What are the different ways to finance solar installation?
Sure, solar panels can cut short your energy bills drastically but they are undoubtedly a substantial investment. While a solar subscription that manages both system operation for no or significantly reduced upfront cost makes for the best case, due to lack of widespread availability of such subscription models, many opt to purchase their residential solar panels and to make it attractive to switch, there are government supported subsides and loans.
<aside> 💡 TL;DR
- Financial support by both private and public entities are available for solar projects to lower upfront cost
- Banks under various Govt. schemes in India offer loans specifically for solar.
- Central Govt. pays 40% of the installation cost, 70% in special category states under current solar subsidy policies
- Under Third party models, one can take solar on lease or subscribe to solar installed as per PPA </aside>
Solar Loans:
Several banks in India are providing loan facilities to consumers who want to install solar panels on their rooftops. There are various schemes from different banks through which one can avail of a solar loan. A few popular ones are listed here;
- Union Rooftop Solar Scheme: Made available by the Union Bank of India (UBI) to install Grid connected RTS (Rooftop Solar) for residential purposes up to a 10 KW plant for an individual who has an existing independent house and has not taken out a loan with another bank or financial institution against the said house.
- Surya Shakti Solar Finance: By the State Bank of India (SBI) for ****SMEs and Business Enterprises to install solar rooftop/ground mounted grid-connected systems all the way up to 1 MW capacity for power use within their premises.
- Cent Solar-PM KUSUM Scheme: By Central Bank of India (CBI) ****with the purpose to establish ground or stilt mounted grid-connected solar with capacities ranging from 500KW to 2MW. Individual farmers / groups of farmers / cooperatives / panchayats / farmer producer organisation (FPO) and water user associations are eligible to apply for a loan under this scheme.
Solar Subsidies:
To encourage use of solar energy for electricity consumption, the central and state governments are offering solar panel subsidies to the people for rooftop installation of solar systems in India. In India, solar panel subsidy is available only for the residential sector. According to the Ministry of New and Renewable Energy, the Central Government pays 40% of the benchmarked installation cost as a subsidy for installing rooftop solar at home in states which come under the general category. The central government, however, pays a 70 percent subsidy on the benchmarked installation cost for rooftop solar in special category states such as Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, and Lakshadweep.
Here is a list of all active subsides as maintained by the Ministry of New and Renewable Energy (MNRE) https://mnre.gov.in/solar/schemes
Third-party Models
Solar Lease:
Certain solar companies lease out roofs to install the solar PV system on a fixed rent. They invest and install the solar PV system on roofs and pay the fixed rent to the roof owner. They then sell the electricity generated by the installed solar PV system to a local utility or another agency. Some of these agreements also include the option to purchase at the end of the contract period.
Solar Subscription:
A close cousin to solar lease models, here instead of generating power and then selling it to a utility or other parties, the power is delivered to the user on whose property it gets installed or to the grid through net metering.
Under this model, the solar company is solely responsible for operating, maintaining, and repairing the project for the duration of the Power Purchasing Agreement (PPA).
