Sell Solar to Factories: A Playbook for 50 to 500 kW MSME Jobs

A factory accountant does not start with "how many kW". The first question is "what is our contract demand, and who pays the GST?" A rep who sold 3 kW homes last month often has no answer, and the meeting ends with "send a quotation, we will see". (Illustrative.)

That gap is why EPCs stall when they move from homes to 50 to 500 kW jobs. The panel is the same. The sale is not. A factory buys through several people, pays an industrial or commercial tariff, has a DISCOM contract with its own limits, and judges your offer as capital spent.

This guide is for an EPC owner or sales head making that move. Rules and tax points were read from official pages on 31 October 2026, and each carries its date. Rupee examples marked illustrative use stated assumptions you can replace. This is a working guide, not tax or legal advice.

Sell solar to factories: what changes from a home sale

A factory buys solar as a business investment with its own tariff, a contract with the DISCOM and a roof it may not fully control. A home buys a saving and a subsidy. Six things change, and each one changes what you must ask for.

Sources: MNRE, Guidelines for PM-Surya Ghar: Muft Bijli Yojana, CFA to Residential Consumers, section 5(d), read 31 October 2026. We have no sourced benchmark for how many months a factory deal takes, so we do not give one. Track your own.

A finance head compares your page with two others and asks which assumption each hides. See why solar quotes differ for showing the build-up, and our commercial sales script for the words in the meeting. This post covers the process around it.

The Four-Chair Table: who decides and what each chair needs

Each chair asks a different question and is satisfied by a different document. Talk to only one and the others stall the deal later, usually at proposal stage. In a small unit one person may sit in two or three chairs. Ask anyway, so you know who is not in the room.

How to use it. In the first call, ask "who else will look at this before you decide?" and write the names. Log each chair's last conversation on the lead and set a follow-up date per chair. A deal with one chair untouched for 30 days is stalled, whatever the owner says. Our stuck-deals guide covers rescues.

Tariff category, sanctioned load and contract demand: read these before you size

Three lines on the bill decide how big a plant you may install and what it can save: the tariff category (industrial, commercial, LT or HT), the sanctioned load in kW, and the contract demand in kVA. Get the sanction letter, because the bill alone may show only one of them.

MERC, Maharashtra's regulator, says it plainly. In its statement of reasons of 16 November 2023 it clarifies that where a contract demand is approved, the sanctioned demand is not applicable, and where it is not approved separately, the sanctioned demand is used. (MERC, First Amendment statement of reasons, read 31 October 2026.) Your size cap follows whichever one applies.

Maharashtra raised its 1 MW cap to 5 MW in 2023, so the 1 MW figure in our commercial sales script is out of date there. Other states differ and we have not checked them all. Name the state and date whenever you quote a cap.

Two cautions. First, a bidder asked MERC whether the cap is read on AC output or DC module capacity. We found no answer in the text we read, so ask the DISCOM and write it into the proposal. Second, the Ministry of Power's Draft National Electricity Policy, 2026 says net metering beyond 5 kW "should be discouraged" and that consumer storage should be promoted in place of banking of power. It is a draft, not law, and we did not check its final status, but it is a reason not to promise 25 years of unchanged banking value.

Shift timings versus solar hours: where a factory can lose the saving

Solar produces from mid-morning to late afternoon. A plant that works then saves most; one that works at night saves little. The shift pattern is the first sizing input after the bill.

Maharashtra shows how fast the rules move. MERC's order of 25 March 2026 in Case No. 75 of 2025 is its fresh decision on MSEDCL's review petition, after the Bombay High Court quashed the earlier order of 25 June 2025 and the Supreme Court sent it back (MERC order, 25 March 2026, section 1). Table 8 gives a solar-hours (09:00 to 17:00) rebate for FY 2025-26 and FY 2026-27 of 15% of the energy charge in April to September and 25% in October to March (the table note lifts it to 20% and 30% from FY 2027-28), and a 20% charge in peak hours (17:00 to 24:00). The night rebate is removed. The 28 March 2025 press note put industrial and commercial peak hours at 25%; the 2026 text we read does not repeat that footnote, so check your customer's category in the tariff schedule.

