Solar project financing enables developers, businesses, and investors to set up large-scale solar power projects without heavy upfront capital. With rising electricity demand and strong government support, solar projects offer stable long-term returns through Power Purchase Agreements (PPAs) and captive consumption models.
What is Solar Project Financing?
Solar project financing is a structured funding solution where lenders finance large-scale solar projects based on project viability, PPA agreements, and cash flow generation. It typically follows a project finance model, where repayment is primarily from project revenues rather than personal guarantees.Project Size & Funding Range
Solar project finance typically starts from 1 MW projects (approx. ₹3.5 crore) and can scale up to 100 MW and beyond. For large solar parks, project sizes can go up to 500 MW, with total funding requirements reaching ₹2,000–₹2,500 crore+, depending on project design, land, infrastructure, and execution model.Greenfield vs Brownfield Solar Projects
Solar projects can be broadly classified into greenfield and brownfield based on land and infrastructure availability.- Greenfield Projects: Developed from scratch on new land with no existing infrastructure. These projects involve land acquisition, approvals, and full project setup. Most large-scale solar parks (10 MW to 500 MW) are greenfield projects and are commonly financed under project finance models.
- Brownfield Projects: Installed on existing infrastructure such as factory rooftops or unused industrial land. These projects require lower investment and faster execution compared to greenfield developments.
Loan Structure & Key Requirements
- Loan Amount: ₹2.5 crore to ₹500 crore+
- Promoter Contribution: 15% – 25%
- Debt Funding: Up to 75% – 85% of project cost
- Interest Rate: 8% – 13%
- Tenure: 10 – 18 years
- Security: Project assets & cash flow based
Example of Solar Project Financing
Let’s consider a 10 MW solar project with a total cost of approximately ₹40 crore.- Promoter Contribution (20%): ₹8 crore
- Bank Loan (80%): ₹32 crore
- Interest Rate: 10%
- Tenure: 15 years
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Key Factors for Loan Approval
- Signed PPA (Power Purchase Agreement)
- Strong project IRR & cash flow viability
- Developer experience & track record
- Land availability & approvals
- Grid connectivity & evacuation plan
Solar Project Financing Companies in India
Government & PSU
- Indian Renewable Energy Development Agency (IREDA)
- Solar Energy Corporation of India (SECI)
- Power Finance Corporation (PFC)
List of Banks for Solar Power Plant Loans in India
Several banks in India offer dedicated solar financing schemes for residential, commercial, and large-scale solar projects.- State Bank of India (SBI) –
Offers Surya Shakti Solar Finance for commercial & industrial projects.
View SBI Solar Loan Scheme - Bank of Baroda –
Provides loans under PM Surya Ghar Yojana and rooftop solar schemes.
View Bank of Baroda Solar Scheme
- Punjab National Bank (PNB) –
Offers solar financing under home loan and renewable energy schemes.
Visit PNB Official Website
- Union Bank of India –
Provides solar loans for MSME and rooftop installations.
Visit Union Bank Solar Loans
- Canara Bank –
Offers solar financing under green energy and MSME schemes.
Visit Canara Bank Solar Loans
NBFCs & Private Institutions
- Tata Power Solar
- Ecofy
- Aerem
- Orb Energy
- Vivriti Capital
Types of Solar Project Models (Detailed Comparison)
| Model Type | Typical Capacity | Investment Required | Revenue / Savings | ROI / Payback | Best For | Key Advantage |
|---|---|---|---|---|---|---|
| Utility-Scale Projects | 1 MW – 500 MW+ | ₹3.5 – ₹4.5 Cr per MW | ₹3.0 – ₹4.0 per unit (PPA with DISCOM) | 5 – 7 years | Large investors, developers | Stable long-term income (15–25 yrs PPA) |
| Captive Solar | 50 kW – 10 MW | ₹40 – ₹50 lakh per 100 kW | Savings ₹7 – ₹12 per unit (vs grid power) | 3 – 5 years | Factories, industries | Maximum electricity cost savings |
| Open Access | 500 kW – 50 MW | ₹3.5 – ₹4.5 Cr per MW | ₹4.5 – ₹6.5 per unit selling price | 4 – 6 years | Commercial consumers, corporates | Higher tariff than DISCOM PPAs |
| RESCO / PPA Model | 100 kW – 5 MW | ₹0 (for user) | Pay ₹4 – ₹6 per unit (lower than grid) | Immediate savings (no investment) | Businesses with low capital | No upfront cost, risk-free model |
Benefits of Solar Project Financing
- Low upfront investment (only 15%–25% equity)
- Stable long-term returns through PPAs
- Protection from rising energy costs
- Tax benefits & accelerated depreciation
- Scalable investment opportunity
- Strong ESG & sustainability value
Why Choose Us?
- Access to top lenders for large solar projects
- Funding support from ₹2.5 crore to ₹500 crore+
- End-to-end assistance from feasibility to disbursal
- Expertise in structuring project finance deals
What is solar project financing?
Solar project financing is a funding model where lenders finance solar projects based on project viability, agreements, and expected cash flow.
Is PPA required for solar project financing?
Yes, a Power Purchase Agreement (PPA) is important as it ensures revenue and improves loan approval chances.
Which businesses can apply for solar project financing?
Manufacturers, industries, commercial businesses, and solar developers can apply for solar project financing.
What factors affect loan approval?
Approval depends on project viability, agreements, developer experience, land availability, and approvals.
What are the benefits of solar project financing?
Benefits include low upfront investment, long-term returns, reduced electricity costs, and tax advantages.
Can MSMEs apply for solar project financing?
Yes, MSMEs and industries can apply, especially for captive and rooftop solar projects.
