India’s distributed renewable energy (DRE) market is expanding rapidly, supported by improving project economics, government incentives and rising consumer awareness. However, access to timely and specialised financing continues to remain a key barrier, particularly for residential rooftop systems, micro, small and medium enterprises, and commercial and industrial (C&I) consumers. Established in 2022 as a technology-led non-banking financial company (NBFC), Solfin aims to address this gap through specialised financing solutions for distributed solar assets. In an interview with Renewable Watch, Gautam Kaushik, Co-Founder and Director, Solfin Sustainable Finance, discussed the company’s financing model, partnerships across the solar value chain, lessons from Tier 2 and Tier 3 cities, and the evolving landscape of green finance in India. Edited excerpts…
How would you describe Solfin’s current business model and its main services and product offerings?
Solfin was established with the objective of addressing one of the biggest bottlenecks in India’s clean energy transition: access to financing for DRE assets. While utility-scale projects have attracted substantial institutional capital, financing solutions for decentralised assets have remained limited. We recognised that without dedicated financing products, adoption at the consumer end would continue to lag despite favourable project economics.
The company was built as a technology-led financing platform that brings together engineering, procurement and construction (EPC) contractors, original equipment manufacturers (OEMs) and end-users. Rather than functioning solely as a lender, Solfin works across the value chain, offering an integrated suite of financing products. These include supply chain financing and working capital for EPC contractors, OEMs and distributors. Additionally, we offer rooftop solar loans for residential consumers and housing societies, and loans as well as performance-linked leasing products for C&I customers. To support this model, the company established its own NBFC, receiving full approval from the Reserve Bank of India in 2024.
Residential rooftop solar is witnessing strong momentum due to the PM Surya Ghar: Muft Bijli Yojana and associated subsidy support. Additionally, housing societies represent another promising segment. They benefit from subsidies of approximately Rs 18,000 per kW, but financing has traditionally remained difficult because resident welfare associations have governance structures that conventional lenders often struggle to evaluate.
Why did Solfin choose to build a platform covering the entire value chain instead of focusing only on lending?
When we entered the market, financing was only one part of the problem. We saw three major barriers preventing faster solar adoption. One, awareness about rooftop solar and its economic benefits remains limited. Two, even interested customers find it difficult to select the right technology, EPC contractor and system design. Three, financing large upfront capex is a challenge.
Addressing only the financing aspect would not have solved the adoption challenge. Customers also need confidence that installations will be executed using quality equipment by experienced EPC contractors. Moreover, working closely with EPCs also revealed that these businesses themselves faced working capital constraints. Dealers often purchase inventory upfront while customer payments are received in stages over the project life cycle. This led us to introduce supply chain financing products for our EPC partners as well. Today, these have evolved into an extensive distribution network comprising over 1,500 EPC partners, allowing the company to reach customers across multiple states, acting as quasi-branches for us now.
The market has evolved considerably over the past two years. Government awareness campaigns and subsidy programmes have improved consumer understanding, particularly in the residential segment. As awareness has increased, customer expectations have also changed. Financing is now expected to be digital, quick and seamless. Our objective today is to sanction eligible residential loans within a time period of around 30 minutes to customers.
Which performance indicators does Solfin monitor most closely?
We evaluate our business through both lending and platform metrics. On the lending side, we closely monitor loan applications received, sanction rates, rejection rates, turnaround time for approvals, loan disbursement timelines and, most importantly, collection rates. Lending money is relatively straightforward; maintaining strong repayment performance determines the quality of the portfolio. On the platform side, we monitor the number of new partners added, utilisation of sanctioned credit lines, number of loan applications generated per EPC and partner retention after three months.
How does your technology-driven underwriting model enable rapid financing decisions? What role does AI play?
The credit ecosystem has evolved significantly in recent years with the introduction of the account aggregator framework and digital public infrastructure. For residential rooftop financing, customers are required to upload only two documents – the electricity bill and the EPC invoice. All other information is sourced digitally through application programming interfaces, including banking data through the account aggregator network, bureau records and various identity verification systems.
