Benefits Of Bank Loan For Solar Power Plant In India
Banks like IDBI, SBI, etc are offering solar energy loans and companies like Insolergy are facilitating easy access to such loans. But what benefits do end users get from such loans for solar power plant in India?
With increasing awareness to adopt clean energy and the rising cost of grid supplied electricity, roof-top solar plants are finding more and more takers in the residential and commercial segment. However, one key concern amongst potential users is the question of initial investment. Even with faster return on investment (typically 3 to 4 years) and long operating life (25 year performance warranty on Solar Panels), the amount of initial investment still deter many potential users, who usually postpone the adoption of solar energy and address their more imminent financial needs.
Taking this into account the Government of India, via RBI, has directed financing of solar plants to be identified as Priority Sector by Public Sector Banks (PSUs), specifically targeting the needs of individual residential users, housing societies and small and medium commercial enterprises. Under this solar loan scheme, the banks are advised to provide financing support to these identified users with ease.
In past few years, Insolergy Technologies has assisted and enabled eligible users to avail such loans for solar power plant installation. We feel that awareness needs to be created about benefits of solar power loans among those who are considering installing solar panels at home or for commercial use. So from our past experiences, we have put together the following list of benefits of loans for solar system in India:
Advantages of loan scheme for financing solar PV system in India
Annual saving during solar loan repayment period is around 20 to 30% of power bills
Insolergy has actively helped many solar users in Maharashtra with installation of solar PV system through EMI option. Our observation is that solar electricity users who pay for their solar power plant through EMIs save 20-30% of electricity expense annually. To illustrate this, let’s consider the following case:
- User: Co-operative Housing Society in Pune
- Plant Size: 20 kWp
- Plant Cost: Rs. 12.0 Lakh
- Annual Production: 30,000 kWh of electricity
- Current Grid Tariff: Rs. 12.00/kWh
- Annual Saving: Rs. 3.60 Lakh
- Annual Maintenance: Rs. 20,000 (for monthly cleaning, etc.)
- Equity (20%): Rs. 2.4 Lakh
- Loan Amount (80%): Rs. 9.6 Lakh
- Loan Tenure: 5 years
- Rate of Interest: 10.50%
- EMI value: Rs. 20,634
- Annual Pay-out: Rs. 2.48 Lakh
- Annual Net Saving: Rs. 92,000
Net Savings: 25% on annual electricity expenses during Loan Repayment Period
Investment Recovery: 2.60 Years
The annual savings, as illustrated in above case, typically varies between 20 to 30% during the loan repayment period, thus making EMI financing option attractive to users.
The solar power system is virtually free after loan repayment period
Whatever solar panel cleaning cost arises is insignificant and is typically less than 5% of the net savings generated.
There is less burden of initial solar investment
The major portion of the expenditure for a solar plant is taken up by the initial investment required. That sometimes deters potential solar users to delay adoption of solar energy. With solar loans, they can own a solar energy system with minimal upfront investment and by paying for it every month at a low, fixed cost in the form of EMI. They can get immediate returns by saving money on their electricity bills right away, even as they repay solar rooftop loan.
The loan for solar system in India may be clubbed with home loan
Solar energy loans can be considered a part of home loan. IDBI Bank, for instance, offers the facility of clubbing with new or ongoing home loan.
PSU banks may allow the cost of the solar plant as part of house construction cost, if the plant is installed at the time of house construction. If your house is already built, then it’ll be considered on case-to-case basis. Home Improvement loans may be taken for solar installation, but may have higher interest rate than typical Home Loan.
Loan for solar power plant on EMI with Insolergy
Insolergy has partnered with IDBI Bank Ltd. on pan-India basis, to assist eligible users to avail IDBI bank solar loan , and has helped many happy customers to realize their goal of adopting solar energy. To inquire about solar panel installation and/ or solar loans on EMI, call / whatsApp 9082786504 or contact here. We also support those users who have already identified their installer and are now looking for financing.
Insolergy is one of the leading solar energy companies in India. The company provides solar EPC services and has successfully installed solar system for home and commercial solar power plants across the country.