What Are The Best Banks For Solar Power Financing?

Are you considering putting a solar photovoltaic (PV) system on your home but are unsure how to pay for it? Perhaps you're considering whether to buy the system outright or use a financing plan. Perhaps you are unaware of the financing choices available to you.

If you are considering going solar, there is good news: the cost of a solar PV system has dropped considerably in recent years, and there are more options for financing it. However, with so many solar financing alternatives accessible today, the market for these goods has become extremely convoluted. It might be difficult to pick among the many packages and providers.

A solar energy system might be a valuable asset for both small and large businesses. Solar power may not only significantly reduce your electricity bills, but it can also minimize your overdue taxes and raise the value of your house. Despite all of the benefits of solar energy, there remains one big hindrance: the initial installation cost. Due to technical improvements such as solar power system design software, solar system components are now easier to handle and less expensive, and attractive government subsidies sweeten the deal even more. However, it is true that solar energy requires a significant initial investment. That investment may pay for itself in a few years, but you'll still need to locate the finances to install the system unless you have enough cash on hand. However, due to short-term financial concerns, you should not have to forfeit the thousands of dollars that a solar energy system may save your business.

What Is A Solar Loan?

Solar loans enable clients to borrow money from a lender or solar developer for the installation of a solar PV system. The homeowner owns the installed system under this method. A broad range of loan options are available, with varying monthly payment amounts, interest rates, durations, credit conditions, and security methods. Some solar financing programmes bundle energy efficiency upgrades with solar PV installation or allow for the inclusion of roof repair or energy-related improvements.

Some loans require an asset to act as collateral to secure the loan. A home equity loan is when the lender obtains a security interest in the solar customer's house. Other loons, other from the solar system itself, do not require an asset to collateralize the loan. These are known as unsecured loans.

The solar PV system may begin saving the homeowner money right away with many solar loans by arranging the repayment conditions such that the monthly loan payments are less than the consequent decrease in the amount on your power bill. Alternatively, paying off the loan sooner and for a shorter period of time may delay immediate positive cash flow, but it will minimize the time required to reach the post-loan period, when monthly savings will be substantially higher.

Banks, credit unions, state programmes, utilities, solar developers, or other private solar financing companies can serve as lenders for solar loans. In a few states, on-bill financing through participating utility companies allows solar customers to repay their loans through payments added to their monthly electric bill. Residential Property Assessed Clean Energy, or R-PACE, programmes may be accessible in a few areas. R-PACE is a financing mechanism for residential energy improvements in which the update is paid off over a certain number of years by an assessment on the homeowner's property tax bill. An R-PACE assessment is attached to the property rather than the homeowner, making it easier for homeowners to acquire a solar PV system even if they intend to sell their house before the system is completely paid off.

What Are The Best Banks For Solar Power Financing?

Almost all public sector banks, including the State Bank of India (SBI), Punjab National Bank, Bank of Baroda, and the Central Bank of India, offer loan financing for various types of solar projects. Private banks like ICICI, Yes Bank, and Axis Bank offer financing for solar projects.

According to a previous press release from the Indian government, "among public sector banks, SBI would finance the largest capacity of 15,000 MW." Banks provide financing for solar projects with annual interest rates ranging from 9.5 percent to 10.5 percent.

Furthermore, IDBI Bank has created the "Surya Shakti" Scheme to finance individual rooftop solar power plants, therefore boosting clean energy and helping to save the environment significantly. IDBI provides no-collateral, no-hassle solar loans up to 3 lac rupees. The loan is now available at an interest rate of roughly 10.5 percent per annum. As an example: You can aim for a bill decrease equal to the EMI by making a little down payment and obtaining a loan of Rs. 3 Lakhs. As a result, you will be able to pay for your Solar solution without financial worry.

SBI Solar Loan:

To offer financing to SME and Business Enterprises for the construction of solar rooftop / ground mounted grid linked systems up to 1 MW capacity for captive usage.

Features:

Target Group: Existing and Prospective SME & Business enterprises, having requirement for installation of Solar rooftop / ground-mounted grid-connected systems upto 1 MW capacity.

