Commercial and industrial consumers (C&I) of electricity can reduce their electricity bills substantially by installing rooftop solar power plant.
However many businesses do not want to divert their cash flows away from their core operations. Many banks and NBFC's including Verde Solaire have started providing loans for solar panel installations. These monthly installations are designed in such a way that the businesses don't have to divert their cash flows away from their core operations.
For eg. Verde has recently installed a 430 KW solar power plant at Jindal Prefab in Dharuhera, Haryana. This company took a loan through SIDBI for its solar plant. SIDBI financed them around 95% of the project cost of solar power plant for seven years. Jindal is paying EMI, but still saving on its monthly bill. Their solar plant will be free of any debt after paying of its loan within seven years after which the savings will be huge. The good thing is that the loan was designed in such a way that there was a very small investment in solar plant by the company. Even that investment will be recovered by accelerated depreciation itself in the first year of the installation of solar energy system.
Below is the synopsis of a savings from installation of a solar energy system of 200 KW with 75% loan for five years.
Solar Power Plant with 75% Debt | |
Project Capacity (in KW) | 200 |
Gross Generation/KW (unit) | 1500 |
Contracted Tarrif (Rs/kwh) | 7.5 |
Term of the project (years) | 25 |
Project Cost/KW (Rs lakh) | 0.41 |
Total Project Cost (Rs lakh) | 82 |
Annual Savings (Rs lakh) | 23 |
EMI (Rs lakh) -annual | 17 |
Interest Rate | 9.25% |
Debt (Rs Lakh) | 62 |
Equity (Rs lakh) | 20 |
Repayment period (years) | 5 |
Project IRR | 33.94% |
Equity IRR | 59.85% |
Project payback (years) | 3.87 |
Equity payback (years) | 3.77 |
As the above chart shows, the annual EMI is Rs. 17 lakhs while the savings from electricity bill is Rs. 23 lakhs by installing solar power plant. The project IRR for solar power plant installation is a phenomenal 33.94%. The accelerated depreciation benefit of 40% is an additional benefit given by the government and reduces the payback period further. This accelerated depreciation is a significant tax benefits for the industries installing rooftop solar plants.
Contact us by sending us a message to know more about getting a loan on installation of rooftop solar power plant without diverting existing cash flow of the company.
