Financing my Rooftop

India has the highest irradiation levels, when compared to other countries, as can be seen from the graph below. As we all know by now that rooftop solar has tremendous potential in India because of its massive advantages. Other than the problem of land scarcity and transmission issues in India, rooftop solar has low gestation period and reduced electricity bills. Saving in power bills is one of the major attractions in installing these rooftops. In India there is severe power problem and the electricity tariffs are also increasing.

As per MNRE, 13 states in India have their own solar policy for grid connected rooftop systems and 19 states had net metering/ feed in tariffs regulations in place.

A rooftop system can be self-owned or third party owned, financed either through 100% equity or a combination of debt and equity. If it is self owned an individual can claim benefits of metering (net or gross) policies or can enter into solar PPA/ leasing with the third party. In India solar leasing is not popular, generally finance is through equity and debt.

Bank Financing

1) The industrial and commercial establishments are entitled to accelerated depreciation and other tax exemptions.

2) All Public Sector Banks like Bank of India, Syndicate Bank, State Bank of India, Dena Bank, Central Bank of India, Punjab National Bank, Allahabad Bank, Indian Bank and Indian Overseas Bank are directed to provide loans for grid connected rooftop solar systems. These loans will be given as home loans.

3) As per the Reserve Bank of India, renewable energy projects are included under Priority Sector Lending. Bank loans to the tune of Rs. 15 crore to borrowers will be granted for solar projects – including both rooftop and ground mounted. As per this directive, individuals will have an access to a loan of Rs. 10 lakh for their houses.

4) Viability Gap Funding (valid till 2017-18) was started to help the Central Public Sector Undertakings (CPSUs) and Government organizations to purchase equipment from domestic manufacturers. To avail VGF the solar project has to be by these CPSUs or government organizations under any state or central scheme for consumption or further sale. They would be entitled to:

• VGF of Rs. 1 Cr/MW with Cells, Modules and Inverters of indigenous source;

OR

• VGF of Rs. 0.5 Cr/MW if only Modules and Inverters are of indigenous source.

The Government will provide a 30% capital subsidy for rooftop solar installations to residential, government, social and institutional segments only. The subsidy level could reach as far as 70% for states such as Sikkim, Uttarakhand, Himachal Pradesh, Jammu & Kashmir, Lakshadweep and Andaman & Nicobar.

Read more about rooftop subsidy scheme here.