Based on the Ministry of Energy’s directive since 1395, the guaranteed electricity purchase contract for household renewable power plants began. According to this guideline, electricity distribution companies are obliged to conclude 20-year contracts with applicants and purchase the generated electricity at the approved rate. These contracts are concluded based on the regulations of Article (61) of the Energy Consumption Pattern Reform Law, and SATBA, on behalf of the Ministry of Energy, is obliged to purchase the electricity of these power plants according to the provisions of the 20-year contracts.
The base rate for guaranteed purchase of electricity from household solar power plants this year has been set at 5,845 tomans per kilowatt-hour, which, in accordance with legal provisions, is adjusted annually in proportion to inflation indices and exchange rates. This rate, compared to the household electricity tariff, which averages about 150 tomans in cities and less than 60 tomans in villages, creates a significant price difference for households. In other words, each kilowatt-hour of electricity generated by a household power plant is purchased at about 25 to 40 times the usual consumed electricity, and this very issue doubles the economic attractiveness of this plan.
An important point is that the guaranteed purchase rate is accompanied by an increasing adjustment coefficient. To preserve the value of capital, the purchase rate is adjusted in proportion to inflation and currency fluctuations; such that in the first year 5 percent and from the second year, about 25 percent will be added to the rate annually. This feature turns a household solar power plant into an inflation-resistant investment whose income value is preserved in the long term.
Cost Structure; From Panel to Grid Connection
The initial investment for constructing a household solar power plant varies depending on capacity, equipment quality, and installation conditions. According to the Director General of the Office of Economic Studies and Financing of SATBA, the cost of constructing a five-kilowatt solar power plant is currently about 350 to 400 million tomans. This figure includes the total cost including equipment, installation, and grid connection.
However, there are other estimates that show a lower cost. The head of SATBA’s Renewable Power Plant Development Group has stated the total cost of a 5-kilowatt grid-connected power plant to be between 170 and 200 million tomans. Of this amount, about 65 million tomans is related to solar panels, 30 million tomans for supplying the inverter, 20 million tomans for structures, and about 30 million tomans is estimated for protective equipment, installation, and the meter. The difference between these two estimates stems from currency rate fluctuations, equipment quality, and differences in estimating side costs such as transportation and design. In any case, applicants must obtain an accurate price quote from reputable sellers and contractors before making any decision.
From the perspective of required space, a 5-kilowatt power plant needs about 50 to 60 square meters of area. This space can be a rooftop, courtyard, or any other sunlit area. For buildings with a larger area, higher capacities can also be installed; such that for every 12 square meters of area, it is possible to install one kilowatt of power plant.
Income and Investment Payback Period; Real Calculations
The most important question that every potential investor faces is: “How long does it take for the initial capital to return, and from what point does net profit begin?” Answering this question requires accurate calculation of annual income and comparing it with the initial capital.
A 5-kilowatt solar power plant can generate more than 9,000 kilowatt-hours of electricity annually. Taking into account the base guaranteed purchase rate of 3,820 tomans per kilowatt-hour (the rate for the year 1404), the first-year income of this power plant is estimated at about 36 million tomans. This income increases in subsequent years with the application of the annual adjustment coefficient, creating a stable and increasing income stream for the owner over the 20-year contract period.
According to experts’ calculations, the payback period for household solar power plants is estimated at about 4.5 to a maximum of 5 years. After this period, the income from electricity sales will be the investor’s net profit. This payback period, given the long useful life of solar panels, which are usually offered with a performance guarantee of 80 to 85 percent for 25 years, means more than two decades of net profitability.
Some reports even mention a shorter payback period. The renewable energy expert of the Qazvin Province Electricity Distribution Company has stated the payback for applicants as three to four years. Also, the head of SATBA’s Renewable Power Plant Development Group has estimated the payback period at about four years and noted that some small-scale power plants have so far reached a monthly income of about 10 million tomans. These differences stem from geographical conditions (amount of solar radiation), equipment quality, and precision in cost calculations.
Bank Facilities and the Loan Application Path
One of the main barriers to entering this investment is securing initial financial resources. Fortunately, the government has allocated significant bank facilities for this purpose. The possibility of receiving bank facilities up to a ceiling of 300 million tomans with an interest rate of 14 percent and five-year repayment has been provided, which covers up to 80 percent of the construction cost of small-scale power plants. This facility is offered through collaboration platforms with SATBA, and applicants can repay the loan installments from the income of the power plant itself.
The application registration process has also been simplified. Household applicants can register their request by referring to the Mehrsun system (mehrsun.satba.gov.ir). In this system, applicants enter their details and register their electricity bill ID. After initial reviews and a visit by distribution company experts to the location, a 20-year guaranteed purchase contract is concluded. Applicants can choose their desired contractor from the list of qualified contractors approved by SATBA.
Summary; A Profitable Investment or Empty Advertising?
The collection of data and calculations shows that a household solar power plant in Iran, beyond being an advertising slogan, is a calculated economic investment. With an initial capital of about 200 to 400 million tomans (depending on current rates), it is possible to achieve an annual income of about 36 million tomans, which increases with the annual adjustment coefficient and brings the payback period to less than five years. After this period, more than two decades of net and stable profit await the investor.
Of course, these calculations depend on numerous factors: the amount of solar radiation at the installation site, equipment quality, precision in installation and maintenance, and the stability of the government’s supportive policies. Investors must, before taking any action, obtain an accurate price quote from reputable contractors and perform their calculations based on up-to-date rates. However, the overall trend clearly shows that household solar energy has become a real and reliable option for diversifying the investment portfolio of Iranian households; an option that both helps reduce the country’s electricity imbalance and leads to stable income generation for citizens.
