Factory Rooftop Solar PV: Is It Worth Installing? Do the Math First

Solar Prices Have Dropped—Should You Jump In?

Solar panel prices have been continuously declining recently, and many factory owners are eager to try. But I want to remind everyone: you can install it, but you must calculate the numbers clearly.

Last year, a friend installed solar PV at their factory, only to discover that annual power generation was 30% lower than expected, extending the investment payback period from 5 to 8 years.

Today, let’s discuss how to calculate the economics of factory rooftop solar.

How to Calculate Investment Costs

System Cost Breakdown

Component Proportion Unit Price Reference
PV modules 45-50% 1.2-1.5 RMB/W
Inverters 10-12% 0.3-0.5 RMB/W
Mounting system 8-10% 0.2-0.3 RMB/W
Cables and distribution 5-8% 0.15-0.2 RMB/W
Installation labor 10-15% 0.3-0.5 RMB/W
Others 10-15% -

2024 Mainstream Price: 3.0-3.5 RMB/W (turnkey price)

Capacity Calculation Formula

Formula:

Installed capacity (kWp) = Usable roof area (m²) × 100-120W/m² × efficiency factor

Example: 10,000m² roof, effective area 8,000m²

8,000 × 110 × 0.85 = 748kWp (approximately 750kWp)

How to Calculate Returns

Power Generation Estimation

Annual Power Generation Formula:

Annual generation = Installed capacity × annual equivalent full-load hours

Annual Equivalent Full-Load Hours by Region:

Region Hours
Category I resource area (Tibet, Qinghai) 1600-2000h
Category II resource area (Gansu, Ningxia) 1300-1600h
Category III resource area (Shandong, Henan) 1000-1300h
Category IV resource area (Sichuan, Hubei) 800-1000h

Example: 750kWp installation in Category III region

750 × 1100 = 825,000 kWh/year

Revenue Composition

Revenue Source Calculation Method
Electricity savings Generation × electricity price
Feed-in revenue Excess electricity × feed-in price
Subsidy benefits Local policy

Using Category III region as example:

  • Annual generation: 825,000 kWh
  • Self-consumption ratio: 70% (577,500 kWh)
  • Grid feed-in ratio: 30% (247,500 kWh)
  • Electricity price: 0.6 RMB/kWh
  • Feed-in price: 0.35 RMB/kWh
  • Annual revenue: 577,500 × 0.6 + 247,500 × 0.35 = 447,000 RMB

Investment Return Analysis

Static Payback Period

Formula:

Static payback period = Total investment ÷ Annual revenue

Example:

  • Total investment: 750kWp × 3.2 RMB/W = 2.4 million RMB
  • Annual revenue: 447,000 RMB
  • Static payback period: 2,400,000 ÷ 447,000 = 5.4 years

Considering Degradation

PV module degradation规律:

  • Year 1: 2-3%
  • Subsequent years: 0.5-0.7% annually

Revenue after 10 years:

First year revenue × (1 - average annual degradation)^10

Calculating for 10 years:

  • Total revenue over 10 years: approximately 3.8 million RMB
  • After deducting investment: 3.8 - 2.4 = 1.4 million RMB
  • Actual IRR: approximately 8-10%

Which Factories Are Suitable

Suitable Factories

  1. Large roof area - Above 5,000m²
  2. Clear property rights - Self-owned factory, no disputes
  3. High electricity consumption - Annual electricity bills above 1 million RMB
  4. Mainly daytime usage - Solar generation matches electricity usage periods
  5. Local subsidies available - Regional subsidy policies

Not Suitable Factories

  1. Old roof structure - Requires significant reinforcement
  2. Mainly nighttime electricity usage - Solar generation cannot be used
  3. Long-term shading on roof - Trees, building shading
  4. Unstable lease terms - Landlord may change
  5. Very cheap electricity prices - Investment return takes too long

Pitfall Prevention Guide

Common Schemes

  1. Exaggerating power generation - Claiming 1500h/year actual only 1000h
  2. Low-bidding with inferior materials - Using substandard components
  3. Hidden O&M costs - Free O&M for first few years, then high fees
  4. Lack of installation qualifications - Non-professional team construction

Selection Recommendations

Module Brands:

  • Tier 1: LONGi, Trina Solar, Jinko Solar
  • Tier 2: Canadian Solar, Risen Energy
  • Avoid: Unknown brands, low-priced Grade B panels

Inverter Brands:

  • Huawei, Sungrow, GoodWe
  • Focus on: Conversion efficiency, after-sales service

Installers:

  • Check past projects
  • Verify qualification certificates
  • Clarify warranty period

Implementation Process

6 Steps

  1. Roof assessment - Structural load capacity, shading conditions
  2. Demand calculation - Electricity consumption, installation capacity
  3. Proposal comparison - Compare 3-5 quotations
  4. Contract signing - Clarify rights and responsibilities
  5. Construction and installation - Supervise construction quality
  6. Grid connection acceptance - Handle grid connection procedures

Grid Connection Application

Required Materials:

  • Property certificate
  • Business license
  • Roof structure diagram
  • Electrical single-line diagram
  • Investor information

Processing Department: Local power grid company business hall

Summary

Factory rooftop solar is worth installing, but you must calculate the numbers clearly.

Key Points:

  • Investment payback period 5-7 years, IRR approximately 8-10%
  • Suitable for factories with high electricity consumption and daytime usage
  • Choose tier-1 brands and professional installers
  • Calculate power generation clearly before deciding

Solar is a good project, but don’t rush in without thinking it through.

This article is for reference only and should not be used as a basis for actual construction