What Are the Different Ways to Finance Solar Installation?
Solar panels cut your energy bills drastically, but let’s be honest: the upfront cost is real, and it stops a lot of people before they even get a quote. A solar subscription that handles the system and the cost together would be the ideal setup, but that model isn’t widely available yet in India. So most homeowners end up either buying their system outright or leaning on the loans and subsidies designed specifically to bring the solar panel installation cost down to something manageable. This post breaks down financing options currently available, from bank loans to government subsidies to third-party lease arrangements.
Quick summary
- Financial support from both private and public entities exists to lower the solar panel installation cost
- Several banks offer loans specifically earmarked for solar installations
- Central government subsidies cover a portion of installation cost, higher in special category states
- Third-party models let you get solar power without owning the system at all, through leases or subscriptions
Solar Loans for Rooftop Installation
Several Indian banks now offer loan products built specifically to cover solar panel installation cost, rather than treating it as a generic personal loan. A few worth knowing:
Union Rooftop Solar Scheme (Union Bank of India):
Covers grid-connected rooftop solar up to 10 kW for individuals who own an independent house and don’t already have a loan against that property with another lender.
Surya Shakti Solar Finance (State Bank of India):
Aimed at SMEs and business enterprises, covering rooftop or ground-mounted systems up to 1 MW for captive power use.
Cent Solar-PM KUSUM Scheme (Central Bank of India):
For ground or stilt-mounted systems between 500 kW and 2 MW. Eligibility extends beyond individuals to farmer groups, cooperatives, panchayats, farmer producer organizations, and water user associations.
| Bank | Scheme | Facility Type | Quantum of Loan | Margin/Borrower Contribution | Repayment Period |
| Union Bank of India | Union Rooftop Solar Scheme | Term Loan | 75% of project cost or ₹10 lakhs, whichever is less | 5% of project cost | 20 years, within housing loan repayment terms (whichever is earlier) |
| State Bank of India | Surya Shakti Solar Finance | Term Loan | Up to ₹4 crores | 20% minimum | Up to 10 years |
| Central Bank of India | Cent Solar–PM KUSUM Scheme | Term Loan | ₹15 lakhs (max per borrower) | Nil up to ₹1.60 lakh; 15% minimum above ₹1.60 lakh | 10 years, including moratorium of up to 12 months |
Solar loan terms shift fairly often, so treat the table above as a starting point and confirm current rates directly with the bank before applying.
Solar Subsidies and How They Reduce Installation Cost
Beyond loans, both central and state governments subsidize rooftop solar to bring adoption up, and this is usually the biggest single lever on your final solar panel installation cost. In India, this subsidy applies only to the residential sector, not commercial installations.
Per the Ministry of New and Renewable Energy, the central government covers 40% of the benchmarked installation cost in general category states. That jumps to 70% in special category states, including Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, and Lakshadweep, largely to offset the higher cost of installation in these terrains.
MNRE maintains a full, regularly updated list of active subsidy schemes on their official schemes page, worth checking directly since state-level top-ups change frequently.
Third-Party Models: Solar Without Owning the System
If neither a loan nor a subsidy makes the math work for you, third-party models skip ownership, and the solar panel installation cost question, entirely.
Solar lease:
A solar company installs and owns the system on your roof, paying you a fixed rent for the space. They then sell the electricity generated to a utility or another buyer. Some lease agreements include a buyout option at the end of the term.
Solar subscription:
Structurally similar to a lease, but instead of the company selling the power elsewhere, it goes directly to you, either used on-site or fed into the grid through net metering. The solar company stays responsible for operating, maintaining, and repairing the system for the entire Power Purchase Agreement (PPA) term.
Both models solve the ownership problem, but they still assume you have a roof to install on in the first place. If you don’t, that’s a different problem than financing, and one that platforms like SundayGrids solve differently: instead of leasing your roof or taking on a loan, you reserve capacity in an existing solar project and get the savings as bill credits, with no installation, financing, or roof required at all.
Conclusion
There’s no single right way to finance solar. It depends on whether you own your home, how much capital you can put down, and whether you even have roof access in the first place. A solar loan brings the solar panel installation cost down to a manageable EMI. A subsidy cuts the number before you even apply for financing. A lease or subscription skips ownership entirely. And if none of those fit because you’re renting or living in an apartment, digital solar platforms like SundayGrids sidestep the solar panel installation cost question altogether, since there’s no installation to finance in the first place.
