# Can the Indian Renewable Energy Development Agency (IREDA) lend me money against the future income of a solar or other renewable plant I already run? Canonical: https://senseible.earth/answers/ireda-loan-against-future-income-of-a-running-solar-plant IREDA considers it, in a scheme called securitisation of future cash flows. IREDA lends against the income a plant is expected to earn, to fund expansion in renewable energy and energy efficiency. The plant should have run successfully for at least three years, and security cover, counting future cash flow, of at least 1.5 times the loan. ## The idea in one picture Think of a landlord with tenants who pay rent for years to come. A bank can lend today against that stream of rent. Here the rent is the money your running plant will earn from selling power. The norms of the Indian Renewable Energy Development Agency (IREDA) call it a loan against securitisation of future cash flow of renewable energy projects, and say it is for future business expansion in renewable energy and energy efficiency. ## Who can ask - Existing IREDA borrowers and other applicants. - The company should have successfully commissioned its existing project and kept it running successfully for at least the last three years. This may be relaxed to two years if the project has run successfully for two years and the average Debt Service Coverage Ratio (DSCR), a test that earnings cover instalments, for those two years is 1.4. - Essential eligibility conditions include cash profit for at least the previous two years, no default or delay in repayment in that period, and no Non-Performing Asset (NPA), meaning a loan that stopped being repaid as agreed, in the loan account at any time in the past. - At least 40% of the existing loan account should have been repaid. This may be relaxed if the company has been regular in repayment for the last two years and its debt to equity ratio including the new loan is not more than 4:1. - The account should never have been restructured because of a shortfall in generation. - A maximum debt to equity ratio of 4:1 for the company, counting the proposed loan. - Minimum average DSCR including existing debt of 1.25 over the repayment period, or 1.3 for hydro projects. - A power purchase agreement with a state electricity board, power trading company or power utility for at least the loan repayment period, or another power sale arrangement to IREDA's satisfaction. ## How the loan is sized and repaid - The net present value of the future cash flows is calculated for a maximum of 15 years, discounted at the maximum lending rate of the sector. In plain words, tomorrow's income is converted into what it is worth today. - The maximum repayment period is up to 15 years from disbursement or 80% of the balance life of the power purchase agreement, whichever is lower. - The minimum security coverage, including future cash flow, should be 1.5 times the loan amount. - Because the loan amount is fixed from the cash flows available, the date of disbursement is critical and extension of the validity period will not be considered. ## Conditions before the money is released - Extra insurance covering loss of generation due to machine breakdown and natural calamities such as fire. - A Trust and Retention Account, with an undertaking not to withdraw from it after a default to IREDA without prior written permission. - A letter showing that power sale proceeds are paid into that account. - Assignment of the project documents to IREDA, if not done earlier. - A pledge of 51% of the company's shares for existing IREDA borrowers, including 100% of the guarantors' shares. ## Strings attached - No moratorium (a pause before repayments begin). - The sanction letter is valid for 45 days from the date it is issued, and the loan agreement is to be signed within those 45 days. - The borrower gives an undertaking that the money is used as seed money for future renewable energy and energy efficiency projects, and that IREDA will have the first right to finance those projects. - At appraisal, IREDA must ensure the loan is not being sought because of financial difficulty that will result in restructuring. - The 51% share pledge is written for existing IREDA borrowers. For other applicants whose shares are already pledged to their existing term lenders, the norms say the pledge is taken on a first charge pari-passu basis, meaning shared on equal footing with those lenders, and existing securities are extended on the same basis. ## Example: what 1.5 times cover means - Loan wanted: rupees (Rs) 4 crore - Minimum security cover, including future cash flow: 4.00 x 1.5 = Rs 6.00 crore - Debt to equity check: a company with Rs 30 crore of debt after the new loan and Rs 10 crore of equity stands at 30 / 10 = 3:1, inside the 4:1 limit Example numbers only. IREDA sets the loan amount and the security from your own plant papers. A crore is 10 million and a lakh is 100,000. ## What Senseible does here Senseible reads fuel invoices and electricity bills into monthly records for the sites you run. It does not read power sale statements or build cash flow forecasts for a lender. Senseible can pass verified records to financing partners. The partner decides. Nothing is promised. - [IREDA loan security in plain words](https://senseible.earth/answers/ireda-security-for-a-loan-in-plain-words) - [IREDA refinancing of commissioned projects](https://senseible.earth/answers/ireda-refinancing-policy-for-commissioned-projects) - [IREDA repayment period and moratorium limits](https://senseible.earth/answers/ireda-repayment-period-and-moratorium-limits) - [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 against Securitization of Future Cash Flow of Renewable Energy Projects](https://www.ireda.in/IredaWebPortal/documents/loan-products/financing-norms-01-10-2026.pdf) Last reviewed 2026-11-07. Conditions are as printed in IREDA's financing norms updated up to 1 October 2026. The landlord comparison and the plain meaning of net present value and NPA are ours. Check the current scheme sheet.