- This is a static guide and worksheet, not a live calculator — rebuild it in your own spreadsheet.
- The engine is simple: generation × tariff − costs, repeated over 25 years, solved for IRR.
- Generation = size × CUF × 8,760 hours; CUF of ~17–19% is an estimate.
- The biggest levers are the tariff, CUF, project cost and whether you own or lease land.
- Tariff, CUF, benchmark cost and CFA applicability are state-variable estimates — verify against the live tender.
A PM-KUSUM Component A plant is a 25-year annuity, so the question that matters is its internal rate of return (IRR). The maths is not hard. This guide shows the inputs, the formula and a worked example so you can build the model yourself — the numbers here are illustrative estimates, not quotes.
What this worksheet does
This worksheet turns a Component A plant into a 25-year cash flow and finds its IRR. It is a static guide: there is no live calculator on this page. You take the inputs, run them through the formula, and read out the return — best done in a spreadsheet you can adjust.
IRR is the single discount rate that makes the present value of all your future cash flows equal your upfront investment. Put simply: it is the annual return the project earns on the money you put in. A higher IRR means a better project.
The inputs you need
You need seven inputs. Get these right and everything else is arithmetic.
The four that move the answer most
- Tariff (₹/kWh): the fixed price the DISCOM pays for 25 years, set by the tender. This is state-variable — verify the current figure.
- CUF (%): the capacity utilisation factor — how much of the plant's rated output it actually produces over a year. A ground-mount plant in India is often around 17–19%, an estimate that depends on site and technology.
- Project cost (₹/MW): your all-in build cost per megawatt. Lower cost lifts the IRR directly.
- Land: own land costs nothing extra; a lease adds an annual rent for 25 years.
The three you still must enter
- O&M cost (₹/yr): the cost to operate and maintain the plant each year.
- Debt/equity split: how you fund the build, e.g. 70% debt and 30% equity. This separates project IRR from equity IRR.
- Plant size (MW): Component A plants are typically 0.5–2 MW.
The IRR formula in plain terms
You build the answer in four steps. None of them needs more than school maths.
Step 1 — annual generation
Generation (kWh) = plant size (kW) × CUF × 8,760 hours in a year. A 1 MW (1,000 kW) plant at 18% CUF makes about 1,000 × 0.18 × 8,760 ≈ 1.58 million kWh a year.
Step 2 — annual revenue
Revenue = generation × tariff. At a (made-up) tariff of ₹3.10/kWh, 1.58 million kWh earns about ₹48.9 lakh in year one.
Step 3 — annual net cash flow
Net cash flow = revenue − O&M − land lease − debt service. Repeat for each of the 25 years, allowing for a small yearly drop in generation as panels age (degradation).
Step 4 — solve for IRR
List year 0 (your equity outflow) then years 1–25 (net cash flows). The IRR is the discount rate
that makes the whole list net to zero. In a spreadsheet this is the IRR() function;
by hand it is trial and error.
The input/output worksheet
Copy this layout into a spreadsheet. The "Input" rows are yours to fill; the "Output" rows are calculated from them. The example values are illustrative estimates only.
Caption: Returns worksheet, SuryaHub. Defaults are illustrative estimates, not quotes. Tariff, CUF, benchmark cost and CFA applicability are state-variable — verify against the current tender.
A worked example
Here is the worksheet filled with illustrative estimates for a 1 MW plant. Every number is made-up to show the method — do not treat any figure as a real quote.
- Plant size: 1 MW (1,000 kW)
- CUF: 18% (estimate)
- Generation: 1,000 × 0.18 × 8,760 ≈ 1.58 million kWh/yr
- Tariff: ₹3.10/kWh (illustrative)
- Revenue (year 1): 1.58M × 3.10 ≈ ₹48.9 lakh
- Project cost: ₹4 crore/MW (illustrative)
- O&M: ₹4 lakh/yr · Land: own land, lease = ₹0
- Funding: 70% debt, 30% equity (₹1.2 crore equity)
Run revenue minus O&M and debt service across 25 years, with a small yearly degradation, and you
get a stream of net cash flows. Feed year 0 (the equity outflow) plus years 1–25 into
IRR() and read the equity IRR. Change the tariff, the CUF or the project cost and you
will see the IRR move sharply — which is the whole point of building the model.
The exact IRR depends on numbers that move, so we deliberately do not print a single "answer" here. The skill is owning the model, not memorising a result.
What moves the IRR most
Four inputs do most of the work. Sensitivity-test these before you bid.
- Tariff: revenue is linear in tariff, so a small tariff change swings the IRR hard. The tariff economics guide covers how it is set.
- CUF: better siting and technology lift generation for the same cost.
