For businesses today, sustainability is no longer a peripheral consideration. Rising energy costs, evolving policy frameworks, and increasing expectations from customers, investors, and regulators are steadily pushing clean energy higher up the corporate agenda.
At the same time, businesses are becoming more conscious of the risks associated with energy decisions – from cost volatility and operational reliability to long-term performance and maintenance accountability. As a result, going green is increasingly treated not just as an environmental choice but as a business decision that must balance savings, risk, and operational certainty.
This is particularly evident among India’s small and medium enterprises, which collectively account for more than 65 million businesses. While intent to adopt clean energy is strong, execution often feels complex, driven by upfront cost, financing choices, and questions around long-term performance.
The cost lever many businesses underestimate
Across manufacturing, logistics, education, food processing, and e-commerce, leadership teams typically focus on growth and delivery. Electricity, cooling, lighting, and pumping are often treated as fixed overheads, even though they directly influence margins.
For many commercial and industrial consumers, grid electricity remains one of the largest recurring expenses. A rooftop solar installation, for example, can require INR 35-50 lakh for a 100-kilowatt system, with a payback period of around seven years. Yet the long-term advantage is clear: commercial tariffs often range between INR 8-INR 12 per kWh, while well-structured rooftop OPEX tariffs can fall in the INR 3.5-INR 5 per kWh range.
Solar, therefore, offers a structural opportunity to reduce long-term energy costs and introduce greater predictability into power spend. The challenge lies less in the economics and more in how risk is allocated through financing and accountability.
Why financing shapes adoption outcomes
The way a solar project is financed determines who carries the downside.
Ownership-based models financed through bank loans or NBFC-led green financing can improve early-year economics through mechanisms such as accelerated depreciation and GST input credit. However, they also place performance responsibility on the business, meaning repayments continue even if generation drops or downtime occurs.
To reduce this exposure, many MSMEs consider power purchase agreements (PPAs). Under a PPA, a developer installs and operates the system, and the business pays only for the electricity consumed, typically at a tariff below prevailing grid rates. The trade-off is that ownership and associated tax benefits remain with the developer.
Increasingly, businesses are looking for models that sit between these two.
Aligning payments with performance
A growing trend in business solar is linking payments to how much electricity a system actually generates. In these structures, repayments are tied to energy output rather than the fixed monthly payments.
This reduces the burden of fixed monthly payments during periods of underperformance and strengthens accountability across the system’s operation. At the same time, it allows businesses to retain long-term ownership and associated tax benefits such as accelerated depreciation and GST input credits – combining the advantages of ownership with stronger risk protection.
A separate option for businesses that already have solar
For businesses with existing solar systems, solar refinancing has emerged as a way to unlock capital while transferring ongoing maintenance and performance responsibility to specialised partners. This allows businesses to continue benefiting from solar generation while transferring operational responsibility – and, where chosen, asset ownership – to the developer.
Policy adds another layer of consideration
India’s renewable energy framework continues to evolve, with central policies implemented differently across states. Differences in net metering rules, open-access regulations, tariff structures, and grid permissions can materially affect project outcomes.
This variability reinforces the importance of choosing financing and operating models that can absorb policy-related uncertainty. Solar decisions, therefore, consider not only cost and sustainability goals, but also long-term regulatory standards.
Beyond sustainability: a strategic business decision
For India’s MSMEs, the question is no longer whether to go solar, but how to do it in a way that delivers savings without introducing new risks.
With the right financing structure, clear performance accountability, and an understanding of state-level policy dynamics, solar moves beyond a sustainability initiative. It becomes a stable, cost-efficient component of business infrastructure -strengthening resilience, improving efficiency, and supporting long-term growth.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: [email protected].
Comments
Please login to comment
The June issue of pv magazine Global is out now!
Available in print and digital – get your copy today!
Thursday, July 9, 2026
11:00 am – 12:30 pm CEST, Berlin, Paris, Madrid
Be part of the high-level European conference on solar and energy storage, exploring bankable BESS projects, warranties, and energy management for residential and C&I sectors
Entries open in seven categories: Modules, Inverters, BoS, BESS, Manufacturing, Sustainability, Projects.
April 01 – August 31, 2026
A two-day conference in Austin, Texas, bringing together leaders in US solar manufacturing, equipment specification, and factory execution.
Saudi Arabia is accelerating its clean energy transition—join the SunRise Arabia Clean Energy Conference 2026 in Riyadh to explore how solar PV and energy storage are powering its digital economy.
Showcase your brand across all our platforms: from 13 websites in 7 languages to our magazines, daily newsletters, industry events and more. Reach your audience the right way!
We are participating in Intersolar 2026 again this year! Visit us at our Booth Hall 2 A2.250 to discuss the latest trends within the photovoltaic industry with the pv magazine team.
June 23-25, 2026 | MUNICH, GERMANY
You have no items in your basket.