Four consequences for your quotation:

• Value each solar unit at the rebated rate. A unit generated in solar hours replaces a unit that would have cost less than the headline energy charge.
• Exported units are bound to their slot, and the rule has been contested. Paragraphs 18.21 and 18.22 say energy banked in the solar-hours slot may be drawn in the same slot, and apply this to net metering under ToD billing (residential rooftop is exempt). A noon export may not offset a night shift. The order records that the Bombay High Court stayed the earlier banking paragraph in 2025, applied the March 2025 banking text meanwhile, and that the new rule runs from 1 July 2025. We did not check for further challenge, so ask MSEDCL which rule your customer's bill uses.
• A grid support charge may apply. The order makes grid support charges on net-metered rooftop plants effective once 5,000 MW of rooftop capacity is reached, and records MSEDCL's letter of 20 February 2026 reporting 5,178.81 MW in the state. It computes ₹1.42 per unit for HT consumers and ₹1.96 for LT consumers in FY 2026-27, levied on generation units, with installations up to 10 kW exempt (paragraphs 21.8 to 21.14, Table 9). We did not verify whether billing has started. A 150 kW unit may be on an LT or an HT connection, so model both as low cases.
• Check the tariff trend. Table 11 puts the average HT industry billing rate at ₹10.88 per unit in FY 2024-25, ₹10.78 in FY 2025-26 (down 1%) and ₹9.97 by FY 2029-30 (down 8%). Do the sum on the current schedule, not on a remembered bill.

Demand charge. Solar cuts energy units bought in daylight. Whether it cuts the demand charge depends on when the plant's highest demand happens, and only a load profile shows that. If it happens at the evening shift change, the kVA may not move. This is our reading of how billing demand works, so confirm the definition in the tariff schedule. Also check the billing unit: the MERC press note of 28 March 2025 says energy charges are per kVAh for consumers on kVAh billing, and solar delivers kWh.

What to ask for before you quote: the bill pack

Ask for the full pack before you give a price, and say why: "I will size to your actual daytime load, so I need 12 months." A factory that will not share bills is not a buyer yet.

Our commercial sizing guide covers the engineering from this pack.

The factory pipeline: nine stages and what moves each

The seven-stage solar pipeline is too short for a factory. A factory needs separate stages for the bill pack, technical sign-off, the finance review, the owner's approval and the approvals after the order. Each stage below has one exit proof, one chair and one date.

Payment pegs for stages 8 and 9: see payment terms for solar projects, which has a C&I milestone and retention schedule. Approvals: see the commissioning process guide and the CEI glossary entry.

1. 1

   One proof per stage

   Move a deal only when the document in the "exit proof" column is in your file or CRM notes, not on a promise.

2. 2

   One named chair per stage

   Before you move a deal forward, name who will decide the next stage. If the answer is "the management", you are still at the earlier stage.

3. 3

   One dated next step

   Set the next call with the chair, not with the contact who is easiest to reach. A dateless deal ages quietly.

Four facts you can quote, with dates

Give the figure, the source and the date, so the finance head can check each one.

Accelerated depreciation: what is in force in October 2026

The rate is 40% of written down value (WDV) for "solar power generating systems". It appears in the Income Tax Department's Appendix I to the Income-tax Rules, 2026 (see rule 25). For income up to 31 March 2026 the same 40% sat in the 1961 Act's depreciation table, where it was 80% before assessment year 2018-19.

The Income-tax Act, 2025 came into force on 1 April 2026 (PIB, 1 April 2026). Depreciation is now section 33, no longer section 32. Older posts that cite "Section 32" are describing the earlier law for earlier years. The 40% itself did not change.

Section 33 attaches conditions you should state in the proposal:

• Ownership. The asset must be owned wholly or partly by the taxpayer and used wholly and exclusively for business (33(1)). If a developer owns the plant, the developer, not the factory, claims depreciation.
• The 180-day rule. For an asset acquired in the year, the deduction is restricted to 50% of the prescribed rate if it is put to use for less than 180 days in that tax year (33(4)). A plant commissioned late in the financial year earns half the first-year deduction. Date the commissioning accordingly.
• Profits. The deduction is allowed only to the extent of the year's profits. The unused part carries forward to the next year (33(11)). A loss-making factory gets no benefit that year.
• Additional depreciation. Section 33(8) and (9) provide a separate additional deduction for new plant of manufacturers and power generators. Whether a rooftop plant qualifies, and how it stacks with the 40%, is for the customer's CA. We leave it out of every number.

See our accelerated depreciation guide for more examples; where it cites section 32, use the 2026 position above.