- Project cost: every rupee saved per MW flows to the return.
- Land: own land beats lease; if you lease, model the rent for the full term — see RESCO vs CAPEX.
Common mistakes that break the model
Most bad Component A models fail on the same few errors. Avoid these.
- Ignoring degradation: panels lose a little output each year; a flat 25-year generation line overstates the return.
- Forgetting O&M for the full term: the 5-year+ O&M obligation is real cost, not an afterthought.
- Assuming CFA always applies: CFA for Component A varies by tender — confirm it before you count it.
- Using an old tariff or ceiling: tariffs are revised; always pull the current figure from the live request-for-selection.
- Mixing project and equity IRR: decide which one you are quoting and keep the debt assumptions consistent.
Figures you must verify before you trust the output
Treat every default in this guide as an estimate. The figures below move, and a stale number can flip a "good" IRR into a loss.
- Tariff bands — verify the current Component A tariff for your state's tender.
- CUF assumptions — site-specific; verify with a generation study.
- Benchmark / project cost — revised periodically by MNRE and the market.
- CFA applicability — varies by state RfS; not guaranteed for Component A.
How SuryaHub helps you model Component A
SuryaHub builds the Component A cash flow inside the finance module, so your tariff, CUF, cost and lease feed one model instead of scattered spreadsheets. The analytics dashboards let you sensitivity-test the tariff and CUF before you bid, and the project and payment data stay linked to the live tender. SuryaHub is pre-revenue; the only real pilots are Suryantra Energy and RGESPL, and every default here is an illustrative estimate, not a guarantee.
Model your Component A IRR in one place
See how SuryaHub turns tariff, CUF and cost into a 25-year return.
Related guides
Frequently asked questions
How do you calculate the IRR of a PM-KUSUM Component A plant?+
To calculate the IRR of a PM-KUSUM Component A plant, estimate annual generation (plant size times CUF times 8,760 hours), multiply by the tariff for revenue, subtract O&M, lease and debt service for net cash flow, then find the discount rate that makes the 25-year cash flows net to zero. That discount rate is the IRR.
What is a good IRR for a PM-KUSUM Component A project?+
A good IRR for a PM-KUSUM Component A project depends on your cost of capital and risk appetite, so there is no single national number. Many developers look for an equity IRR comfortably above their borrowing cost to justify the 25-year commitment. Treat any target as an estimate and test it against the live tender tariff and your real costs.
What inputs do I need to estimate Component A returns?+
To estimate PM-KUSUM Component A returns you need plant size, the PPA tariff, the capacity utilisation factor (CUF), the per-MW project cost, land or lease cost, annual O&M cost and your debt-equity split. From these you derive annual generation, revenue, net cash flow and the 25-year IRR. Tariff, CUF and cost are state-variable estimates to verify.
How does land lease affect Component A returns?+
Land lease lowers PM-KUSUM Component A returns because lease rent is an annual cost that reduces net cash flow for 25 years. Building on your own land removes that cost and lifts the IRR. If you lease, model the rent and any escalation across the full PPA term, because a small annual figure compounds into a large lifetime cost.
Is this a live PM-KUSUM Component A calculator?+
No, this is a static guide and worksheet, not a live calculator. It explains the inputs, the formula and a worked example so you can build the model yourself in a spreadsheet. The default numbers shown are illustrative estimates, not quotes. Always run your own figures against the current tender tariff and your real project costs.
Does the CFA or subsidy change Component A IRR?+
Whether central financial assistance (CFA) changes PM-KUSUM Component A IRR depends on the state tender, because CFA applicability for Component A varies and is not guaranteed in every request-for-selection. Where CFA applies, it lowers your effective project cost and lifts the IRR. Confirm CFA eligibility against the current tender before you count on it.
Sources & references
The method follows standard project-finance practice applied to primary PM-KUSUM Component A sources. Tariff, CUF, benchmark cost and CFA rules vary by state and change over time — confirm the current figures before you commit.
- Ministry of New & Renewable Energy (MNRE) ↗
PM-KUSUM Component A guidelines and benchmark cost.
- PM-KUSUM National Portal ↗
Component A tenders and state status.
- SECI ↗
Model PPA and request-for-selection documents.
Written by the SuryaHub team · reviewed against MNRE, PM-KUSUM portal & SECI sources · updated 19 June 2026.
Method: The worksheet applies standard project-finance IRR practice to PM-KUSUM Component A and is re-checked every 30 days. All default figures are illustrative estimates, not quotes; verify tariff, CUF, cost and CFA against the live tender. SuryaHub is pre-revenue; only Suryantra Energy and RGESPL are real pilots.
Change log: 19 Jun 2026 — first published.