With the rise in the prices of coal and gas, the cost of electricity in India is also increasing. To combat this soaring expense, businesses and homeowners are turning towards solar energy to meet their power needs.

But, while this green energy source can be a great cost saver, the initial investment required to install a solar energy system is substantial. This price factor prevents many from going solar.

Here, solar financing comes into the picture.

Solar Financing is a way of generating the capital for the purchase and installation of a solar system. Rather than paying the full amount at once, individuals and organizations have the option of spreading out the expense over several years.

Even with financing options, a consumer can avail of multiple benefits such as a reduction in electricity bills and lower carbon emissions.

Financial institutions such as Indian and international banks, non-financial institutions such as Indian Renewable Energy Development Agency (IREDA), along with solar installers and developers have the authorization to offer such financial aid.

In India, if you are exploring solar financing, two options are available: solar loan and solar lease/ PPA.

A solar loan is similar to a car or home loan. The consumer deposits a small fraction of the entire cost as an upfront payment. The rest of the amount is broken into monthly payments or EMIs, which also include a small interest.

A solar lease and power purchase agreement, both involve a third-party developer who installs the system over the owner’s house or business. The owner essentially rents the system from this developer who sells the power generated by the system back to them, at a fixed rate. This rate is lower than the electricity tariff charged by the local utility.

Ownership of the Power Generated

With a solar loan, the consumer retains the ownership of the energy produced by the solar panels. They just have to deposit the monthly payments associated with the loan.

In a lease structure, the third-party developer owns the system, and thus controls the power generated from the panels. Moreover, the developer acts like a utility provider for the consumer.

Maintenance Responsibility

This responsibility lies with the third-party developer if a lease system is chosen.

In a lease, the bill is lower because the consumer is buying the solar power at a reduced rate from the developer.

With a solar loan, the responsibility to maintain the system is with the consumer. They handle all the costs associated with it.

Incentives and Tax Benefits

The Indian government has some incentives to encourage solar installations. These include subsidies for residential installations; and, tax credits, and renewable energy certificates for all types of installations.

With a solar loan, a consumer can avail of all such incentives. In a lease structure, on the other hand, since the ownership is different -the developer claims the incentives.

Net Metering and Bill Reduction

In both options, the consumer can expect a reduced electricity bill. With a solar loan, this is because a consumer is meeting a major percentage of their power needs through solar power. The rest is taken from the grid.

However, if surplus energy is being produced, only those consumers who control the energy generation from the system, benefit from net metering. Hence, if a solar system is under a lease, the ability to send the surplus power back into the grid lies with the third-party developer.

To make an informed decision about the right type of financing scheme, first, understand your expectations from the solar system.

A solar loan is right for you if,

1. You do not want to spend a big amount on solar installation.

2. You want to own the energy generated from the solar panels to save on electricity bills.

3. You are ready to pay monthly EMIs for a maximum period of 4-5 years.

4. You are willing to pay for the Operation and Maintenance (O&M) cost of the panels.

A solar lease is right for you if,

1. You do not want to spend money on the purchase, installation, or maintenance of the system.

2. You want to utilize clean energy to run your home/business.

3. You want to reduce your electricity bills

4. You have the space to install the solar panels.

5. You are ready to pay a regular power tariff to a third-party developer.

Ornate Solar has partnered with HDFC bank to provide residential and commercial consumers, an opportunity to raise the funds for their solar energy system.

We now offer a solar loan for solar projects up to 1 MW capacity. All you have to do is, make a down payment of 25% of the total cost. The rest 75% of the amount, will be financed through the bank, with a tenure of up to 60 months.

To make the entire process simple and stress-free, we have eliminated the tedious task of visiting the bank for approval and sanctions. You just have to submit some basic documentation and Ornate Solar will handle the details.

1. Saves the Initial Capital- No need to shell out the cash for the upfront cost of installing a solar system. That sum can be allocated for other pressing expenses.

2. No additional costs- The amount you save monthly on your electricity bills, can be used to make affordable EMI payments.

3. Short Tenure- Your solar system will be completely paid off, within a few years.

4. Continued Power Savings- Even with the loan and interest, savings on your monthly electricity bills will not stop. The system will also provide a buffer against future hikes in electricity tariffs.

5. Reduce carbon emissions- With a solar loan, there is no need to delay your clean energy journey. You can start contributing to the goal of a greener India from Day 1.

Check out Ornate Solar Finance, if you are interested in funding your solar installation or have any doubts or inquiries about the process.