GST on the equipment

PIB's release of 17 September 2025 records the cut for the renewable energy chain from 12% to 5%, effective 22 September 2025 (PIB, Ministry of New and Renewable Energy). CBIC Notification 9/2025-Integrated Tax (Rate), entry 437, lists solar power-based devices, solar power generators and photovoltaic cells and modules (notification text). Its explanation says that when these goods are supplied together with other goods and services including a specified taxable service, 70% of the total is deemed to be goods.

The service portion (30%) falls under serial number 38 of Notification 11/2017-Central Tax (Rate): 9% central tax (Notification 27/2018-Central Tax (Rate), in force 1 January 2019) and 18% integrated tax for an inter-State supply, per the CBIC tax portal on 31 October 2026. State tax is set by each State's own notification, which we did not open, so check your State's rate with your CA. On those figures, an inter-State factory sale carries about 8.9% of the contract value in GST (70% at 5% plus 30% at 18%), which is arithmetic and not an invoice template. For a same-State sale, the State tax part comes from your State's notification. Show GST as its own line, ask the CA to compute it for your invoicing structure, and read our GST on installation guide alongside it. Confirm your contract's classification with your CA. Input credit is also the CA's call.

Who counts as an MSME

The Ministry of MSME's notification of 21 March 2025 revised the classification from 1 April 2025. A micro enterprise has investment in plant and machinery or equipment up to ₹2.5 crore and turnover up to ₹10 crore. A small enterprise is up to ₹25 crore and ₹100 crore. A medium enterprise is up to ₹125 crore and ₹500 crore. (Ministry of MSME, Annual Report 2025-26, section 1.2.4.) A 50 to 500 kW factory can sit in any of the three, so ask for the Udyam certificate. It decides which schemes apply (MSE GIFT covered micro and small enterprises only). See our MSME glossary entry.

A worked example (illustrative): 150 kW on a day-shift unit

A fabrication unit on a day shift. Every number below is an assumption to replace with the customer's own. None is a tariff, price or yield we are quoting.

We ignore demand charge, power factor, duty, module degradation and future tariff changes. Use the bill pack for the real inputs.

Illustrative. Closing WDV after year 3 is ₹11,34,000. Ignores additional depreciation, GST credit effects and the year-1 half-rate case.

Net saving = 2,10,000 × avoided cost − ₹90,000. Payback = ₹52,50,000 ÷ net saving. The ₹1.42 (HT) and ₹1.96 (LT) figures are MERC's computed charges for FY 2026-27 (25 March 2026 order); whether either applies to your customer is a billing question for MSEDCL.

For a longer ROI method, see commercial solar ROI; keep its structure and replace its numbers with the customer's.

Financing routes for an MSME buyer

A factory can pay for solar from its own money, a bank or NBFC loan, an equipment lease, or through a third party that owns the plant. Each changes who claims depreciation and what the CFO compares. We describe the routes generally. We did not open any bank's or SIDBI's current rate card, so ask the lender for written terms.

On RESCO: MNRE's PM Surya Ghar guidelines state they do not cover RESCO models (section 5(c)). On ownership: MERC's 2023 text allows a DISCOM or third party to lease a system to the consumer; whether a per-unit payment fits net metering is a separate state question.

Two dated facts. SIDBI lists "Mission Solar - Enabling each Enterprise go Solar" among its missions on its Green Pathways E-Series page, so a SIDBI-linked lender is a place to start. The Ministry of MSME's MSE GIFT guidelines (May 2024) offered a 2% a year interest subvention on term loans up to ₹2 crore to Udyam micro and small enterprises, but only for loans sanctioned up to and including 31 March 2026 (MSE GIFT guidelines). We found no extension, so do not promise it. Ask the lender what replaced it.

If the factory rents its shed, the lease must outlast the payback and the landlord's consent belongs in the file. Our solar business loan guide covers your own borrowing.

A proposal outline for the CFO

A finance head reads the first page and the assumptions. Keep the proposal to a one-page summary plus annexures. The ten parts below follow the order in which a CFO tends to question you.

1. 1

   One-page summary

   Plant size, price before GST, GST as its own line, year-1 saving, simple payback, low and high case, and the decision you want.

2. 2

   Bill baseline

   The 12 months of units and charges, which lines solar avoids and which it does not.

3. 3

   Sizing basis

   Roof area, contract demand or sanctioned load, the state cap with its date, daytime base load and coverage.

4. 4

   Savings model

   Avoided cost per unit after any time-of-day rebate, a base, low and high case, and what happens if the tariff falls.

