Payment terms, contracts and DISCOM delays

Most disputes in residential solar are not about engineering. They are about money and time: "I won't pay the balance until the net meter is installed", "you said it would be done in two weeks", "where is my subsidy?". Many of these delays are caused by the DISCOM, not by the installer or the customer. A clear contract with sensible payment milestones turns a potential fight into a predictable process.

Why payment terms matter so much

On a ₹2 lakh home system, you pay suppliers for modules, inverter and structure (about ₹1.3–1.4 lakh) before or at delivery. If your payment terms collect only 30% before installation and the rest "after net metering", you are financing the customer for weeks or months, possibly across dozens of jobs. That is how growing installers run out of cash while their order books look healthy.

The customer's concern is the mirror image: they do not want to pay everything and then wait months for a working, net-metered system.

Good terms balance both: payments track the value delivered, and the part that depends on the DISCOM is small and time-limited.

Common Indian residential norms

There is no single standard, but a widely used structure looks like this.

Worked example: ₹2,02,272 contract (3.3 kWp)

The last line is the DISCOM-delay protection: the customer keeps a meaningful retention as an incentive for you to chase the DISCOM, but your money is not held hostage indefinitely by an office neither of you controls.

Variations you will see: - Some installers take 30–40% on signing for custom orders or when material prices are volatile. - For premium customers or repeat clients, a 10% retention for 30 days after commissioning. - A small separate amount for the net meter and DISCOM fees, collected when the DISCOM issues its demand note.

Loan-financed jobs

With PM Surya Ghar bank loans or other finance, the bank sets the disbursement rules, often paying the vendor directly after installation or in stages against documents.

• Get the loan sanction letter before ordering material.
• Read the bank's disbursement conditions and align your contract milestones to them.
• Agree with the customer, in writing, what they pay from their own funds (the margin money) and when.
• Do not install on the strength of "loan is under process".

C&I terms

Commercial and industrial clients usually negotiate harder: 10–30% advance, 50–60% against delivery (sometimes pro-rata), 10% on commissioning, and sometimes a performance-linked retention or bank guarantee. Two points to know:

• If you are a registered micro or small enterprise (Udyam), the MSMED Act, 2006 requires buyers to pay within the agreed period, not exceeding 45 days from acceptance, and allows interest on delayed payments; the MSME Samadhaan portal handles disputes. Quote your Udyam number on invoices.
• Insist on a purchase order that matches your proposal, including exclusions and the DISCOM clause.

Clauses every contract needs

1. Parties and site: names exactly as on the electricity connection and bank account; consumer number.
2. Scope and specification: kWp, module make/model (or "make A or B, equal or better wattage"), inverter make/model and rating, structure type and height, earthing and protection, monitoring.
3. Price and GST, with what is included and excluded (net meter, DISCOM fees, civil work, extra cable beyond X m, structure height above Y m).
4. Payment milestones as above.
5. Timeline: your installation period after site readiness and material delivery, and a clear statement that DISCOM and subsidy steps follow the authorities' timelines.
6. Customer obligations: roof access, structural adequacy of the roof (or responsibility for an engineer's check), society/RWA consent, power and water for work, a safe place to store material.
7. Warranties: module product and performance warranties (by the manufacturer), inverter warranty (by the manufacturer), structure and workmanship warranty (by you), with durations, and what voids them (unauthorised modification, walking on modules, damage by others).
8. CMC / AMC: what is covered, visit frequency, response time, exclusions. Five years for PM Surya Ghar systems.
9. Waterproofing: who is responsible for leaks at anchor points and for how long.
10. Subsidy disclaimer (below).
11. Force majeure: cyclones above design wind speed, floods, lightning strikes beyond the protection provided, government orders.
12. Price validity and changes: quote valid for X days; change of GST rate passed through.
13. Cancellation and refund: what is refunded at each stage, and deductions for material already ordered.
14. Dispute resolution: negotiation first, then arbitration or courts with named jurisdiction.

Sample DISCOM-delay clause (plain English)

"Net-meter installation, inspection and commissioning are carried out by [DISCOM] and are outside the Installer's control. The Installer will submit the complete application within 3 working days of installation and will follow up with the DISCOM. The final 5% payment is due on net-meter installation or 45 days after the application is submitted, whichever is earlier. If the DISCOM requests changes caused by the Installer's work, the Installer will make them at no cost."

Sample subsidy disclaimer

"The central financial assistance under PM Surya Ghar (and any state subsidy) is paid by the Government directly to the Customer's bank account. The Installer will upload the required documents correctly and on time but does not guarantee the amount or timing of subsidy. The contract price is payable in full as per the payment schedule irrespective of subsidy timing."

Get a lawyer to review your standard contract once. It is money well spent.

Key points

• Payment milestones should track value delivered: signing, material delivery, installation, and a small capped DISCOM-dependent retention.
• A typical residential structure is 20/60/15/5, with the last 5% due on net meter or after 45 days, whichever is earlier.
• For loans, align milestones with the bank's disbursement rules and get sanction before ordering.
• Contracts need clear scope, price with GST, exclusions, warranties, CMC, waterproofing, subsidy disclaimer, force majeure, cancellation and dispute terms.
• MSEs can use the MSMED Act's 45-day rule for B2B payments.

Check yourself

1. Why is "balance on net-meter installation" risky for the installer?
2. What two things should a subsidy clause make clear?
3. Under the MSMED Act, what is the maximum payment period a buyer can agree with a micro or small enterprise supplier?