Sharad Gupta – VP – Operations & Procurement, Oorjan Cleantech
India’s rooftop solar sector is poised for a transformative growth trajectory, with installed capacity expected to increase from around 17 GW in FY25 to between 25 GW and 30 GW by FY27, driven by robust expansion across commercial, industrial, and residential sectors nationwide.
The Growth Outlook: A Sustainable Surge
The rooftop solar market in India has been growing at an average annual rate of 33%, propelled by supportive policies, declining technology costs, and heightened sustainability commitments among businesses and homeowners.
This potential expansion aligns with India’s broader renewable energy targets: achieving 500 GW of solar capacity by 2030, with rooftop solar playing an increasingly important role. The commercial and industrial (C&I) segment, in particular, is expected to be a leading growth engine as companies seek to reduce power costs and lower carbon footprints.
Policy Push — A Framework for Rapid Adoption
Government initiatives have played a pivotal role in catalysing rooftop solar deployment:
- Grid Connected Rooftop Solar Programme: Administered by the Ministry of New and Renewable Energy (MNRE), this programme aims to reach a cumulative installed capacity of 40 GW by 2026 with central financial assistance (CFA), net-metering incentives and DISCOM support mechanisms.
- Pradhan Mantri Surya Ghar: Muft Bijli Yojana (PMSGMBY): Launched in February 2024 with a budget of Rs 75,021 crore, this flagship scheme targets the installation of rooftop solar systems across 1 crore residential households, offering subsidies and up to 300 units of free electricity per month to beneficiaries.
Early results from Surya Ghar indicate strong traction: as of late 2025, more than 23.9 lakh installations have been completed, representing nearly 24 % of the residential target, a clear sign of growing consumer demand.
Financing Innovations — The Growth Catalyst
While strong policy support lays the foundation, financing products are the key to unlocking mass adoption. Rooftop solar installations typically involve upfront costs, which financing solutions can spread out over time, making clean energy accessible even for budget-constrained users.
1. Tailored Solar Loans by Banks & Partners
Partnerships between solar developers and financial institutions are accelerating rooftop solar financing:
- Tata Power Solar and Bank of India: This collaboration offers collateral-free loans for residential systems up to 3 kW (Rs 2 lakh) at interest rates around 7.10 % p.a. with up to 10-year tenures. Larger systems up to 10 kW are also financed with competitive rates. MSMEs can access loans up to Rs 30 crore with extended repayment tenures.
- Canara Bank Tie-ups: Strategic partnerships, such as with Canara Bank for rooftop solar, offer loans up to Rs 6 lakh with moderate margins and up to 10-year repayment periods, helping homeowners and small businesses adopt clean energy.
These tailored products are especially critical for residential and small commercial customers who might otherwise delay or forgo solar adoption due to high upfront costs.
2. Fintech and NBFC Solar Financing
Non-bank lenders are introducing simplified, digital financing solutions that reduce friction in loan approvals and disbursements:
- Credit Fair’s solar financing: In partnership with solar solution providers, Credit Fair offers loans at annual rates between 9 % and 9.75 %, with flexible EMIs up to seven years and options to pre-close without penalties — increasing affordability for households and businesses alike.
These models reduce barriers, enabling broader participation from middle-income segments and speeding up installation cycles.
3. Multilateral Support & Institutional Loans
International financing agencies are also stepping in:
- Asian Development Bank (ADB): The bank has approved USD 650 million (approx. Rs 5,780 crore) to support rooftop solar adoption across India, helping remove financing hurdles and supporting programmes like Surya Ghar.
Such large-scale funding not only provides capital but also instils confidence among domestic lenders and investors, encouraging further private financing.
Challenges & the Road Ahead
Despite impressive momentum, some risks remain — including potential oversupply in solar module manufacturing that has prompted lenders to adopt a more calibrated financing approach for new projects.
However, with robust demand trends, expanding financing products, and strong government backing, India’s rooftop solar sector is well-positioned to reach 25–30 GW by FY27. Continued innovation in financing, especially for underserved segments, will be crucial to ensuring that this growth is both inclusive and sustainable.
