Empowering your rooftop: Overview of solar rooftop financing models and financing options
If you are considering installing a rooftop solar system in India, but are unsure about the financing options available, this blog is for you. We will try to provide you with a comprehensive guide on how to finance your rooftop solar project and might help you to turn your solar dreams into reality!
Overview: Projected & Installed RE capacity
As per the Ministry of New and Renewable Energy (MNRE), India targets 500 GW of renewable energy by 2030. Annual solar installations of approximately 30 GW are needed from 2023-2030 to achieve this target.
The installed solar PV capacity of India as of March 2023 is 66.78 GW, this represents approximately 23% of the 2030 target. The current breakup of installed solar PV capacity has been illustrated below.
Rooftop solar system currently accounts only for 20% of the total installed solar energy capacity in the country.
Three states contribute to nearly 50% of India’s rooftop solar capacity: Gujarat (23%), Rajasthan (13%), and Maharashtra (10%). States like Tamil Nadu, Uttar Pradesh, Punjab, Delhi, Telangana, Andhra Pradesh, and Madhya Pradesh are actively promoting rooftop solar, aiding in achieving national targets.
The Ministry of New and Renewable Energy (MNRE) in India is offering Central Financial Assistance (CFA) to promote rooftop solar system installations for domestic consumers only which applies to you based on your proposed system:
Special category states – North Eastern States including Sikkim, Uttarakhand, Himachal Pradesh, UTs of Jammu & Kashmir, Ladakh, Lakshadweep, and Andaman & Nicobar Islands
For Group Housing Societies/ Residential Welfare Association (GHS/RWA) CFA limit is Rs. 7,294 per kW of solar system for up to 600 kWp.
CAPEX: In the Capital Expenditure (CAPEX) model, you make an upfront payment or take a loan to cover the installation cost. You own and maintain the solar system. It’s popular for residential, commercial, and industrial rooftops, offering lower electricity bills and potential power sale to the grid.
RESCO: In this model, a Renewable Energy Service Company (RESCO) installs a system on your rooftop and owns it. You pay the RESCO for electricity for a set period. Once the term ends, ownership transfers to you. The RESCO finances the system with loans and sells power to you through a long-term PPA.
CAPEX vs. RESCO
CAPEX with a 70% share, is the dominant model in residential and C&I segments. RESCO with 30% share, is primarily available in the C&I segment.
Challenges & Solutions
In making a right decision, you might be facing a few challenges including lack of awareness, high capital involvement, lengthy application process, delayed approvals, frequent revisions in policies, state agencies and distribution companies (DISCOMs) delay in formalising the end to end process, credit challenges, etc.
To finance your rooftop solar installation in India, you can choose from various evolving financing options for rooftop solar. It is important to research and evaluate the available options based on your financial goals, risk tolerance, and project requirements. You can also consult solar experts, financial advisors, and government agencies for guidance. Here are the financial institutes listed by MNRE for rooftop solar financial assistance: They are categorised into:-
For any individual, investing in rooftop solar is an important decision, however, choosing the right financing option can be challenging. Our blog outlines various financing models & options available for rooftop solar in India.
Evaluating the financial feasibility of rooftop solar is another hurdle you may face. To simplify this, Auroville Consulting has developed ‘Solsavi,’ a solar rooftop calculator that carries out an economic feasibility and simplifies complex calculations. With Solsavi, you can make informed decisions, save on electricity bills, and contribute to a cleaner future.
Solsavi assesses solar capacity and battery storage based on state regulations, metering mechanisms and electricity tariffs, providing a 25-year financial analysis. It is suitable for all consumer categories and offers a feasibility study for rooftop solar with or without battery storage (Li-Ion or Lead acid).
Take a step in toward your rooftop solar journey by analysing the rooftop solar capacity & feasibility on ‘Solsavi‘.