Solar EPC · Renewable energy and clean technology
Solar EPC projects costed per watt, from module order to final payment
A solar EPC firm agrees a price per watt and then buys modules, inverters and structures at whatever the market charges that month. We cost each project per watt from the first purchase order to the final payment, so the firm sees which projects held their margin and why the others did not.
In one paragraph
Solar EPC firms build rooftop and ground-mounted plants for commercial and industrial customers, utility-scale projects for developers, and residential rooftops, usually on ₹20–500 crore turnover. Most of the contract value is bought-in equipment whose price moves fast, and projects are short. The last payment depends on grid connection and inspection steps the contractor does not control. Owners and finance heads feel each of these in cash.
Founder or managing director, often with the head of projects
The economics
How the money moves in this trade
Modules, inverters and mounting structures make up most of the cost of a solar plant, and module prices have moved sharply in both directions over recent years. A firm that quotes a price per watt and orders modules weeks later carries that exposure on every contract. It also carries any currency exposure on imported components. Where the customer or scheme requires it, the firm must buy from approved lists of models and manufacturers, which now cover cells as well as modules. Installation, cabling, civil work and labour make up the rest.
GST on solar plant contracts applies a prescribed split between the value of goods and the value of services. The rates have changed more than once and may change again, so the tax position of a contract depends on when it was signed and billed. Payment typically comes as an advance, a large payment on delivery of equipment and a final tranche on commissioning. That final tranche often waits on the distribution company's inspection or net-metering approval. Many firms also sign operation and maintenance contracts, and some give generation or performance guarantees that run for years after the project is closed.
The problem
Where the numbers usually break down
Equipment prices are locked after the price is agreed
The customer price per watt is fixed at signing, while modules and inverters are ordered later, so a move in the market lands entirely on the contractor's margin and is seen only when the project closes.
The tax split is applied inconsistently
Contracts signed under one set of rates and billed under another, or billed with goods and services split differently from the prescribed basis, leave mismatches between the tax charged and the tax that should have been charged.
Commissioning receivables wait on someone else
The final tranche is due on commissioning, but grid connection, inspection or net-metering approval takes weeks or months, and those balances are not separately aged or followed.
Performance guarantees are not provided for
Guarantees on generation or performance ratio expose the firm to compensation if a plant under-performs, but the exposure is not tracked against actual generation data after handover.
O&M contracts are priced without their cost
Annual operation and maintenance is quoted as a small add-on, while cleaning, technician visits, spares and travel to remote sites are booked as general overhead.
What we do
The work, and the result each part produces
Project cost per watt
Modules, inverters, structures, balance of system, installation and logistics booked to each project and expressed per watt against the quoted price.
Every closed project shows whether it earned its quoted margin.
Equipment price exposure tracking
Signed contracts with equipment not yet ordered listed against current module and inverter prices, including currency exposure on imports.
The firm knows its open exposure before it places the order.
GST position by contract
Each contract's goods and services split, rate and billing date checked against the rules in force at the time.
Tax charged matches tax due across the order book.
Commissioning and approval receivables
Final tranches tracked by project with the pending approval, the authority and the date it was applied for.
Money stuck behind an approval is followed, not forgotten.
Guarantee exposure register
Generation and performance guarantees listed by plant with their terms, compared with reported generation each period.
Compensation risk is known before a customer claims it.
O&M contract costing
Cleaning, visits, spares, travel and monitoring booked to each O&M contract and compared with the annual fee.
O&M is priced to cover its cost.
Where we start
The first steps of an engagement
Contracts, orders and invoices
We ask for signed customer contracts with their price per watt, purchase orders for modules, inverters and structures, the GST invoices raised on each contract, and the list of projects awaiting commissioning.
Closed projects costed per watt
Actual cost of recently closed projects is rebuilt per watt against the quoted price. The goods and services split and rate on each invoice are checked against the rules in force when it was raised.
Open exposure and approval lists
Signed contracts with equipment not yet ordered are listed against current prices, and each final tranche is tagged with the approval it is waiting on.
Project margin and exposure report
The first report shows quoted against actual cost per watt by project, open equipment exposure on the order book, any GST mismatches found, and receivables awaiting commissioning.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Quoted against actual cost per watt, by project
- Open equipment exposure on signed contracts
- Receivables awaiting commissioning or approval, aged
- Generation against guaranteed level, by plant
- O&M cost against fee, by contract
- Project margin by customer segment
Who it suits
Written for, and not the right fit for
- You own and operate generating assets and sell power; our renewable developers page covers that.
- You need a statutory audit, a tax-audit report or a tender certificate on its own; those are signed by an independently engaged CA.
- Solar EPC firms serving commercial and industrial customers, developers or residential rooftop buyers.
- Firms whose order book has grown faster than their ability to cost projects individually.
- EPC firms adding O&M contracts or a project-ownership arm alongside construction.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Module prices are outside our control. What can finance do about it?
It can tell you, contract by contract, how much unordered equipment you're exposed on and what a price move would do to margin. That changes when you order, how you quote validity periods and whether price-variation terms are worth negotiating.
How is GST checked on older solar contracts?
We review the goods and services split and the rates applied on each contract against the rules in force at the time, and quantify any differences. Where a formal opinion is needed, it comes from an independently engaged professional.
Do you work with residential rooftop installers?
Yes, though the work differs. With many small projects, the focus shifts from individual project costing to cost per installation, subsidy-linked receivables and collections.
5th Quadrant maintains project accounts and prepares GST workings and schedules. Statutory audit, tax-audit reports, certificates required for tenders and any formal tax opinion are provided by an independently engaged licensed professional, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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