How to Start a Solar Energy Business in India

Solar energy is one of the most promising and fastest-growing sectors in India. The country has abundant sunshine and a huge potential for harnessing solar power for various applications. According to the Ministry of New and Renewable Energy (MNRE), India’s cumulative installed solar energy capacity increased from 6.76 GW in 2016 to 54 GW in 2022, expanding at a compound annual growth rate of 41.39%. The government has set an ambitious target of achieving 175 GW of renewable energy capacity by 2022, out of which 100 GW is expected to come from solar energy.

If you prefer a lucrative and eco-friendly business opportunity, starting a solar energy business in India might be the right choice. Here are the steps and tips on how to establish a solar panel business in India in 2023.

Step 1: Choose Your Niche
You can choose from many types of solar energy businesses, depending on your skills, interests, budget, and market demand. Some of the popular niches are:

• Solar PV Module Manufacturing

This solar business idea means producing solar photovoltaic (PV) modules or panels that convert sunlight into electricity. Solar PV modules are the major components of any solar power system and have many applications. It has rooftop solar systems, solar farms, solar streetlights, and solar water pumps. 

To start this solar panel business in India, you will need significant capital investment, technical expertise, quality certification, and raw materials and machinery access.

• Solar PV System Installation

As the name suggests, the solar panel installation in India means installing and commissioning solar equipment for home, commercial, or industrial customers. It is a service-oriented business. You will need skilled technicians, engineers, electricians, and project managers. You also must get licenses and permits from the local authorities and follow the safety and quality standards.

• Solar PV System Maintenance

This solar business franchise involves servicing, repairing, and replacing solar PV systems and components. Solar PV system maintenance is a recurring revenue stream that ensures customer satisfaction and loyalty. To run this business, you must have trained staff, spare parts inventory, and customer service skills.

• Solar Product Distribution

This solar distributorship business involves selling or distributing various solar products, such as solar lanterns, solar cookers, solar water heaters, solar inverters, etc., to end-users or retailers. Solar product distribution is a low-investment and high-margin business that you can do this online or offline. You must have good marketing and sales skills, reliable suppliers, and a vast distribution network to succeed.

• Solar Consultancy

It is a knowledge-based business requiring domain expertise, research, and communication skills. For various solar projects, you can offer consultancy services for feasibility studies, site assessment, design and engineering, project management, and financing options.

Step 2: Do Your Market Research

Market research is crucial to understanding the current trends, opportunities, challenges, competitors, customers, and regulations in the solar plant business. You can do your market research by:

• Reading industry reports and publications
• Visiting trade fairs and exhibitions
• Joining industry associations and forums
• Conducting surveys and interviews
• Analysing online data and feedback

Some of the critical questions that you must answer through your market research are:

• What is the size and growth potential of the solar energy market in India?
• What are the drivers and barriers to adopting solar energy in India?
• Who are your target customers? 
• What are their needs and preferences?
• Who are your competitors?
• What are their strengths and weaknesses?
• What are the legal and regulatory frameworks for the solar energy sector in India?
• What are the best practices and standards for the solar energy sector in India?

Step 3: Make Your Business Plan

A solar farm business plan is a document that outlines your goals, strategies, actions, resources, and financial projections for your business. A well-written business plan will help you to:

• Clarify your vision and mission
• Define your value proposition and competitive advantage
• Identify your target market and customer segments
• Set your short-term and long-term objectives
• Plan your marketing and sales strategies
• Estimate your capital requirements and revenue streams
• Assess your risks and contingencies
• Attract investors and lenders

You can use various online tools and templates to create your business plan or hire a professional consultant to help you with it.

Step 4: Register Your Business

Registering your solar business will give you a legal identity, protect your rights and liabilities, and enable you to avail of various benefits and incentives from the government and other agencies. To register your business, you will need to:

• Choose a suitable name and structure for your business. You may register as a private limited company, sole proprietorship, partnership, or LLP.
• Get a PAN and TAN from the Income Tax Department
• Get GST registration from the GST portal.
• Register your business under the Shops and Establishments Act or the Companies Act, depending on your business structure.
• Apply with a local municipal authority for a Trade License.
• Register with the EPFO and the ESIC, if applicable.
• Get any other licenses or permits required for your niche, such as MNRE certification, electrical contractor license, net metering approval, etc.

Step 5: Arrange Your Finance

Finance is the lifeblood of any business, and you will need adequate funds to start and run your solar energy business. You can arrange your finances from various sources, such as

• Self-finance: You may fund your business using your savings, assets, or income. It is the easiest and cheapest way to finance your business. However, sometimes you need more to meet your needs.
• Debt finance: You may borrow business loan from financial institutions like FlexiLoans to fund your solar panel business. Debt finance is readily available and flexible but comes with interest costs and repayment obligations.
• Equity finance: This loan for business involves raising money from investors, such as angel investors, venture capitalists, or crowdfunding platforms, in exchange for a share of ownership or profits in your business. Equity finance is attractive and scalable, but it dilutes your control and ownership in your business.
• Grants and subsidies: This involves receiving money from the government or other agencies as a reward or incentive for your business. Grants and subsidies are non-repayable and beneficial but competitive and conditional.

You can choose one or a combination of these sources of MSME loan depending on your needs, eligibility, and availability.

Step 6: Set Up Your Infrastructure

Infrastructure refers to the physical and technological assets you need to operate your solar business efficiently and effectively. Depending on your niche, you may need to set up:

• A manufacturing unit or a warehouse for producing or storing solar products
• An office space or a showroom for displaying or selling solar products
• A service centre or a workshop for installing or maintaining solar systems
• A website or an app for marketing or delivering solar products or services online

You can buy or rent these infrastructures depending on your budget and preference. You should also ensure adequate equipment, tools, vehicles, computers, and software for your business operations.

Conclusion

Starting a solar energy business in India is a great way to tap into the huge market potential and contribute to the green revolution. However, it also requires a lot of planning, preparation, and perseverance. If you follow the steps mentioned above, you can start your own solar business in India successfully and profitably. If you have any questions or comments, please feel free to share them with us. 

FAQs

Q.1. What is net metering?

This system allows you to attach your solar panels to the electricity grid. When your panels generate more electricity than you require, the surplus is sent back to the grid. You get credit for this surplus energy, which can offset your future electricity bills.

Q.2. How can I finance my solar business in India?

You can finance your solar plant business by seeking loans from financial institutions, using your savings, finding investors, or applying for government grants and subsidies.

Q.3. Do I need special permits or licenses to operate a solar energy business in India?

Yes, you need special permits and licenses to run a solar business in India. These legal approvals ensure your business complies with regulations and safety standards.

Q.4. What are the safety considerations when operating a solar panel business?

When working with solar panels, be cautious of electrical hazards. Always switch off panels before maintenance, avoid shading them, and wear protective gear. Keep panels clean and free of debris to maintain efficiency.

Q.5. What is the profit margin in the solar business in India?

The typical return on investment (ROI) for a solar energy business in India can vary but often ranges from 15% to 28% over several years, depending on location and system size.