Should you invest in solar as an asset class? 3 experts answer
Also Read: Avaada Energy secures 1,050 MWp solar power project from NTPCHere’s a small example of how solar investing works if you are investing in solar assets through a Limited Liability Partnership (LLP).Initiation by an Organization: An organisation or housing society wants to set up cost-effective solar power for their consumption and have another source of energy. They don’t want to do it on their own as they are not sure about the initial investments.Role of the Leasing Platform: Now, a leasing platform steps in, instals, and maintains the solar panels.
The organisation or the society agrees to pay for the power that they have consumed.Funding by Investors: The leasing platform invites investors like you to contribute funds. Once the required investment capital is gathered, a LLP is formed.
Each investor becomes a partner in this LLP and therefore has a stake in the solar project.Operation and Management: The solar project becomes operational. The platform manages and supervises its functioning, receiving revenue for the power consumed.Revenue Distribution: The platform disburses monthly returns or payments to the investors, who are now LLP partners.Monitoring and Reporting: Continuous maintenance and monitoring of the solar plant is essential.End of Contract: When the contract ends, the solar panels are typically transferred to the organisation and they can take ownership.
The leasing platform can also sell these assets and the amount can be divided among the investors. The annual degradation rate of the panels is considered at 1% during the sale of the solar panels.
Also Read: Biden Seeks to Bolster Solar Manufacturers With Tax and Trade MovesAnother way to invest in solar is to lease the solar panels.
