The critical importance of choosing appropriate solar panel financing

Did you know that India ranks among the top 5 countries that lead the world in solar panel installations? The reasons for that are many. Most businesses and industries are well aware of the numerous benefits that come with installing solar panels on their premises. These include saving on energy costs, lowering electricity bills, reducing dependence on electricity generated from fossil fuels, and reducing their carbon footprint.

Whatever the reason, and despite the significant financial savings from switching to solar power, the transition to solar power isn’t easy for everyone considering the initial costs involved in installing, for instance, a rooftop solar plant. At B. U. Bhandari, we understand the challenges you face in making an upfront investment in solar panels, even knowing that you can save a lot of money in the long run. Many organisations hesitate to dip into their cash reserves to pay for a solar plant but they often do not know about the solar panel financing options available exclusively for renewable energy installations.

Imagine installing a solar power plant - with little or no upfront investment!

At B. U. Bhandari, we understand the challenges you face in making an upfront investment in solar panels, even though there is a lot of money to be saved in the long run. What you might not be aware of is the various solar panel financing models available in the market today, based on such factors as:

• - the percentage of the cost you are comfortable paying upfront (ranging from 0 to 100) the tenure of the financing contract
• - whether you want the ownership or lease to reflect in your books of accounts; or
• - whether you prefer a simple power purchase agreement with no upfront investment or maintenance cost;

Further, you can also decide on a suitable business model that allows you to take full advantage of a solar power installation without drastically affecting your organisation’s finances. Before we talk more about that, let’s take a look at the ways to pay for a solar panel system. You can either own the solar installation outright by paying upfront cash or opt for a collateral-free loan, financial lease, or power purchase agreement for a solar power plant. Alternatively, you can lease the solar panel system from a third party, as elaborated below. We’ll discuss all these in this article and help you make an informed decision.

Types of solar financing options

Outright cash
Naturally, making a cash investment in a solar panel system is a straightforward way of enjoying power cost savings almost immediately. You protect your profitability from hikes in electricity rates over many years. The only challenge to this could be having enough capital to fund this plan.
Lack of capital shouldn’t deter you from getting a solar panel system from a reputed vendor. This is where a solar panel loan or a solar lease can help.

Collateral-free solar panel loans
You can choose to install a solar power generating system through a collateral-free loan whose salient features include:

• - 25-30% margin
• - No additional security to be paid
• - EMIs are paid from monthly savings itself
• - Short-term tenure of 3-7 years
• - Tax benefit on depreciation and GST input to your account, with the net investment working out to around 5%

Financial Lease
A short-term financial lease is another option, and has the following salient features:

• - No investment and a refundable security deposit of between 15-30%, based on your credit rating
• - Shorter tenure of 3-7 years with the deposit refunded at the end of the tenure
• - Monthly lease paid from savings
• - The lease can be shown as 100% direct expense thereby you can claim income tax benefit on the lease expense
• - Monthly credit of GST input
• - No liability in your books
• - The asset is transferred to you at INR 1 at the end of the tenure
• - Enjoy 100% savings from the date of transfer

Power Purchase Agreement
In a power purchase agreement, a third-party investor invests in the project and sells power to you over a predefined long-term tenure at a predefined rate, which is 15-30% lower than the grid tariff.
Salient features include:

• - No investment from your end
• - You pay only for whatever power is generated each month at a predefined fixed electricity tariff that is 15-30% lower over a 10-, 15-, or 20-year tenure
• - No operation and maintenance cost as this is accounted for and factored in by the investor
• - At the end of the tenure, the asset is transferred to you at INR 1

Choosing a suitable solar financing option

Before we delve deeper into solar financing information, you need to figure out which solar panel financing option is ideal for you, check which of the following options apply to you:

B. U. Bhandari Energy your preferred solar panel solutions provider

B. U. Bhandari Energy is one of India’s leading solar financing companies helping businesses make a seamless

Making the transition from traditional to solar can be a big step towards reducing your carbon footprint as well as drastically bringing down your electricity costs. If concerns about the huge upfront investment are preventing you from taking this step, you can speak to one of our experts about taking a loan for a rooftop solar plant. We utilise the latest technologies in the most optimal design to create customised solar rooftop installations that best suit your organisation. Talk to us today to discover the perfect financial model for your rooftop solar installation.

Partner with us

At B. U. Bhandari Energy, we have spent years providing onsite solar power solutions to countless industries and businesses in India. We utilise the best technologies with the best design to create customised solar rooftop installations. Talk to us today to discover the perfect financial model for your rooftop solar installation.