With solar projects coming across the country and project developers/financiers running to close bank debts, we have missed one route of financing: Solar Leasing Financing where the equipment is purchased by a Bank/NBFC and leased out to the project developer.
1. Leasing can provide a major chunk of the cost of the equipment- so solar panels that make up more than 70% of the project cost can be taken on lease.
2. Leasing opens up valuable working capital or credit lines for other businesses. This would be important in Solar where returns are among a fixed range and other sectors in India can offer better ROI. In such a scenario, leasing does not tie up capital allowing business houses to pursue other capex oriented projects.
3. Solar Leasing could be worked out according to expected cash flows; providing certainity.
4. Solar Leasing will avoid major dilution of share ownership since assets are acquired without any increase in capital base.
5. Leasing is straightforward with simple documentation and tax procedures.
6. Solar lease can be tax efficient; with lease rentals being tax deductible as operating expenses.
We, along with our partners, work with NBFCs to create customized solar lease financing solutions.