Our proprietary AI engine analyses this information and generates an initial credit assessment by evaluating multiple variables simultaneously. These include banking behaviour, credit history, electricity consumption, projected savings from the proposed solar installation and customer profile. Nearly 90-95 per cent of loan decisions are made automatically by the system, with manual intervention required only for exceptional cases. This enables us to sanction eligible customers in approximately 30 minutes. Beyond lending, AI can also transform asset monitoring by comparing electricity generation across neighbouring rooftop projects and automatically identifying underperforming installations. Such systems could generate predictive maintenance requests for EPC contractors before customers experience major losses.
Looking ahead, AI will increasingly support system sizing, battery optimisation, demand forecasting and energy management. As BESS adoption accelerates, AI will also play a major role in scheduling charging and despatch decisions. We expect many of these applications to become commercially viable within the next 6-12 months.
How do your financing solutions cater to different customer segments?
On the residential side, the average project size is approximately 3-3.5 kW, with installations generally ranging from 1 kW to 10 kW. The average project cost is around Rs 200,000 before subsidies. Residential customers receive financing for up to 100 per cent loan-to-value. For a typical 3 kW installation, the central subsidy amounts to Rs 78,000, while states such as Uttar Pradesh provide an additional Rs 30,000, reducing the effective financing requirement to roughly Rs 92,000 after subsidy adjustment.
Within the C&I segment, financing products are segmented as per project size, beginning with loans below Rs 600,000 for small C&I projects, followed by loans between Rs 600,000 and Rs 2.5 million for mid-sized projects. For larger projects above approximately 100 kW, loans up to Rs 10 million, and even Rs 60 million-Rs 70 million, are provided. For C&I customers, we also offer performance-linked leasing solutions, structured as a pay-as-you-go model. Under this model, Solfin finances and owns the solar asset while customers pay only for the electricity generated.
Lease tenures generally range from 5 to 10 years, depending on customer requirements and project economics, after which ownership transfers to the customer for a nominal value. The structure immediately reduces electricity costs for C&I customers by replacing conventional grid tariffs of around Rs 9-Rs 10 per unit with lease payments of approximately Rs 6-Rs 7 per unit, while also allowing them to benefit from accelerated depreciation.
Residential rooftop loans are typically priced at around 16 per cent on a reducing-balance basis, while C&I loans are generally offered in the 15-17 per cent range. We provide 20 per cent interest cashback to customers who repay all EMIs on time over the loan tenure. Our delinquency levels remain extremely low, with the portfolio recording only around 0.11 per cent delinquency. Residential and C&I segments generate comparable returns, with residential marginally ahead due to stronger recent growth. Across our businesses, we target internal rates of return of around 16-18 per cent.
What lessons have emerged from your operations in Tier 2 and Tier 3 cities?
The biggest lesson has been that successful lending depends on understanding the customer rather than simply evaluating documents. In smaller towns, local relationships remain extremely important. That is where our EPC network plays a critical role because these partners already have established credibility within their operating regions.
At the same time, we supplement this through our technology platform. Every financed project undergoes multiple verification layers, including geotagging, rooftop assessment, digital property verification and video-based customer interactions. These processes help us understand whether the customers fully appreciate the technical and financial implications of their investment rather than simply purchasing a system based on sales claims.
Customer education remains particularly important. During our initial years, we found that many customers believed rooftop solar alone would provide uninterrupted power during grid outages. In reality, that requires hybrid inverters and battery energy storage systems (BESSs). Ensuring customers clearly understand system capabilities before financing significantly improves both customer satisfaction and portfolio performance.
What are your future growth priorities?
Solfin has raised approximately Rs 3.8 billion in equity capital to date, including Rs 2 billion from the Waaree Group, alongside investments from institutional funds, angel investors and high-net-worth individuals. We are now focused on raising Rs 5 billion-Rs 7 billion of institutional debt over the next 12-18 months.
We already finance hybrid inverters and BESSs and expect rising demand for the same from residential consumers, housing societies and C&I customers. BESS represents the most natural extension of our current business. They serve the same customer base, leverage the same distribution ecosystem and complement rooftop solar by addressing reliability and backup power requirements.
