India is leading the world in clean energy. One of the biggest drivers is solar power. Whether you’re a business owner, factory manager, or solar developer, large-scale solar project financing is the key to starting your journey toward clean, affordable power.
But solar farms or industrial-scale rooftop systems need smart planning and funding. In this guide, you’ll learn how to finance a big solar project in India, reduce your costs, and use the best government schemes, loans, and investment methods available.
1. Understand the Real Cost of a Solar Project
A large-scale solar power plant in India costs around ₹4–6 crore per megawatt. The cost includes:
- Solar panels (modules)
- Inverters and transformers
- Land or rooftop infrastructure
- Labour, installation, and engineering (EPC)
- Grid connection and approvals
The total cost depends on size, location, equipment brand, and design.
2. Take Advantage of Government Incentives
The Indian government offers many benefits to make solar affordable.
Accelerated Depreciation
If your business installs solar, you can claim up to 40% depreciation in the first year. This reduces taxable profits and improves return on investment (ROI).
Subsidies and Capital Grants
Schemes like PM-KUSUM, National Solar Mission, and state-level programs give upfront subsidies for solar projects. Commercial systems often get 20–30% capital subsidy. Some agricultural or rural projects get up to 60%.
GST and Tax Relief
Solar panels and inverters attract only 5% GST. Custom duty is often waived under energy-friendly import policies. These help lower your initial investment.
3. Get Project Loans from Banks and Financial Institutions
Public Sector Banks
Banks like SBI, PNB, and Bank of Baroda offer solar project loans with interest rates around 9.5–10.5%. They usually cover 70–75% of the project cost as debt.
IREDA and Power Finance Institutions
The Indian Renewable Energy Development Agency (IREDA) is a dedicated solar finance agency. It gives long-term loans and refinancing support for renewable energy projects. Power Finance Corporation and REC also offer funding for large-scale solar.
International Support
Big solar projects (over 25 MW) can get support from international groups like ADB, World Bank, and IFC. They offer low-interest loans and risk guarantees.
4. Equity Investment and Private Funding
For large projects, a mix of equity and debt financing is used. Private investors, green energy funds, or venture capitalists may take equity in your solar plant. You keep control but share profits.
Green Bonds
Large businesses can raise funds by issuing green bonds. These are long-term instruments dedicated to climate-friendly projects. Many Indian companies have used them to raise hundreds of crores.
Renewable Energy Certificates (RECs)
You can also earn RECs or carbon credits by selling clean power. These can be sold on energy exchanges for extra revenue.
Also Read How Import Duties Are Shaping Solar Equipment Prices in India (2025)
5. Choose the Right Financial Model
Your financing depends on how your project is structured.
Independent Power Producer (IPP)
You build and own the project. You sell power to customers (industries, discoms) under a Power Purchase Agreement (PPA). Revenue from power sales is used to repay loans.
RESCO Model
Under RESCO (Renewable Energy Service Company), a solar developer owns the system and sells power to you at a fixed rate. This is ideal if you don’t want to invest capital but want solar power benefits.
Solar Park Model
You can also set up inside a solar park, where the state provides land and infrastructure. This reduces land and grid connection risks.
6. Restructure and Refinance as Needed
Once your solar plant is operational, you can refinance loans at lower interest rates or longer tenure. This reduces EMI burden and improves cash flow.
Many companies like Adani, Avaada, and ReNew Power use this strategy for long-term financial stability.
7. Tips to Lower Risk and Improve Financing
- Secure long-term PPAs (15–25 years) with stable buyers
- Use escrow accounts to manage payments
- Take performance guarantees for construction and operation
- Get third-party audits to improve credibility with banks
- Build in solar parks to avoid land acquisition issues
8. Key Trends in 2025 Solar Project Financing
- Green financing is growing: More loans and equity are coming from ESG funds and green investors
- Digital loan processing is improving speed and access
- State governments are offering interest subsidies
- Carbon trading is being adopted to increase project revenue
- Solar leasing and BOOT models (Build-Own-Operate-Transfer) are rising for industrial projects
FAQs on Financing a Solar Project in India
Q1. What is the ideal loan-to-equity ratio for solar?
Most projects follow a 70:30 or 75:25 ratio. Banks give 70% as debt. You contribute 30% as equity.
Q2. Can I get a subsidy for large industrial solar projects?
Subsidies apply mostly to residential and agri projects. However, commercial and industrial (C&I) projects benefit from tax breaks, REC earnings, and net metering.
Q3. How long is the payback period?
With government incentives, the solar payback period in India is 4 to 6 years. For larger projects with PPAs, returns begin early.
Q4. Which banks offer solar project loans?
SBI, PNB, Bank of Baroda, and IREDA are the top lenders. NBFCs like Tata Capital, L&T Finance, and SIDBI also support solar funding.
Q5. What documents are needed for a solar loan?
You’ll need:
Project report
Feasibility study
Land and grid access proof
Financials of your business
Company registration and KYC
Conclusion: India’s Solar Future Is Bright — Finance It Right
Solar energy investment in India is not only good for the planet—it’s good business. With falling costs, government support, and strong banking partnerships, building a large-scale solar plant is more feasible than ever.
Plan smart, choose the right finance mix, and work with trusted partners. Whether you’re powering a factory, school, or industrial park—solar is your way to a cleaner, cheaper energy future.
