, ensuring peak performance requires some degree of routine checks and upkeep.
- Cleaning the Solar Panels: Dust, dirt, and bird droppings can reduce panel efficiency by as much as 20-30%. Regular cleaning, particularly in dusty regions, is crucial.
- Inverter Maintenance: Inverters, which convert solar energy from DC to AC, are more likely to require maintenance or replacement over the lifespan of the system. Most inverters have a warranty period of 5-10 years and may need repairs or replacement afterward.
- Wiring Checks: Over time, wiring can degrade due to weather conditions or pests, requiring regular inspections.
- Monitoring System Health: With advancements in technology, real-time monitoring solutions can alert operators to potential issues before they escalate into costly breakdowns.
On average, the O&M costs for a 1 MW solar plant are estimated to be around ₹4-5 lakh annually, a fraction of the initial setup cost. This low maintenance requirement makes solar energy particularly attractive for businesses looking for reliable and affordable energy solutions.
Government Incentives and Support for 1 MW Solar Plants
The Indian government has been proactive in promoting solar energy through a host of policies, incentives, and subsidies. Some of the key schemes and incentives for 1 MW solar plants include:
1. Accelerated Depreciation (AD): Businesses that invest in solar plants can claim up to 40% of the project cost as depreciation in the first year, which significantly reduces taxable income and, hence, the tax burden.
2. Subsidies for Residential and Agricultural Use: The Ministry of New and Renewable Energy (MNRE) offers capital subsidies for rooftop solar installations, which can be particularly beneficial for small businesses operating out of residential premises or agricultural units.
3. Net Metering: Under the net metering policy, solar power generators can feed surplus electricity back into the grid, offsetting their electricity bills. This is especially advantageous for businesses with fluctuating energy needs.
4. GST Benefits: The Goods and Services Tax (GST) on solar equipment has been lowered to 5%, reducing the overall capital cost of setting up a solar plant.
5. Solar Renewable Energy Certificates (RECs): Businesses that generate solar power but do not consume all of it can sell Solar RECs in the power market, providing an additional revenue stream.
How 1 MW Solar Plants Benefit Small and Mid-Sized Businesses
One of the biggest beneficiaries of 1 MW solar plants are small and mid-sized businesses (SMBs), which often struggle with high electricity costs and unreliable power supply. The benefits to these businesses are manifold:
1. Reduced Electricity Costs: With grid electricity prices on the rise, installing a 1 MW solar plant can drastically reduce power bills, leading to significant savings over time. In some states, the cost of solar energy is already lower than grid electricity, making it an economically viable alternative.
2. Energy Independence: By generating their own electricity, businesses can reduce their dependence on the grid and avoid power outages, which can disrupt operations and lead to productivity losses.
3. Environmental Impact: Solar energy is clean and renewable, allowing businesses to reduce their carbon footprint. For companies with corporate social responsibility (CSR) commitments or those looking to improve their sustainability credentials, solar energy provides a tangible way to meet these goals.
4. Return on Investment (ROI): With falling costs, government incentives, and a reduction in electricity bills, businesses can achieve an attractive ROI within 5-7 years, after which the solar plant generates almost free electricity for the remainder of its 25–30-year lifespan.
5. Improved Brand Image: As environmental consciousness grows, businesses that adopt solar energy can improve their brand image. This can be an especially powerful marketing tool, particularly for companies that wish to appeal to eco-conscious consumers or investors.

Challenges and Considerations
While 1 MW solar plants offer numerous benefits, there are some challenges that businesses need to be aware of:
1. Initial Capital Investment: Despite falling costs, the upfront investment for a 1 MW solar plant can still be significant for many SMBs. However, financing options such as solar loans or power purchase agreements (PPAs) can help alleviate this burden.
2. Land Requirement: Ground-mounted 1 MW solar plants require approximately 4-5 acres of land, which may not be feasible for businesses located in densely populated urban areas. Rooftop installations are a good alternative for businesses with sufficient roof space.
3. Intermittency: Solar power generation is dependent on sunlight, making it an intermittent energy source. For businesses that require round-the-clock power, integrating battery storage systems or using solar as part of a hybrid system can help mitigate this issues
Final Words
With the government’s continued support and advancements in solar technology, the future for 1 MW solar plants looks bright. For businesses looking to reduce energy costs, improve their environmental footprint, and gain a competitive edge, investing in a 1 MW solar plant is a viable and rewarding option. With the support of experts like M&Y Solar, you can ensure a seamless and successful transition to solar energy.