India now ranks among the top countries globally for solar power generation, and as more businesses and homeowners look to go solar, understanding solar financing options has become just as important as picking the right panels.
Why Financing Matters
Building a solar plant isn’t cheap. A commercial installation typically runs between ₹35 to ₹50 per watt in 2026, and a 1 MW plant, excluding battery storage, generally costs between ₹3.5 to ₹5 crore. Most projects are structured with roughly 20 to 30 percent equity and the remaining funded through debt, which is where solar loans come into the picture.
Domestic Financing Options
IREDA, India’s dedicated renewable energy lender, remains one of the most competitive options available. It typically funds 70 to 75 percent of project cost for commercial and industrial solar plants, with interest rates ranging from 8.5 to 11 percent depending on the project size and risk profile, and repayment tenures stretching up to 12 to 15 years. IREDA rates generally run lower than most commercial banks, sometimes by a full percentage point or more.
For smaller businesses, SIDBI’s 4E scheme has become a popular choice, offering rates as low as 7 to 8 percent for MSMEs looking to go solar, and in some cases covering close to 100 percent of project cost.
On the residential side, banks like SBI, HDFC, and PNB now offer dedicated solar loans too, with interest rates ranging from roughly 8.5 to 10.5 percent. A typical 5 kW rooftop system financed over 10 years can come with an EMI comparable to what you’d otherwise pay on your electricity bill, which is part of why solar loans have become such an easy sell for homeowners.
What About Foreign Financing?
International lending can offer lower rates once currency hedging costs are factored in, though the approval process tends to take longer and often comes with restrictions around using imported components, which can affect eligibility for domestic content requirement projects.
Additional Financial Benefits
Businesses installing solar also get access to accelerated depreciation, allowing up to 40 percent depreciation in the first year, which meaningfully reduces taxable income. For those unable to commit upfront equity, RESCO or OPEX-based solar models offer a way to go solar with little to no initial investment, paying instead for the power generated over time.
Choosing the Right Financing Path
The right option really depends on your project size and credit profile. IREDA suits larger industrial projects, SIDBI works well for MSMEs, and standard bank loans are usually the easiest route for residential systems. Comparing a few lenders before committing can make a noticeable difference in long-term costs.
Once financing is sorted, choosing a reliable manufacturer matters just as much. Waaree, India’s largest solar panel manufacturer with over 25.8 GW in manufacturing capacity, offers solar solutions across residential, commercial, and industrial scales, backed by decades of experience helping customers navigate both financing and installation smoothly.
