How does the Indian Renewable Energy Development Agency (IREDA) structure its loan for concentrating solar thermal process heat in industry?
IREDA's concentrating solar thermal (CST) scheme offers up to 75% of project cost: a soft loan plus a bridge loan against the Ministry of New and Renewable Energy (MNRE) subsidy. The indicative split is a minimum of 25% promoter, 45% soft loan and 30% subsidy, with a minimum loan of rupees (Rs) 30 lakh.
What the scheme is
The document describes an innovative financing scheme launched by MNRE with the United Nations Industrial Development Organization (UNIDO) and IREDA under the Global Environment Facility (GEF)-UNIDO-MNRE project. It aims to bring CST technology into thermal uses in specified industrial sectors. Any entity that meets IREDA's guidelines and is setting up a solar thermal heating, cooling or tri-generation project is eligible.
Two loans for one project
- Part A, soft loan from IREDA: repayment over 7 years, made up of a 1-year moratorium and 6 years of repayment.
- Part B, bridge loan against the MNRE subsidy: it runs until the project is commissioned. On commissioning, the MNRE subsidy is passed to the project and the bridge loan is closed.
- The soft loan amount depends on the MNRE subsidy and on approval by the UNIDO project management unit.
The indicative cost split
- Promoter contribution: at least 25%.
- Soft loan: 45%.
- MNRE subsidy: 30%.
- Total: 100%. My reading: the 45% soft loan plus the 30% MNRE subsidy, which IREDA bridges, makes 75% of cost, which matches the up to 75% the document states.
Disbursement in four steps
- 30% of the loan on signing the loan agreement and receipt of at least 30% of the promoter's contribution.
- 30% on inflow of an additional 60% share of the promoter's contribution, as printed, and delivery of all equipment at site. The document is ambiguous: it could mean 60% in all by this step, or the first 30% plus an additional 60%, which is 90% in all and fits the next step's minimum of 90%. Ask IREDA which it means.
- 30% after at least 90% of the promoter's contribution has come in and the CST equipment is finally installed.
- 10% on completion, commissioning, testing and inspection, and use of 100% of the promoter's contribution.
Security and the subsidy risk
- Security follows IREDA's norms. In addition the document asks for a performance guarantee from the supplier for 7 years or until the loan is fully repaid, and a payment guarantee from the beneficiary.
- The promoter gives an undertaking that if the capital subsidy is not released, the company will bring in equity to repay the IREDA loan.
- An interest rebate applies if the borrower gives, as the primary security, a bank guarantee or pledge of fixed deposit receipts, equal to the amount IREDA sanctions for both loans, from a scheduled commercial bank, or an unconditional or irrevocable guarantee from an All India public financial institution rated AAA or equivalent.
- The document says consideration of projects may be subject to availability of funds.
Check before you plan around it
The scheme prints the 30% subsidy as an indicative share, not as a promise. Confirm support under current MNRE schemes: ask MNRE and IREDA whether the subsidy and the UNIDO approval are open today. Interest rates for both parts are printed in the scheme; check the current figures with IREDA.
Example: a Rs 1 crore solar thermal project
- Promoter contribution: 25% of Rs 1 crore = Rs 25 lakh
- Soft loan: 45% = Rs 45 lakh. MNRE subsidy: 30% = Rs 30 lakh, bridged by IREDA until commissioning
- Check: 25 + 45 + 30 = Rs 100 lakh. Soft loan plus subsidy: 45 + 30 = Rs 75 lakh, which is 75%
- Soft loan in four steps of 30%, 30%, 30% and 10%: Rs 13.5 lakh + Rs 13.5 lakh + Rs 13.5 lakh + Rs 4.5 lakh = Rs 45 lakh
The project cost is an example. The document says the main loan and the bridge loan are disbursed in proportion to the steps above.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records, so the boiler fuel a plant buys before solar heat is on file by month. It does not lend and does not size solar thermal systems.
- Solar concentrators for process heat
- IREDA loan for biomass steam heating
- Blended finance for small businesses
- Green loan readiness check
Last reviewed 2026-11-05. Scheme availability, the subsidy share and the UNIDO approval can change. Confirm with MNRE and IREDA before relying on the split.