Startup Financing Models Can Drive Cheaper Rooftop Solar in Southeast Asia

Solar Financing and Barriers to Installation are Dropping

Even though the countries in Southeast Asia have an abundance of sunshine in their equatorial locations, cost has constrained progress and held back installation. New financing models and regulatory changes have the potential to unlock the market.

A fundamental issue in Southeast Asia has been that installing rooftop solar panels seems expensive. Costs in higher-priced markets such as Singapore are similar to those in Western countries, at about S$15,000-S$40,000 (US$12,000-$31,000). In a lower-priced market such as the Philippines, where installation prices can be about US$2,000-$5,000, the cost can be an even larger part of people’s incomes.

While cost is clearly a barrier, regulation has also played a part. Onerous requirements have made it difficult to install solar in some places. Amidst impending energy shortages as consumer and data centre usage rises rapidly, however, governments in the region have seen the benefits and made installation easier.

In Vietnam, for instance, the government has approved subsidies for solar energy. Moreover, homeowners and landlords can now sell excess solar power back to utilities, which can reduce the cost further. In Thailand, legislation approved in 2024 allows households to install rooftop solar panels without obtaining a permit for installation. Krungsri expects the change to lead to rooftop solar installations becoming the norm in new real estate developments and to older buildings retrofits.

The shifts in regulation in these and other markets, along with better financing models, could well lead to more rapid increases in rooftop solar panel installation and perhaps even batteries to store the power.

Startups make Paying for Solar Easier

Startups and more established small companies across Southeast Asia have developed financing mechanisms that make it much more affordable to install rooftop solar. These new services offer an immediate benefit to homeowners. Investors may have an opportunity for positive financial returns while doing good by investing in startups that finance rooftop solar installation in the region. At least three models are available to consumers.

One is lower cost financing. In the Philippines, for instance, Helios offers a relatively low financing rate that it says can reduce homeowners’ monthly payments and simplify the solution by adding the cost of solar to a current mortgage. The result can be a cash flow-positive solution for the homeowner.

A second model is leasing, whereby a solar company installs rooftop solar at no cost to the customer. The customer makes monthly payments for electricity that costs less than buying power from a utility. Moreover, there should be no increase in costs because the solar panels are already installed.

Okapi Technologies, for example, aims to make affordable residential solar energy accessible to homeowners in its home base of Malaysia and then across Southeast Asia. It says it collaborates with leading solar companies to deliver financing solutions with zero upfront cost to help homeowners switch to solar energy and enjoy net savings. Okapi uses a partnership model to extend its reach and can use that practice to expand abroad in the future.

In Vietnam, SmartSolar installs solar panels on the customer’s roof, finances them, and enables the customer to purchase solar power at a discount to their usual price of electricity.

Another company is Xurya, which has quickly grown to become a leading Indonesian commercial solar energy player. Xurya was the first company in the country to offer rooftop solar installation without upfront costs, which has boosted the adoption of solar energy across the market.

A third model, a variation on leasing, allows the customer to rent the solar panels at a fixed rate and own them at the end of the rental period. One example is from GetSolar, headquartered in Singapore. GetSolar, backed by Engie, helps homeowners and businesses install rooftop solar through a rent-to-own model with no upfront cost, using AI and satellite data to simplify solar installation across Southeast Asia.

Another company offering solar in a similar model is Volt in Thailand. It also offers a rent-to-own payment option with no down-payment or collateral, partial or full payment possible anytime and transferable to another person in case of property sale. The customer pays fixed monthly instalments for 8 years and then owns the system.

Admittedly, these nascent players have increasing companies from larger organisations. Altervim partnered with TrueMoney and Pay Next in Thailand, for instance, to enable households to access clean energy through Pay Next Extra, a pre-approved digital credit line for solar panel installation that is available through the TrueMoney app. The Vietnamese government is also arranging for low-interest rate loans for consumers who install solar. The flexibility of leases or rent-to own models could still give startups an advantage.

Implications for Investors

For investors, the combination of lighter regulations for solar installation and new models from startups for financing could be beneficial. Growth in the industry could enable the startups to expand significantly. Solar installation in Southeast Asia seems to be the opposite track compared to the US, where policy changes have slowed solar power.

Solar installation solutions are still at an early stage, though, so realising returns could take time. That said, Xurya Daya Indonesia raised US$55 million in 2024 from overseas development funds. This year, Vietnam-based solar firm Stride secured series A funding from new and existing investors, which it said will help it scale up its business.

While selective investing is essential, startups doing the financing could have significant growth that also has a big impact both on reducing their customers’ costs and on decreasing carbon emissions that cause climate change.