# How does the Indian Renewable Energy Development Agency (IREDA) structure its loan for concentrating solar thermal process heat in industry?

Canonical: https://senseible.earth/answers/ireda-concentrating-solar-thermal-process-heat-loan

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

1. 30% of the loan on signing the loan agreement and receipt of at least 30% of the promoter's contribution.
2. 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.
3. 30% after at least 90% of the promoter's contribution has come in and the CST equipment is finally installed.
4. 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](https://senseible.earth/answers/solar-concentrator-process-heat-msme)
- [IREDA loan for biomass steam heating](https://senseible.earth/answers/ireda-biomass-steam-heating-project-loan)
- [Blended finance for small businesses](https://senseible.earth/answers/blended-finance-for-msmes)
- [Green loan readiness check](https://senseible.earth/green-loan-check)

Sources: [IREDA, Financing Norms and Schemes, issue 35, updated up to 01.10.2026: loan scheme to promote concentrating solar thermal projects for industrial process heat](https://www.ireda.in/IredaWebPortal/documents/loan-products/financing-norms-01-10-2026.pdf)

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.