India is aggressively moving towards a new world of renewables, where it targets adding 500 GW of non-fossil fuel-based capacity by 2030. Since solar energy serves as the pillar for this transformation, the high costs of installation have always been a challenge both for industries and people.
Solar financing— a breakthrough that is currently enabling the expansion of green power across the country. Technological advancement, especially in the power sector, has put forward new methods of financing such as green loans, leasing of solar power by contracting clients, and power purchase agreements popularly known as PPAs that have enabled businesses and even homes to adopt to use solar energy yet they do not have to make huge investments at first instance. IREDA has reported that only the rooftop solar market is expected to reach 15% CAGR in the year 2025 due to easier credit access and subsidies. Solar financing is not a mere utility; instead, it is the enabler for India’s journey towards a sustainable and economically sustainable energy future.
Why Solar Financing Matters
Utilisation of solar energy is very cost-effective in the long term; this makes it one of the most effective sources of energy. The cost of solar technology per kilowatt-hour has reduced by more than 82% between 2010 and 2021, concludes IRENA.
However, especially for first-time users, the costs of setting up may be quite high. Depending on the size of the business, the installation of a 100kW solar on the rooftop could cost about ₹ 60-80 lakhs. That is when solar financing comes in to close the gap in affordability.
Through loans, leasing, and PPAs, solar financing enables consumers to pay for solar services of their desired quality and capacity in instalments over some time without having to make a single lump-sum payment. For India, where the need for energy is expected to rise by 6% in the subsequent decade, the function of convenient financing can hardly be overstated.
Different Varieties of Solar Financing
The solar financing structure has been very effective, and this has been due to the flexibility of the solar financing. Here are the primary models available:
Solar Loans
Solar loans are one of the easiest funding types. Banks and other NBFCs provide several sorts of loans for solar services and products, both for individual entities as well as for institutional use. These loans are designed to meet the installation expenses, and the funds can be paid back in equal installments spanning the agreed-upon period. Solar loans that attract interest of between 8% and 12% are similarly gaining popularity among Indian ventures.
Solar Leasing
Leasing offers a unique advantage; you can use a solar system without having to own it. In fact, under this solar financing model, the leasing firm is responsible for the installation and also maintenance of the solar equipment, and the business entity or the individual simply pays monthly fees. It helps to avoid large initial investments and places most of the maintenance expenses on the lessor’s side.
Power Purchase Agreements
PPAs are especially suitable for those companies that wish to transition to solar power with no financial outlay whatsoever. In this model, an investor in solar energy equipment puts in place the system and then sells electricity to the business at lower rates than the grid rates. PPAs offer reasonable tariff costs and are ideal for commercial and industrial uses.
Government Motivational Schemes
There are numerous subsidies and incentives given by the Indian government to ensure the high utilisation of solar products. Both the SECI and other related bodies provide capital subsidies of up to 40% for the installation of rooftop solar systems in residential complexes and certain institutional structures. For businesses, the benefits of depreciation are increased through accelerated depreciation, giving solar installations an economic incentive.
The Consequences for Indian Industries
The use of energy in industries causes nearly 40% of energy consumed in India. Switching to solar energy not only makes industries conserve their emissions but also saves a lot of energy expenses. Consider these examples:
Textile Industry
Solar energy is perfectly suitable for textile manufacturing that consumes a high energy level. Some textile mills in Gujarat and Tamil Nadu provinces have already installed rooftop photovoltaic systems, and energy costs by 25%.
IT and Data Centres
HVAC, lighting, and cooling are substantial consumers of electricity and are ideal for the storage of solar energy with a battery. Thus, by adopting solar power here, one can reduce operation costs to a great extent.
Agriculture
Solar pumps and cold storage are on the rise, assisting farmers in their bid to slash the cost of diesel and increase profitability.
Challenges in Solar Financing
Despite its potential, solar financing in India faces certain barriers:
Awareness
Some companies lack adequate information on the funding type or the returns on investment in solar systems.
Access to Credit
One major issue that the CoD faces is that small businesses and more so rural businesses have a bad credit profile. Hence, are unable to access loans.
Complex Processes
Subsidisation and finance requesting procedures require a series of steps and formalities, which discourage potential adopters.
Maximizing the Capability of Solar Funding
The financing of solar energy has to be made easier for business communities in India to enjoy the full benefits of the power. However, solar energy production organisations such as Sunsure Energy have emerged and faced these challenges. Its CAPEX and OPEX models allow businesspeople to opt for either ownership of solar facilities or leasing solar products as utilities.
As a full-service solar company, Sunsure Energy covers all the aspects of a project in order to facilitate a smooth and efficient switching of consumers to solar power in the best way that solves the financial issue. Where companies are still unclear about which direction they should take, Sunsure’s consultants assess energy needs, present the breakdown of costs and benefits, and identify the best type of funding. Such services not only bring solar-power installations closer to customers but also improve the attractiveness of such installations for companies concerned with sustainability and costs.
Consider solar financing options to understand which way to turn and achieve a sustainable change for the better for your business and the planet to boot. Check out Sunsure Energy’s website to learn how it helps businesses.