With growing energy demands and digitally-led lifestyles, the key concern for many homeowners in India is managing the monthly budget amid increasing electricity bills.
With more urgent calls for sustainability, renewable energy alternatives such as solar rooftop systems are clearly emerging as the best bet for homeowners. Solar rooftop systems deliver on multiple fronts—energy independence, a reduced carbon footprint, and potential decreases in electricity bills of up to 90%.
Homeowners should consider that investments in solar rooftop systems require a certain payback period before the monetary returns of the power savings are realised. However, this initial upfront financing gap can be easily bridged with solar financing. Solar loans can conveniently pave the way for homeowners to embrace solar energy with flexible EMI repayments—and make going solar more accessible and affordable.
What is a solar loan?
Solar loans allow homeowners to borrow from banks, financial institutions, NBFCs, and lenders for the installation of rooftop solar systems in their homes.
Solar loans come with diverse features such as varying EMIs, repayment tenures, interest rates, and in certain cases, collateral requirements.
Even solar loan structures vary across lenders. Certain lenders offer solar loans as part of home loans or home improvement loans—as an extension of roof repair or energy improvements—while others sanction solar financing as personal unsecured loans, or, alternatively, as secured term loans with an underlying asset as collateral.
How does a solar loan work?
First, the borrower needs to apply for a solar loan either online or at the nearest branch of the lender.
Generally, lenders collect the following documents from borrowers prior to loan disbursal:
- KYC documents providing identity and residence proof as per bank policy
- Completed and signed application forms
- Housing documents in case the solar loan is clubbed with a home loan
- Income proof and IT returns
- Last six months' bank statements
- Passport-size photograph
- Quote or cost estimate for the solar rooftop installation from the solar company
- Electricity bills from the past six months
Certain lenders consider the existing liabilities of the borrowers and may also assess credit scores as part of the credit underwriting process.
Once a solar loan amount is approved, it will be disbursed to fund the cost of the rooftop solar system. Depending upon the solar loan interest rates, the borrower may need to repay in EMIs over the payment cycle.
Key factors that impact solar financing
As there are multiple elements that influence the final loan liability of the borrower, we encourage borrowers to evaluate the following aspects of solar rooftop system loans before deciding on the best fit:
Loan amount: Borrowers are advised to choose a solar financing company that offers the highest solar loan amount possible to cover the price of the rooftop solar installation.
Interest rate: It's best to opt for solar loan interest rates that are competitive.
- Equated monthly instalment (EMI) repayments include the principal component, interest charged, and, in certain cases, the lender may also include loan processing fees
- The lower the solar loan interest rates, the earlier the solar panels will be able to generate monetary returns by way of energy cost savings
- On average, the interest rates may fall between 8.7% – 14% annually, or they may vary depending on the base rate and spread
Payment cycle: Borrowers should consider flexible repayment tenures suited to their monthly incomes and budgets. Loan repayment tenures can range between one and 20 years, though repayment cycles vary across lenders. A higher repayment cycle could apply in the case of a combined housing and solar loan.
Foreclosure: Each bank follows specific policies with respect to foreclosure or loan prepayment of solar loans. There may be charges levied as prepayment fees either towards part or full prepayment.
Solar financing options in India
Categorised by RBI as a priority lending category, several leading banks, lenders, and NBFCs have come forward to extend solar loans for homeowners.
Some of the solar loans that may be available include the SBI’s Solar Roof Top Finance, HDFC’s solar loan, IDBI Bank’s Surya Shakti scheme, Canara Bank’s Housing cum Solar Loan, Union Bank of India’s Union Roof Top Solar Scheme (URTS), and ICICI Bank’s unsecured loans, among others.
Below is a broad overview of solar loans being offered by financial institutions, banks, NBFCs, solar financing companies, and lenders in India*:
| Loan application process: | Eligibility criteria: | Borrowing conditions: | Repayment period: |
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*Please note: The above are indicative only and subject to change from time to time, as per lender policies. Actual loan terms and conditions may vary.
Source: National Portal for Rooftop Solar
Government incentives for homeowners to go solar
The central government is offering the following incentives to encourage homeowners to adopt solar:
Capital subsidies to promote residential solar rooftop installations:
- SRISTI provides Central Financial Assistance to homeowners for residential rooftop installations in urban areas. The financial assistance starts at 20% for capacity between 3 and 10 kWp, and at 40% for capacity up to 3 kWp. This applies only to solar rooftops made in India.
- SAUBHAGYA scheme provides financial assistance for residential rooftop installations in rural areas.
Source: MNRE, Power Ministry
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Solar Rooftop Subsidy Yojana: The Government of India provides subsidies on solar rooftop installations as follows:
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30% subsidy for installation of rooftop solar in general category states
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Up to 70% subsidies to special category states
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Eligibility: The average installation cost of the rooftop solar should amount to INR 60,000 – 70,000.
How can Enphase help you?
As solar rooftops become the preferred energy choice for homeowners in India, customers, too, are spoiled for choice when it comes to solar financing options. It’s important for borrowers to draw up a detailed financial plan that considers everything from varying loan structures and flexible repayment plans to government incentives for going solar.
Lastly, to simplify credit access for customers interested in Enphase-enabled solar PV systems, we've allied with Indian fintech lender Credit Fair to launch one-of-a-kind easy solar financing plans.
Key features of the solar financing plans include:
- Zero-collateral solar loans
- Competitive interest rates
- Flexible repayment tenures
- Easy monthly instalments
- Quick and secure digital loan process
- Transparent processing
- Minimal documentation
If you’re interested in going solar, you can learn more about solar financing schemes from our wide network of Enphase installers across India.
