SOLAR PANEL FINANCING AND SUBSIDIES IN INDIA

Solar Panel Financing and Subsidies in India

Solar Panel Financing and Subsidies in India

Blog Article

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Introduction


The demand for solar energy is growing in India as more people and businesses look for sustainable and cost-effective power solutions. However, the high initial cost of solar panels often discourages buyers.

To make solar adoption easier, the Indian government offers subsidies, incentives, and financing options that reduce costs and encourage investment in solar power.

This blog explains everything about solar panel financing, government subsidies, and other incentives available in India.

1. Government Solar Subsidies in India


a. PM Surya Ghar Muft Bijli Yojana (₹75,000 Subsidy)


The Indian government recently launched the PM Surya Ghar Muft Bijli Yojana, offering a subsidy of up to ₹75,000 for residential solar panel installation. This scheme aims to provide free electricity up to 300 units per month for homeowners using solar power.

  • Eligibility: Residential homeowners

  • Subsidy Amount:

    • ₹30,000 for 1 kW

    • ₹60,000 for 2 kW

    • ₹75,000 for 3 kW and above



  • How to Apply? Visit the National Portal for Rooftop Solar (https://solarrooftop.gov.in) and register your details.


b. Solar Rooftop Subsidy Scheme (MNRE)


The Ministry of New and Renewable Energy (MNRE) provides subsidies under the Rooftop Solar Programme Phase II for residential consumers.

  • For Individual Homes: Up to 40% subsidy for solar systems up to 3 kW and 20% for 4-10 kW systems.

  • For Housing Societies: 20% subsidy for 10 kW and above installations.

  • Application: Through DISCOM-approved vendors via the National Solar Rooftop Portal.


c. State-Wise Solar Subsidies


Many state governments provide additional subsidies and incentives for solar panel installation.

  • Delhi: ₹2 per watt additional subsidy.

  • Maharashtra: Property tax rebate for solar users.

  • Gujarat: Exclusive subsidy for residential users.

  • Tamil Nadu: Net metering benefits for grid-connected solar users.


2. Solar Panel Financing Options in India


Many banks and financial institutions offer solar loans and EMI options to make solar energy affordable.

a. Solar Loans from Banks


Several Indian banks provide solar loans under priority sector lending.

  • SBI Green Home Loan – Special interest rates for home solar installations.

  • HDFC Solar Loan – Flexible repayment options.

  • ICICI Bank Solar Loan – Collateral-free financing for rooftop solar.


b. EMI and Solar Financing Plans


Solar companies now offer no-cost EMI options for customers who cannot pay the full amount upfront. Some providers include:

  • Tata Power Solar – EMI-based rooftop solar installation.

  • Loom Solar – Easy financing options with minimal documentation.

  • ZunRoof – Flexible solar payment plans.


c. Solar Leasing and Power Purchase Agreements (PPA)


For businesses and industries, solar leasing and PPA models allow users to install solar panels without upfront costs.

  • Solar Leasing: The solar company owns the system, and you pay a fixed monthly fee.

  • PPA Model: You pay only for the electricity generated at a pre-agreed rate.


3. Tax Benefits and Incentives for Solar Panel Buyers


a. Accelerated Depreciation for Businesses


Businesses can claim 40% depreciation in the first year, reducing taxable income.

b. GST Reduction on Solar Panels


The Goods and Services Tax (GST) on solar panels is 5%, making solar energy more affordable.

c. Income Tax Benefits


Homeowners installing solar panels under a home loan can claim tax benefits under Section 80EE.

4. Net Metering and How It Helps Reduce Bills


a. What is Net Metering?


Net metering allows homeowners and businesses to sell excess solar electricity to the grid and receive credits on their electricity bills.

b. How Does It Work?



  • Your solar system generates electricity during the day.

  • Excess power is sent to the grid.

  • Your meter records the difference between the power generated and used.

  • The DISCOM adjusts your electricity bill based on the excess power supplied.


c. Net Metering Benefits


 Reduces electricity bills
 Generates income from excess power
 Encourages self-sufficient energy usage

5. Challenges in Solar Financing and Solutions


a. High Initial Investment



  • Solution: Opt for solar loans or EMI financing.


b. Complex Paperwork



  • Solution: Apply via the National Rooftop Solar Portal for simplified approvals.


c. Lack of Awareness About Schemes



  • Solution: Follow government websites and solar providers for updated information.


Conclusion


Investing in solar panels is a smart decision, especially with the government subsidies, financing options, and net metering benefits available in India. With affordable loans, tax benefits, and increasing awareness, solar energy is now within reach for homeowners and businesses.

If you're planning to install solar panels, check for state-wise subsidies, financing options, and apply through official government portals to maximize your savings.

 

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