5. 5

   Capex and GST

   Line items, GST as its own line with the CA caveat, and the validity date.

6. 6

   Tax treatment

   The 40% rate with its dated source, the ownership and 180-day conditions, and a note that the CA decides. No promises.

7. 7

   Financing comparison

   Capex, loan and third-party routes with who claims depreciation under each.

8. 8

   Payment schedule and retention

   Pegs tied to proofs. Reuse the C&I schedule from our payment terms guide.

9. 9

   Risks and responsibilities

   Roof lease and consent, shutdown window, approval timing you cannot control, who maintains what, and the makers' warranties for modules and inverters.

10. 10

    Proof and next steps

    One case study from a similar unit, the approval checklist, and dated next steps with named chairs.

Build the case study with our case study template. Without one, you are asking a finance head to trust a first-time seller with a large payment.

How QuickEstimate fits

A factory deal runs for months across several people. In Quickest Solar CRM you can set your own lead stages, so the nine stages above can be your stages. Labels can mark the chair you are speaking to, and follow-up reminders keep a date on each next step.

• Pipeline Management, set the nine stages above, label each lead by the chair you last spoke to, and filter leads by stage and label to find deals gone quiet.

You can log activities on a lead, so the plant head's survey call and the CFO's tax question sit on one record, and the dashboard and team report show where factory deals sit. Proposal templates carry your logo, items, product photos and terms, and you add the CFO summary and savings table on top. To see this set up for a C&I team, book a demo.

What to do this week

1. 1

   Map one live factory lead to the Four-Chair Table

   Write the four names. Mark which chair you have never spoken to, and call that person first.

2. 2

   Send the bill-pack request

   Use the checklist above. Ask for 12 bills, the sanction letter and the shift calendar in one message.

3. 3

   Collect your state's rules

   Download the state commission's current rooftop regulation and your DISCOM's latest circular. Write the cap and the time-of-day rule, with dates, on a sheet for the proposal.

4. 4

   Rename your pipeline stages

   Use the nine stages and the exit-proof column. Start with the open deals and move each to the stage its documents support.

Frequently asked questions

How do I sell solar to a factory owner?

Treat it as a business investment. Identify the four people who decide (owner, finance, plant head, electrical in-charge), collect 12 months of bills and the sanction letter before quoting, size to daytime load and contract demand, and give the CFO a one-page summary with stated assumptions, dated tax facts and a payment schedule.

Is there a subsidy for factory rooftop solar?

Not under PM Surya Ghar. MNRE's guidelines say no central financial assistance is provided to non-residential segments, including commercial and industrial consumers (section 5(d), read on 31 October 2026). A factory's case has to stand on bill savings, depreciation and financing terms.

What depreciation can a factory claim on solar in 2026?

The Income Tax Department's Appendix I to the Income-tax Rules, 2026 lists solar power generating systems at 40% of written down value. The Income-tax Act, 2025 came into force on 1 April 2026, so the provision is now section 33. The taxpayer must own the asset and use it wholly and exclusively for business, and the rate halves if the plant is used for under 180 days in the year it is acquired. The CA should confirm.

What is the GST rate on solar equipment for a factory?

Solar power-based devices, solar power generators and PV modules are at 5% since 22 September 2025, per PIB's release of 17 September 2025 and CBIC Notification 9/2025-Integrated Tax (Rate). For goods and installation supplied together, the notification treats 70% of the total as goods. The 30% service portion is under serial number 38 of Notification 11/2017-Central Tax (Rate): 9% central tax, and 18% integrated tax for an inter-State supply, per the CBIC tax portal. State tax follows each State's own notification, which we did not open. Show GST as a separate line and confirm your contract's classification with your CA.

How large can a factory's net-metered solar plant be?

It depends on the state. In Maharashtra, MERC's statement of reasons dated 16 November 2023 limits net metering to 5 MW or the contract demand or sanctioned load, whichever is lower. Where a state's regulations are silent, the central rules allow net metering up to 500 kW or the sanctioned load, whichever is lower, as MERC quoted in August 2024. Read your state's current regulation.

Does rooftop solar reduce the demand charge in a factory bill?

Not automatically. Solar lowers the energy charge by cutting units bought in daylight. The demand charge follows the highest demand the DISCOM records, and if that peak falls at an evening shift change, the figure may not move. The load profile shows whether the peak sits inside solar hours.