Can solar projects energize your investment portfolio?

Fractional ownership of rooftop solar projects offers good returns but is fraught with risks

- Akshat Rohatgi

Gold, real estate, bonds, equities, and more. Now, you can add solar panels to that list of asset classes. Online investment platforms are already tom-toming it as the next best thing—a win-win situation where one benefits financially while contributing positively to the environment. Solar investment was in the news recently when SustVest, a Gurgaon-based sustainable investment platform that enables ownership in renewable energy projects such as solar installations, raised $250,000 in a funding round led by WEH Ventures.

Traditionally, rooftop solar projects have demanded substantial capital, making them exclusive to large investors. However, the landscape has changed, with various solar investment models that have lowered investment thresholds. One such model currently offered by some platforms works on the concept of fractional ownership, just like real estate investment trusts (Reits), and the entry ticket for investors is as low as ₹500.

Here is how the scheme works under this model. An entity, say a Residents Welfare Association (RWA), seeks access to cost-effective solar power but is wary of the significant upfront investment necessary for purchasing solar panels. To cater to this need, a specialized solar asset leasing platform steps in, not only installing but also taking charge of maintaining the solar panels. The RWA agrees to pay for the power it uses from these panels over the contract’s duration (at rates lower than what it pays the electricity distribution company).