The solar and renewable energy sector in India has witnessed significant growth over the past decade, driven by government policies, technological advancements, and increasing awareness of sustainable energy solutions. With ambitious targets such as achieving 500 GW of non-fossil fuel capacity by 2030, the sector presents vast opportunities for MSMEs involved in manufacturing, installation, maintenance, and innovation. MSMEs play a pivotal role in supplying photovoltaic (PV) modules, solar inverters, battery storage solutions, wind turbines, and other essential components to large-scale renewable projects and decentralized energy solutions. The transition to clean energy has also fostered the growth of service-based MSMEs, including solar EPC (Engineering, Procurement, and Construction) companies, project developers, and O&M (Operations and Maintenance) providers.
Despite the immense opportunities, MSMEs in the solar and renewable energy sector face substantial financial challenges, including high initial investment costs, extended project gestation periods, and the need for working capital to sustain operations. Access to tailored financial solutions is crucial for MSMEs to scale their operations and contribute effectively to India’s green energy transition. Below are the key funding options available:
a. Working Capital Funding
- Cash Credit Facilities: Helps MSMEs manage receivables and maintain liquidity for procurement of raw materials, solar panels, batteries, inverters, and wind energy components.
- Letter of Credit (LC): Essential for the import of advanced solar PV technology, wind turbines, and other critical components, ensuring smooth procurement.
- Bank Guarantees: Required for MSMEs participating in large-scale renewable energy projects, enabling them to provide performance guarantees for government and private sector contracts.
- Packing Credit & Buyer’s Credit: Helps MSMEs engaged in solar and wind equipment exports secure funding at competitive interest rates, reducing financial strain and improving global competitiveness.
At Capstone, we have successfully structured working capital solutions for transactions ranging from INR 3 crore to 250 crore, enabling MSMEs to manage cash flows efficiently and undertake larger projects with confidence.
b. Long-Term Funding
- Term Loans for Infrastructure Development: MSMEs require financial support to set up solar panel manufacturing units, battery storage plants, and wind energy farms. Term loans with flexible repayment options help them expand infrastructure and production capacity.
- Machinery Loans: Funding for purchasing solar panel assembly lines, robotic cleaning systems, wind turbine manufacturing equipment, and grid storage solutions. Import-backed LC financing is also available for acquiring specialized renewable energy equipment.
- Property and Asset Funding: Long-term loans for acquiring industrial land, warehouses, and factory premises to set up renewable energy manufacturing and service units, with tenures extending up to 30 years.
Capstone has successfully facilitated over 200+ term loan and machinery financing transactions, supporting MSMEs in renewable energy projects valued up to INR 500 crore.
c. Structured MSME Funding Options
- Bridge Funding: Renewable energy projects often require short-term financing before subsidies, government payments, or project revenues are realized. We arrange bridge funding solutions ranging from INR 2 crore to 25 crore without requiring additional collateral, enabling seamless project execution.
- Margin Funding: When MSMEs secure term loans but require additional funds due to cost escalations or expansion needs, margin funding helps bridge financial gaps. This can be availed with or without collateral, based on project viability.
- Bill Discounting & Invoice Financing: Solar and wind energy MSMEs often experience delayed payments from government tenders and private contracts. Bill discounting solutions, including sales bill discounting and inventory funding, help maintain liquidity and manage operational expenses.
Capstone specializes in consulting, structuring, and delivering customized financial solutions to MSMEs in the solar and renewable energy sector, ensuring they have access to cost-effective funding with committed timelines.
Special Funding Options
MSMEs registered under “Make in India,” “Start-up India,” and Udyam can avail of preferential funding schemes, subsidies, and interest subvention benefits.
With strong financial support, MSMEs in the solar and renewable energy sector can accelerate India’s transition to clean energy, contribute to sustainability goals, and achieve long-term business growth.
