Solar Energy Business Plan

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With a growing focus on sustainability, solar energy is becoming more prevalent in India. With the Central Government’s aim to meet 50% of India’s energy needs through renewable sources, the solar energy industry has got a boost. Solar energy accounts for 13.22% of total power capacity installed in India during the first quarter of 2022.

This behavioural change has led many people to integrate solar energy solutions with their commercial as well as residential facilities. In fact, the focus on renewable energy sources has made starting a solar energy business an attractive option. However, this business requires you to have skilled staff and follow a structured strategy.

So, if you are planning to start this business, you need to have a robust solar energy business plan in place. Read on to find out more about how you can structure your solar power business plan and make it a success in the short and long term.

Types of Solar Energy Companies

Based on the operations that your company performs, there can be different types of solar energy companies:

Solar Power Plant Installation Business: Certain companies provide solar power plant installation services because these plants need high technical know-how. Estimates suggest that you may need capital of ₹4 Lakhs and above to start this business.
Solar Power Plant Manufacturing Business: Some companies also focus on manufacturing solar panels and other components like the batteries used in a solar plant. You will require an initial investment of around ₹5 Lakhs to start this business.
Solar Power Plant Sales Business: Certain companies only engage themselves with the sales of solar power plant components. To start this business, you may require a minimum of ₹1 Lakh.
Solar Power Plant Maintenance Business: Solar plants require timely maintenance to perform at optimal levels. Some companies are focused on providing this service. You can start a maintenance business with as little as ₹50,000.

A Step-by-Step Guide to Starting a Solar Energy Business

If you wish to start a solar energy business, it is advisable to have a business plan before delving into any other aspect. Following a solar panel business plan can outline the path to success for your business.

So, here is a step-by-step guide to creating a solar system business plan for your company.

1. Draft Up a Business Plan

Your solar power business plan must contain the details about all the necessary components:

Business background
Budget requirements
Funding prospects
Location
Staff requirements
Equipment and machinery
Raw materials

Charting out a solar energy business plan also helps in securing funding for your business from financial institutions.

2. Research & Analysis

Understanding your competitor and the market is key. Market and competitor analysis provides you with insights about how other players are faring. This can reduce the chances of failure and can help steer clear of potential pitfalls.

Market analysis can also help you in determining the following for your business:

Raw materials and supplies
Equipment and machinery
Contractors
Price point
Infrastructure
Marketing and hiring strategies

3. Registering the Business

The next step of your solar system business plan is to get your business registered. You can register your business as a company under the Companies Act of 2013 as either of the following:

Public Company
Private Company
One-Person Company
Proprietorship
Limited Liability Partnership
Partnership

Each of these forms of companies performs different functions. So, it is important to determine your company’s role and function even before you register it. Moreover, you need the company’s name when you are registering it. A good name can go a long way in establishing authority and building the brand image.

4. Tying up with the Electricity Department

Both Central and State governments are onboarding private players in the renewable energy sector. So, it is important to stay aware of the government’s legislation regarding solar energy businesses.

You will also need to tie up your solar panel business with the state government’s electricity department.

5. Choosing the Location

Another important component of your solar panel business plan is choosing the right location for your business. In a solar energy business, the environment plays a pivotal role and thus, you must find a location where your business can sustain itself.

Offering services in a locale or region with minimal sun exposure will affect your chances of success. Furthermore, choosing the right location helps get better reach and aids in easy transportation of solar equipment. Before you finalise a place, make sure you have prospective buyers willing to invest in your products.

6. Finances

For the growth and success of any business, finances are the most important factor. So, you need to have a clear estimation of your expenditures, revenue streams, etc. It is advisable to chalk out your finances in the solar panel business plan at the start.

In case you lack the required funds, you can also avail of a business loan facility to run your business smoothly.

7. Hiring Employees

A solar energy business requires highly skilled staff to run optimally. So, it becomes important to select and choose staff that are well-versed with the technical knowledge needed in a solar business.

Apart from staff with technical expertise, you will also need to hire a managerial team. Employees to maintain the company’s accounts are also key for business.

8. Key Machinery

The next component of your solar energy business plan is the procurement of equipment and machinery.

You will require the following engineering elements to run your business efficiently:

Mechanical: These elements deal with the mounting procedures and the module installations
Electrical: Electrical elements refer to electrical aspects of solar installation, like the installation of inverters, power generators, wiring, etc.
Civil: These elements safeguard the module-mounting platform

9. Marketing the Business

Having a clear marketing strategy is important for all businesses as it helps them reach their target audience. So, when you hire a team, make sure that you employ someone for the marketer’s role as well.

1. Dos

Keep important documents handy: To avail of a solar energy business loan, you will need to submit a solar energy business plan and other documents to your bank. So, keep them ready even before you apply for it.

Research the market: Many banks and NBFCs offer business loans. Compare the loan features and interest rate before you finalise the lender.
Know your need: Based on your solar energy business plan, determine the quantum of loan that you need for your business. Choosing the right repayment tenure is equally important when you avail of a business loan as you may not wish to pay excess interest.

2. Don’ts

Avoid multiple applications: Do not apply for business loans from multiple lenders as it will lower your credit score.
Fail to check all charges: While you compare the lenders, do not just look at their interest rates. You must check if there are any additional charges levied on your business loans.
Never borrow without a clear plan: It is important that you clear your dues on time, so that your repayment schedule does not affect your business operations.

Disclaimer

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.