Setting up a 10 MW solar power plant in India requires significant capital investment, typically ranging between ₹40 crore to ₹50 crore. To support such large-scale renewable energy projects, banks and financial institutions offer structured funding solutions in the form of project finance and solar power plant loans.
If you are planning a solar project under a Power Purchase Agreement (PPA), securing the right financing is the most critical step. This guide explains how to get a 10 MW solar power plant loan, project finance structure, eligibility, documents, and approval process in India.
What is a 10 MW Solar Power Plant Loan?
A 10 MW solar power plant loan is a large-scale financing facility designed to fund utility-scale solar projects. These loans are typically structured under project finance models, where repayment depends on the revenue generated from power sales.
Unlike traditional business loans, solar project financing focuses on the project’s future cash flow, especially under long-term PPA agreements with DISCOMs or private buyers.
Project Cost of a 10 MW Solar Power Plant
The cost of setting up a 10 MW solar project depends on multiple factors such as land, technology, location, and EPC contractor.
- Land acquisition or lease
- Solar modules and inverters
- Mounting structures and civil works
- Transmission and grid connectivity
- EPC (Engineering, Procurement & Construction)
- Operation & Maintenance (O&M)
Estimated project cost: ₹40 crore to ₹50 crore
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Banks and financial institutions fund solar projects through structured project finance models:
- Loan amount: 70%–80% of total project cost
- Promoter contribution: 20%–30%
- Loan tenure: 10–18 years
- Moratorium period: 6–18 months
The loan is repaid through income generated from electricity sales under PPA agreements.
Importance of PPA in Solar Project Financing
A Power Purchase Agreement (PPA) is a long-term contract between a solar power developer and a buyer (such as a DISCOM or a private company) for the sale of electricity at a predetermined tariff. In large-scale projects like a 10 MW solar power plant, the PPA plays a crucial role in securing project finance and loan approval.
Under a PPA, the developer agrees to supply power for a fixed period, typically ranging from 15 to 25 years, at an agreed price. This ensures a stable and predictable revenue stream for the project.
How PPA Helps in Securing Solar Project Loan
Banks and financial institutions primarily evaluate solar projects based on their ability to generate consistent income. A strong PPA significantly reduces financial risk and improves loan eligibility.
- Assured Revenue: A signed PPA guarantees long-term income, which is critical for loan repayment.
- Lower Risk for Banks: Fixed tariff reduces uncertainty and makes the project more bankable.
- Improved Loan Approval Chances: Projects with strong PPAs are more likely to get faster approvals.
- Better Interest Rates: Reliable PPAs with strong buyers can help negotiate lower interest rates.
- Cash Flow Stability: Predictable revenue helps in structuring long-term project finance.
Key Features of a Strong PPA
- Long-term agreement (15–25 years)
- Fixed or clearly defined tariff structure
- Signed with credible DISCOMs or corporate buyers
- Clear payment terms and security mechanisms
In most cases, banks consider the PPA as the foundation of solar project financing. Without a strong PPA, securing a 10 MW solar power plant loan becomes significantly more difficult.
Eligibility for 10 MW Solar Power Plant Loan
To qualify for solar project financing, applicants must meet the following criteria:
- Strong financial background or investor support
- Good credit profile (CIBIL score 700+)
- Clear land ownership or long-term lease
- Detailed project report (DPR)
- PPA agreement or letter of intent
Documents Required
Basic Documents
- PAN card and Aadhaar card
- Company incorporation documents
- Director KYC details
Financial Documents
- ITR for last 3 years
- Balance sheet and profit & loss statements
- Bank statements
Project Documents
- Detailed Project Report (DPR)
- Land documents or lease agreement
- EPC contract details
- PPA agreement copy
- Technical feasibility report
How to Get a 10 MW Solar Power Plant Loan
Step 1: Project Planning
Identify the location, land availability, and solar irradiation potential. Finalize project size and cost estimation.
Step 2: Prepare Bankable DPR this is be done by professionals
Create a detailed project report covering technical, financial, and operational aspects of the project.
Step 3: Secure PPA(Power Purchase agreement )
Obtain a Power Purchase Agreement with DISCOM or private buyers to ensure revenue stability.
Step 4: Apply for Project Finance
Submit the loan application to banks or NBFCs along with required documents.
Step 5: Bank Evaluation
The bank evaluates project feasibility, financial strength, and risk factors before approval.
Step 6: Loan Approval & Disbursement
The loan is sanctioned and disbursed in phases based on project progress.
Interest Rates for Solar Project Finance
Interest rates vary depending on the lender, project profile, and PPA strength.
- Typical interest rate: 8.5% to 12%
- Lower rates for strong PPA-backed projects
- Better terms for experienced developers
Government Support and Incentives
While large-scale solar projects may not receive direct subsidies, they benefit from various incentives:
- Accelerated depreciation benefits
- State-level solar policies
- Renewable energy incentives
Advantages of Solar Project Finance
- High long-term returns through PPA
- Stable and predictable income
- Growing demand for renewable energy
- Environment-friendly investment
Key Considerations Before Applying for 10 MW Solar Power Plant Loan
Before applying for a 10 MW solar power plant loan or structuring project finance for a PPA-based solar project, it is essential to evaluate certain critical factors. Banks and financial institutions do not approve solar project funding based only on investment capacity—they focus on project viability, revenue security, and risk assessment.
A well-planned project with strong fundamentals such as land readiness, PPA agreement, and financial projections significantly improves loan approval chances. Understanding these factors in advance helps developers structure their project in a bankable manner.
Why These Factors Matter for Loan Approval
- Banks assess the project based on future cash flow and PPA-backed revenue
- Proper financial planning ensures smooth loan repayment
- Strong technical and regulatory compliance reduces project risk
- A well-prepared DPR increases credibility with lenders
Once these key aspects are evaluated, you can move forward with detailed planning and execution of your solar power plant project.
Conclusion
A 10 MW solar power plant loan structured under project finance is the most effective way to fund large-scale renewable energy projects. With a strong PPA, well-prepared DPR, and proper financial planning, developers can secure funding of up to 70%–80% of project cost.
If you are planning a solar power project and need assistance with project finance, DPR preparation, or bank loan approval, expert support can help you secure funding faster and with better terms.
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