Type of facility: Term Loan

Quantum of Loan: Maximum Rs.4 Crores

Borrower's Margin / Contribution: 20% (minimum)

Pricing: Attractive interest rates based on rating of the borrower.

EBLR linked (for MSMEs) & 6 months MCLR linked (for Non-MSMEs)

Repayment Period: Upto 10 years (maximum incl. initial moratorium of 6 months)

Upfront fees / charges: 1% of Term loan amount + applicable GST

Processing of loans: Centralised Processing for quick Turn Around Time (TAT)

Government Loans For Solar Panels:

Both the Central Government and State Nodal Agencies offer subsidies for the construction of rooftop PV systems (SNAs). This encourages people to utilize renewable energy and save money on their utility bills. Though building a rooftop PV system is pricey at first, it is less expensive in the long run than electric generators. Rooftop PV systems require no further maintenance after installation since they use solar energy rather than fossil fuels.

According to the Ministry of New and Renewable Energy, the Central Government would fund 30% of the benchmarked installation cost for rooftop PV systems. This subsidy is only accessible to general category states. However, in some areas, such as North MNRE PV Rooftop Cell, a subsidy of up to 70% of the benchmarked installation cost is available. Uttarakhand, Sikkim, Himachal Pradesh, Jammu & Kashmir, and Lakshadweep are among them. Furthermore, in certain states, State Nodal Agencies grant subsidies.

This initiative provides financial assistance to the institutional, residential, and social sectors. It does not, however, apply to commercial, industrial, or public-sector organizations. PSUs are eligible for energy-generation-based incentives.

In addition to the subsidy, installing a rooftop solar system provides several other advantages:

• Nationalized banks are offering priority sector loans of up to Rs 10 lakh to those wanting to construct rooftop PV systems. This loan will be classified as a house loan or a home renovation loan.
• Customers would be eligible for generation-based incentives of Rs 2 per unit of power generated.
• Additionally, extra electricity can be sold. They would get a regulated cost per unit based on tariffs established by the government in exchange for this.
  

What To Look For When Financing Solar?

You may be steered toward one sort of lender or another when considering how to finance solar panels. Do not enter into a solar loan hastily. If you decide to go with the purchase, inform the salesman that you intend to rate the shop first. A difference in interest rates of as small as one percentage point can save (or cost) you thousands of dollars over the life of your solar loan.

Here's what to look for when you're financing solar:

Low Interest Rate: The lower the loan payment, the sooner solar panels pay for themselves through energy savings.

Attractive Repayment Terms: Your monthly payments may be excessively expensive if the payback period is too short. If the period is too lengthy, you will pay more interest than necessary. You want to choose the shortest loan term that you can afford.

Perks: The finest solar power financing benefits include a lower interest rate for autopay, convenient online access to your loan information, and unemployment insurance.

What Are The Benefits Of Solar Power Financing?

Reduced Power Costs & Bills:

The most obvious financial advantage of solar energy is that it may reduce your utility expenses. Actually, it's a straightforward equation. Any electricity generated by your solar panels is power that you do not have to purchase from the utility. When your system generates more power than you consume, it is sent back into the grid in return for an energy credit.

Cleaner Environment and More Sustainable Future:

It is priceless to ensure a cleaner and more sustainable future for future generations. Solar energy is one of the most environmentally friendly kinds of electricity available. With guarantees of up to 25 years and an active production life of 40-50 years, your clean energy solar investment will benefit both your children and grandkids.

Short Term Solar Tax Incentives:

There are now significant federal solar tax incentives available that may cover almost one-third of the cost of a solar system through a 26 percent tax credit. This 26 percent tax credit will be reduced again at the end of 2020, so act now to maximize the return on your solar investment. The state of Arizona also provides a $1,000 reward.

There are also appealing financing and leasing alternatives. It is now fully viable to go solar with little to no out-of-pocket expense. If your monthly lease or loan payment is less than your usual bill, you'll still have money in your pocket at the end of the month plus many decades of regular energy expenditures.

Conclusion:

To summarize, the end customer has several alternatives for financing their rooftop solar installation, ranging from typical mortgage loans to 'no security' personal loans and even over-the-counter credit card payment options. It all comes down to knowing all of your alternatives in order to make the best financial decision.