Small businesses in India shops, offices, small factories, clinics, restaurants, and workshops face electricity costs that directly affect profitability. Commercial and industrial electricity tariffs in most states are significantly higher than domestic tariffs, making the financial case for solar even stronger for businesses than for homeowners.

This guide covers what small business owners need to know about going solar in 2026.

How commercial solar differs from residential

Tariff advantage. Commercial and industrial electricity tariffs in India are typically Rs 8 to Rs 14 per unit, significantly higher than domestic rates. Higher tariff means more savings per unit of solar generation.

PM Surya Ghar does not apply. The PM Surya Ghar Muft Bijli Yojana is for residential domestic connections only. Small businesses on commercial or LT commercial tariff categories are not eligible for this subsidy. They access solar through other MSME-focused schemes and state-level industrial incentives.

Net metering rules differ. Commercial connections have different net metering limits and processes from domestic connections. Some states restrict net metering system size for commercial consumers to a lower percentage of sanctioned load than domestic.

Faster ROI. Higher tariffs, longer daytime operating hours, and typically higher daytime electricity consumption mean small business solar systems often pay back faster than residential systems on a purely financial basis.

What subsidies are available for small businesses?

MNRE MSME solar scheme: MNRE (Ministry of New and Renewable Energy) has run subsidy schemes specifically targeting MSMEs (Micro, Small and Medium Enterprises) for rooftop solar. Verify the current active scheme and eligibility at mnre.gov.in.

State MSME solar schemes: Several states including Tamil Nadu, Gujarat, Maharashtra, and Rajasthan have run MSME-specific solar incentives through their state energy agencies. Check your state energy agency’s website for current schemes.

Capital subsidy for MSME under PMEGP and similar schemes: Some MSMEs can access capital subsidy or concessional loans through MSME-focused financing schemes. These are not solar-specific but can fund solar installations as part of capital expenditure.

Priority sector lending: Banks under RBI’s priority sector guidelines offer loans to MSMEs at regulated rates, which can be used for solar investments.

What does commercial solar cost?

Commercial solar systems are priced differently from residential. They are typically larger (10 kW to 100 kW for small businesses) and the per-kW cost is lower than residential due to economies of scale.

System size	Typical fully installed cost (commercial)
10 kW	Rs 4.5 lakh to Rs 6 lakh
25 kW	Rs 10 lakh to Rs 14 lakh
50 kW	Rs 18 lakh to Rs 25 lakh
100 kW	Rs 34 lakh to Rs 45 lakh

These costs are before any applicable subsidy.

ROI for small businesses

The financial case for commercial solar is typically stronger than residential because of higher tariffs and longer daytime operating hours.

A 10 kW system generating 1,200 to 1,500 units per month at a commercial tariff of Rs 9 per unit saves Rs 10,800 to Rs 13,500 per month. At a system cost of Rs 5 lakh, payback is approximately 3 to 4 years. After that, 20 or more years of substantially reduced electricity bills.

The exact numbers depend on your state’s commercial tariff, your operating hours, and the solar irradiance in your location.

Net metering for commercial connections

Net metering is available for commercial solar connections in most states, but the rules differ from domestic:

System size limits for commercial net metering vary by state and DISCOM. Most states allow commercial net metering up to the sanctioned load, similar to domestic.

The annual settlement rate for exported commercial solar power may differ from domestic rates in some states.

Check with your specific DISCOM before sizing your system to confirm the net metering limit applicable to your commercial connection category.

Open access solar: an option for larger businesses

For businesses consuming above 100 kW of power, open access solar is an alternative to rooftop solar. Under open access, a business can buy power from a remote solar plant and transmit it through the grid, paying only transmission and wheeling charges. This is more complex but can offer lower per-unit solar power costs for larger consumers.

Open access regulations vary significantly by state and are governed by state electricity regulatory commissions. This is typically relevant for medium and larger businesses rather than small shops and offices.

Key steps for a small business going solar

Identify your electricity consumption pattern. A business that operates 10 hours per day during daylight hours consumes most of its power when solar is generating, maximising self-consumption and reducing export.

Identify applicable subsidy schemes through your state energy agency and MNRE.

Get three quotes from installers experienced with commercial connections and your DISCOM’s commercial net metering process.

Apply for net metering through your DISCOM’s commercial solar application process.

Consult a tax advisor on depreciation benefits. Commercial solar installations qualify for accelerated depreciation under Indian tax law, which can significantly improve the after-tax ROI for businesses.

Summing up

Solar makes strong financial sense for small businesses in India, often with faster payback than residential installations due to higher commercial tariffs and daytime operating hours. PM Surya Ghar does not apply, but MSME-targeted schemes and state incentives are available. The accelerated depreciation benefit under Indian tax law is an additional advantage that residential buyers do not get.