Have you ever taken a look at your electricity bill, which seems to be higher every time no matter what you do, and thought of switching to solar but did not know where to start?

Dawn.com collected information from a few companies operating across Pakistan to answer your questions about how much a solar system costs, what types there are, and how much you can expect to save.

Types of solar systems

The first thing you need to decide is the type of solar system you want, of which there are three: on-grid (also known as grid-tie), off-grid and hybrid.

An on-grid system is linked to the power company in your city and allows you to use both; the solar panels generate electricity during the day while the grid supplies it at night or when the panels have not generated enough.

The system allows you to sell any excess electricity you produce to the power company through a mechanism called net metering, which can lead to huge savings on your bill. On the other hand, you will be completely dependent on the grid at night and since you are connected to it, even during the day, your solar system will shut down any time load-shedding occurs or there is a power breakdown.

A hybrid system, while linked to the grid, comes with batteries that store some of the excess electricity you produce during the day. It works as a buffer against load-shedding and breakdowns. However, the batteries are costly and the backup time depends on the type and quality you go for.

An off-grid system, as the name suggests, is not connected to any power company and gives you complete independence. It includes large batteries and at times, a generator as well. It is a lot more expensive than the other two systems.

How much will it cost?

What the capacity of your solar system should be depends on the number of units you consume per month. On average, if you use between 300-350 units, you will need a 3kW system. If you use between 500-550 units, you will need a 5kW system. If your monthly electricity usage is between 1,000 to 1,100 units, you'll need a 10kW system.

According to estimates calculated after evaluating prices offered by three companies, 3kW, 5kW and 10kW systems cost approximately Rs522,500, Rs737,500 and Rs1.37 million, respectively.

There is, however, one caveat: these rates are for systems without batteries, which means these rates correspond to an on-grid system.

But if you want to have a hybrid system or go off-grid, you will need batteries which could increase the cost of your system significantly.

Rass Ahmed Khan, design and sales engineer at Max Power, a company operating in Lahore, said there are two main types of batteries — lithium ion and tubular, prices of which depend on the quality and backup time you want.

The former is expensive — for instance, a 4kW pylon tech lithium-ion battery costs Rs350,000 but it lasts for 10-12 years, Khan said. You can run a few light bulbs, a fridge and a TV for 7-8 hours on a 4kW battery. However, if you want to run an air conditioner or water pump, the battery will drain very quickly, he added.

On the other hand, a tubular battery of 210 amperes costs Rs50,000. Khan said two of these tubular batteries would be needed for a 3kW system, giving you a backup of up to two hours. You could run a few light bulbs, fans and a one-tonne inverter AC on it.

Information provided by Kaiynat Hitech Services (KHS), a solar contractor based in Islamabad and Rawalpindi, showed that tubular batteries for 3kW and 5kW systems cost around Rs100,000 and Rs200,160, respectively.

According to Mujtaba Raza, CEO of Solar Citizen, a solar provider based in Karachi, with batteries, a 10kW system that is otherwise priced at Rs1.4-1.5m would go up to Rs2-3m.

Besides this, batteries need to be replaced frequently, adding to your overall cost. But there is a way around this expenditure.

Due to these costs, many users opt for an on-grid or hybrid system which allows them to take advantage of net metering, which is a billing mechanism that credits solar system owners for the electricity they add to the grid. You could sell any excess energy you produce to your power company and offset your bill for the power you consume from the grid during the night.

Another relatively small cost is that of maintenance. The solar panels need to be washed frequently so you could expect to spend around Rs2,500 every month on this.

However, Solar Citizen's Raza cautioned that the prices of systems could fluctuate, considering the exchange rate volatility over the past few months.

"Every single component of the solar system is imported — solar panels, inverters and even the copper wires. So, every component has a dollar value as opposed to a rupee value. The exchange rate fluctuates a lot, so it becomes very hard to give packages/estimates. This is the solar industry’s dilemma right now."

KHS documents also showed that the prices were valid only for two days from the date of issuance of the estimated costs.

How much will you save?

This is perhaps one of the biggest concerns for those who are mulling over installing a solar system given the high capital investment.

Raza said his company worked with the customer to set up a system through which the electricity bill would be reduced to zero.

How does this happen? The answer lies in net metering.

Assuming you don’t have batteries, during the day, you would use your own produced solar energy and sell the excess to your power company. At night, however, you don’t produce your own energy and use electricity from your power utility. On net, you could end up paying nothing in electricity bills.

Max Power's Khan gave an example of a customer who used 382 units in July this year and was billed Rs11,500 for that month. The company installed a 5kW solar system for him, which produces around 500 units per month and 6,000 units annually. Given the per unit cost of electricity in Lahore in July, the return on investment would take approximately three years, Khan said.

Information provided by KHS showed that the payback period for 3kW, 5kW and 10kW systems was three years, 3.1 years and 2.6 years, respectively. The savings per annum for the three systems were calculated at Rs204,097, Rs340,162 and Rs612,291, respectively by the company.

In addition, the expected life of a solar system is between 20 and 25 years so it would continue to save your money well after the initial investment is made.

Are there any risks?

Raza said in an on-grid system that has net metering, when there is no electricity in the grid such as during load-shedding hours or in case of a fault at the power company's end, the solar system will shut down immediately.

Solar panels are made for Western markets and are thus not adapted for load-shedding. If there is no electricity in the grid, the system will work on the assumption that maintenance is going on and automatically shut down within seconds to prevent any safety-related incidents via a mechanism in the inverter, he elaborated.

Even otherwise, with an on-grid system, you will rely on the power company's supply at night and will be exposed to load-shedding and any breakdowns.

Raza added that if the system also includes batteries, they will need to be frequently topped up with fluid.

Batteries will also need to be replaced every few years, the cost of which could be in the hundreds of thousands.