Solar Investment Trusts Instrument Analysis

This briefing by the India Innovation Lab for Green Finance analyzes the Solar Investment Trust (SEIT), a proposed dividend-yielding instrument designed to lower the cost of capital for industrial and commercial rooftop solar developers in India. The SEIT would be structured as an Infrastructure Investment Trust (InvIT) under SEBI guidelines, allowing developers to monetize existing assets and attract institutional investors. While the instrument could potentially mobilize USD 1 billion for the rooftop solar sector within five years, current SEBI requirements regarding asset scale and leverage ratios present significant barriers to immediate implementation for most developers.

• A Solar Investment Trust (SEIT) is designed as a dividend-yielding vehicle to lower the cost of capital for industrial and commercial rooftop solar developers in India by allowing them to monetize existing assets. It is structured as an Infrastructure Investment Trust (InvIT) and must comply with Securities and Exchange Board of India (SEBI) guidelines.
• SEITs can reduce the cost of marginal equity by 300 to 350 basis points compared to conventional sources, which are assumed to be approximately 15% post-tax for typical rooftop solar projects. This reduction is attributed to asset pooling diversification, improved governance transparency, lower cash-flow volatility, and increased liquidity through listing.
• The instrument has the potential to mobilize over USD 1 billion in commercial capital for the rooftop solar sector within five years, which could enable the installation of more than 1 GW of capacity. For the broader clean energy sector, the potential mobilization is estimated at USD 3-4 billion.
• Current SEBI guidelines create significant barriers to the proliferation of SEITs. Specifically, the requirement for a minimum asset value of INR 500 crore and a float size of at least INR 250 crore is a hurdle, as even the largest rooftop solar developer in India, Cleanmax Solar, does not currently meet this asset value.
• Additional regulatory challenges include a leverage cap of 49% (debt to equity ratio of 49:51), which is lower than the typical 70:30 ratio for unlisted projects. Furthermore, for public placements, at least 80% of projects must be operational (revenue generating for at least 12 months), and investments in under-construction projects are capped at 10%.
• To attract institutional investors such as Indian pension funds and insurance companies, the debt held by an SEIT should achieve a credit rating of AA or above. This is challenging because most rooftop solar developers are SMEs with lower ratings; for example, Cleanmax's credit rating is BBB.
• The report proposes several recommendations to the Ministry of Finance and SEBI to improve the environment for SEITs, including allowing High Net-Worth Individuals (HNIs) to participate in private placements, permitting the ownership of overseas projects, increasing the under-construction project limit to 20%, and expanding the types of entities that can act as sponsors.

APA

Singh, D., Trivedi, S., & Shrimali, D. G. (2017). Solar Investment Trusts Instrument Analysis. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/10/Solar-Investment-Trusts-SEITs_Instrument-Analysis.pdf

Chicago

Singh, Divjot, Saurabh Trivedi, and Dr. Gireesh Shrimali. Solar Investment Trusts Instrument Analysis. Climate Policy Initiative, 2017. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/10/Solar-Investment-Trusts-SEITs_Instrument-Analysis.pdf.

Wikipedia

{{cite report |last1=Singh |first1=Divjot |last2=Trivedi |first2=Saurabh |last3=Shrimali |first3=Dr. Gireesh |title=Solar Investment Trusts Instrument Analysis |publisher=Climate Policy Initiative |date=October 2017 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2017/10/Solar-Investment-Trusts-SEITs_Instrument-Analysis.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{singh2017solar, author = {Singh, Divjot and Trivedi, Saurabh and Shrimali, Dr. Gireesh}, title = {{Solar Investment Trusts Instrument Analysis}}, institution = {Climate Policy Initiative}, year = {2017}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2017/10/Solar-Investment-Trusts-SEITs_Instrument-Analysis.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }