As India accelerates its clean energy goals, financing has become a critical enabler for commercial and industrial (C&I) entities adopting solar. Structured funding options, ranging from MSME-focused bank loans to lease-based and turnkey financing, are making solar adoption more accessible and cost-effective.

At the recent C&I Clean Energy Meet hosted by Mercom India in Mumbai, leading financial services companies and solar solution providers came together to share details on obtaining green loans for rooftop and captive open-access solar systems. The panel discussion featured representatives from SIDBI, Siemens Financial Services, IDBI Bank, Credit Fair, and Oorjan Cleantech.

Loan Products

Sheetal Sherke, Deputy General Manager, SIDBI, said the bank has two dedicated programs for clean energy financing—the End-to-End Energy Efficiency (4E) and the Green Finance programs.

“Both are aimed at MSMEs. Applicants can submit documents online. The 4E program offers up to ₹150 million (~$1.75 million), while Green Finance is available up to ₹500 million (~$5.84 million),” said Sherke.

Poonam Pawar, AGM Asset, IDBI Bank, spoke about the IDBI’s dedicated offering under the “IDBI Surya Shakti” program tailored for farmers, as well as commercial and industrial units. “We prioritize clients who have maintained a consistent relationship with the bank over the last two to three years,” she added.

Siemens Financial Services has expanded its financial services arm in India over the past 14 years. Abhay Dixit, Vice President of Business Development Siemens Financial Services, stated that the company offers loans and leasing models tailored for solar and clean energy projects. “We offer rental-based solutions that don’t require collateral or no objection certificates (NOCs) from existing banks. These products allow clients to retain their working capital lines,” he explained.

Gautam Das, CEO of Oorjan Cleantech, outlined the company’s comprehensive turnkey model: “We provide full-cycle project execution from land acquisition and engineering to funding and maintenance. Our financial offerings include loans, leases, and PPAs with buyout options.”

Vikas Aggarwal, CEO of Credit Fair, said Credit Fair focuses on small commercial and residential rooftop solar projects. He said, “We have already financed over 9,000 rooftop systems, amounting to around 16 MW of capacity across India. Applications are processed digitally through our EPC partners.”

Interest Rates and Loan Tenure

SIDBI offers loans at interest rates ranging from 8.75% to 10%. The 4E program’s repayment period is up to seven years with a 12-month moratorium. The Green Finance program offers repayment terms of up to 10 years. “We calculate ratings internally, based on GST data, CIBIL scores, and borrower history,” said Sherke.

Siemens Financial Services does not offer standard interest rates for all clients but provides monthly rentals based on the project, down payment, and tenure. Dixit said, “We are a triple-rated company and offer competitive rentals tailored to each client. We usually see tenures between 4 and 5 years, but can extend this if necessary.”

Oorjan’s Das clarified how the cost of capital impacts interest rates. He said, “If you’re taking loans from a large NBFC with a Triple-B-Plus or better rating, you can expect interest rates below 10%. But small NBFCs often lend at 14–15% due to the higher cost of funds.”  Financial leasing with depreciation and GST set-offs for high-quality projects can lower the effective cost.

Pawar said the IDBI Bank offers rates ranging between 9.10% and 13.84%, depending on project appraisal and credit rating. The tenure extends from seven to ten years.

Credit Fair’s rates are higher, with unsecured loans priced between 12% to 14% and 15% to 18% on a reducing balance basis. “Our tenure is typically two to three years, especially after accelerated depreciation benefits,” said Aggarwal.

Siemens also provides a customized strategy. Dixit said the company aligns its internal ratings with available external scores and creates bespoke financing solutions without relying on the client’s primary banking limits.

Collateral and Credit Rating Mechanisms

Collateral requirements and credit evaluation processes vary among the participating organizations.

Siemens’ leasing model offers financing without needing collateral or NOCs. “The equipment acts as the asset, and the repayments come through rental structures. It’s tax-efficient and avoids interfering with banking limits,” said Dixit.

Oorjan uses lease and PPA models, which allow depreciation and GST benefits to be passed on to the customer. “You can save 30% on capital deployed if structured correctly. Even if a customer doesn’t want to buy the asset immediately, our model allows test-and-buy later,” explained Das.

IDBI Bank assesses credit ratings as part of project appraisal and determines collateral requirements based on the proposal’s size and scope.

Credit Fair uses only internal credit evaluations. It relies on cash flow analysis and business viability. “Loans up to ₹5 million (~$58,400) are unsecured,” said Agarwal.

Advice for C&I Units Considering Solar

Experts strongly encouraged MSMEs to adopt renewable energy solutions, particularly solar power, citing its financial and environmental benefits. Sherke recommended rooftop and ground-mounted solar systems, noting that energy cost becomes almost negligible after four to five years, and added that early repayment penalties could be up to 3% plus GST.

Dixit emphasized the cost-effectiveness of lease models over equity, explaining that lease-based financing allows businesses to preserve their banking limits. He also stressed the importance of involving EPC partners early for integrated engineering and financing.

Das pointed out that delayed decision-making hinders progress despite the clear 30% return on capital from solar investments, urging partner-financed and pay-as-you-go models that minimize risk for businesses.

Aggarwal urged immediate action, especially in states like Maharashtra, which are experiencing rising electricity tariffs, stating that rooftop solar energy is key to cost control and decarbonization.

The financial companies emphasized that while the financing landscape for green energy is diverse, businesses must choose partners and models that align with their operational needs and fiscal capacity. With flexible loan products, digital processing, and evolving lease and PPA structures, adopting renewable energy is becoming easier and more efficient for India’s C&I sector.

The next Mercom India C&I Clean Energy Meet event will be held in Pune on May 16, 2025.

At the last C&I Clean Energy Meet hosted by Mercom in Chennai on March 7, 2025, industry experts from leading financial institutions discussed multiple lending options, loan structures, and interest rates available for businesses investing in solar energy.

Contact us if you plan to install solar and need guidance or vendor recommendations.