Commercial and industrial (C&I) solar continues to be one of the fastest-growing segments in India’s renewable energy market. With increasing pressure on businesses to cut operating costs and reduce dependence on grid electricity, rooftop and captive solar systems have gained prominence across manufacturing, services, and agricultural enterprises. Financing, however, remains the critical element that determines the success of adoption in this segment.

Public and private sector banks are well positioned to influence the transition to clean energy, as they have direct connect with businesses and control over who receives or does not receive the financing.

Avinash Patodi, Assistant General Manager at the State Bank of India elaborated on the bank’s extensive role in financing renewable energy. SBI, which has adopted sustainability as a core institutional value, has set an internal target of 7.5% of its overall portfolio to be invested in sustainable finance.

The bank offers a comprehensive portfolio of green finance products catering to residential, micro, small, and medium enterprises (MSMEs), large corporates, engineering, procurement, and construction (EPC) service providers, and the manufacturing segment.

For residential customers, loans are available under the PM Surya Ghar program, which supports the installation of systems with a capacity of up to 10 kW.

Renewable energy EPC companies engaged in non-captive projects also qualify. Vendors associated with major manufacturers can access channel financing support through SBI’s tie-ups with large solar companies. Manufacturers can also apply for plant finance and security-backed loans directly.

Patodi added that SBI finances projects from 1 kW upwards without a technical cap, depending on the project scope. “Customers need to define the scope of the project, collect invoices, prepare a project report, and submit financial documents, including balance sheets.”

Applications can be made online through the bank’s FP Green Link or at its 70 regional offices and its branch network.

Interest rates offered by SBI vary by programs:

• PM Surya Ghar loans: as low as 6%
• Captive projects: around 5%
• Non-captive/third-party power generators: up to 9.65%
• Project finance: 8.4% to 9.15%, based on the risk rating

SBI evaluates projects using the “four Cs” – character, capital, collateral, and capability. While renewable energy loans usually do not require additional collateral, security is established through the project assets.

Renewable energy is not just about large projects, manufacturing and urban carbon emissions reduction. For 70% of the rural Indian population solar has been economically transformative. Though the government has numerous programs specific to farmers and micro rural businesses, the reach and awareness have been a holdup.

Institutions like the Rajasthan Gramin Bank have extensive rural reach, with 1,600 branches, of which 74% are in rural areas. The bank supports solar projects through multiple government-linked programs.

Under the PM Surya Ghar rooftop program, loans are available at 7% for amounts up to ₹200,000 (~$2,256) and 9% for loans above ₹200,000 (~$2,256) up to ₹600,000 (~$6,768).

For larger systems under PM KUSUM Component A and C, which cover ground-mounted solar projects and solar pumps, loans carry fixed rates of around 10.15%.

Dheerendra Jeengar, General Manager at Rajasthan Gramin Bank, noted that the bank accepts land ownership or lease arrangements for project sites. Power purchase agreements (PPAs) signed with distribution companies or designated agencies are essential documents for loan processing. The bank also assesses the track records of EPC contractors.

Subsidies further reduce costs for borrowers. For example, under the PM KUSUM Component C, solar pumps receive a 60% subsidy (30% central and 30% state), with farmers contributing only a 30% margin.

For ground-mounted systems, subsidies of ₹15 million (~$169,193)/MW are available. “Government is also targeting net zero by 2070, and these subsidies help us move towards that. Daytime power for irrigation, 60% subsidy for pumps, and subsidies of ₹15 million (~$169,192.70)/MW for larger projects all make solar highly viable,” Jeengar said.

While banks finance customers within the credit rating threshold, a large number of businesses do not qualify and are largely underserved. Non-Banking Financial Companies (NBFCs) focused on green financing are bridging the gap lending to businesses that banks generally are not able to cater to.

Aditya Birla Finance manages an overall capital base of ₹50 billion (~$568 million), comprising 70% retail and 30% wholesale, with approximately ₹80 billion (~$901.97 million) invested in renewable energy.

Prateek Nichani, Senior Manager, Project Finance, Aditya Birla Finance explained that the company provides loans for large corporates, manufacturing facilities, and independent power producers. It also funds equity requirements, as mandated by regulatory rules that require developers to maintain a 26% equity stake in projects.

“We give loans at the holding company level so that developers can put in their equity part, either as a bridge loan or structured finance,” he said.

Nichani explained that central utility-scale projects generally access financing at around 8.7%, while C&I customers without signed PPAs can secure financing at 9.5%, with rates stepping down after project stabilization.

The process requires submission of project fundamentals, promoter background, and equity commitment of 25% to 30%. External agencies are hired for due diligence, assessing project feasibility and assumptions before sanction.

Nichani focused on savings. “If grid tariffs are around ₹6 (~$0.067)/kWh, solar can reduce it to ₹2.5 (~$0.028)/kWh to ₹3.5 (~$0.039)/kWh. With a payback period of less than a year for captive projects, the financial case is clear.”

Credit Fair focuses on underserved segments. The company has financed over 10,000 solar projects and provides digital-first, collateral-free loans. It targets installations up to 100 kW for small and medium enterprises, residential consumers, and trusts.

The company’s offerings include:

• Profit-sharing loans and operating leases for medium-sized projects
• Collateral-free loans for cooperative housing societies (CHS), with more than 100 CHS projects already financed
• Loans for diesel generator replacement in rural areas, enabling customers to reduce costs and emissions

Piyush Bang, Chief Manager at Credit Fair explained that the niche lies in reaching customers often overlooked by large banks. “We have been trying to touch the points where people do not get loans easily,” he said.

These discussions were part of Mercom’s C&I Clean Energy Meet in Jaipur. India has set a target of installing 500 GW of non-fossil fuel energy capacity by 2030 to combat climate change, and Mercom is doing its part to foster renewable energy growth in India, one event at a time, in support of this goal.

The objective of these events is to connect C&I consumers with developers and provide clarity on how industrial and commercial units can adopt clean energy, finance it, and procure power through innovative long-term plans at competitive prices, among other benefits.

The next Mercom India C&I Clean Energy Meet event will be held in Bhubaneshwar on November 14, 2025.

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