ROOFTOP SOLAR LOANS FOR MSMES: CUT ENERGY BILLS AND SCALE THROUGH SOLAR FINANCING

• Publish on Jun 23, 2025
• Read Time 5 min

Electricity in India accounts for around 15-20% of operating costs for many MSMEs in manufacturing, textiles, and food processing sectors. With commercial power tariffs averaging ₹8–₹10/unit in industrial zones, energy costs are a major barrier to scale.

At the same time, solar energy costs have dropped by around 85% over the last decade. This makes it cheaper than grid power in most states. And yet, only a small fraction of India’s 6.3 crore MSMEs have adopted rooftop solar.

Why?

Upfront costs.

But solar loans designed specifically for MSMEs are closing this affordability gap.

What Are Rooftop Solar Loans?

A solar loan is a financial product that lets you install a solar system with zero or minimal upfront cost. Instead of paying ₹3–10 lakh from your pocket depending upon the size of the project, you repay in monthly EMIs in around 1–7 years, often using the savings from your company’s electricity bills.

Here are some typical rooftop solar loan features in India:

• Loan amount: ₹50,000 to ₹150 lakh
• Tenure: 06 to 60 months
• Interest rates: Typically, 8% to 24%, depending on credit worthiness
• Collateral: The solar asset itself becomes the collateral for the loan, with no additional collateral required
• Vendors: Most green lenders work with reliable solar installers to ensure compliance and quality

Note: Solar EMIs are often designed to match or even stay below your current monthly electricity bill depending on the project size, hence creating a cash-neutral model from day one.

Also Read: How SME Business Loans are Evolving in India: What You Need to Know in 2025

Why Solar is a Smart Switch for MSMEs

Here’s why rooftop solar is great for your medium-to-small business:

• Lower energy bills: Solar can reduce your monthly electricity costs by 60–80%, especially if your operations run during daylight hours.
• Power stability: Grid issues and power cuts can disrupt productivity, and solar provides the energy resilience your infrastructure needs.
• Diesel offset: Many MSMEs rely on diesel gensets. Solar eliminates that need and saves ₹15–20 per unit compared to diesel.
• Increased capacity: Savings can be reinvested into machinery, hiring, or expanding operations.
• Net metering: In most states, excess solar power can be exported to the grid and win you energy credits.

Above all, solar systems come with a 25-year panel warranty and 5–10 years of inverter support, making them a long-term asset.

How to Choose the Right Solar Loan

Keep these points in mind when applying for an MSME business loan for solar systems:

• MSME experience: Choose lenders who understand your business cycle and GST structure.
• Low paperwork: Look for loans that accept basic KYC, bank statements, and GST/ITRs to avoid endless documentation.
• Installation support: Check if the lender offers tie-ups with certified solar EPCs (Engineering, Procurement & Construction partners).
• Prepayment flexibility: Some lenders allow early repayment without penalty, and this is useful if your revenue grows.
• After-sales support: Ensure performance tracking, AMC options, and warranty handling are bundled in.

Financing platforms like Ecofy are focused specifically on making clean energy affordable for small businesses. Their bundled solutions cover factors like credit evaluation, extension of term loans on rooftop solar, along with active and accurate performance tracking of the installed solar panels.

Verdict

Remember, India’s MSMEs generate nearly 30% of the country’s GDP. However, many are trapped in high operational costs.

FAQs

1. Are solar loans available without collateral?
   Yes. Many financers like Ecofy offer rooftop solar loans up to ₹10–15 lakh based on your credit worthiness, combined with the electricity bill amount which you will save on successful solar project installation.
2. What happens if my solar system underperforms?
   Warranties, AMC packages, and smart performance tracking help resolve issues quickly. Reputed vendors also ensure proper system design and output.
3. Can I avail government subsidies for a solar system?
   Yes. The Ministry of New and Renewable Energy (MNRE) offers up to 30–40% subsidy for small rooftop systems under the Rooftop Solar Programme Phase II. Certain states also run their own subsidy programs, the applications of which are assisted by the EPC who will install the solar project at your premises.
4. Can I use a rooftop solar loan for partial installation?
   Absolutely. You can seize the system to cover part of your load. Even 3–10 kW systems make a big impact.