- CAPEX: you pay for the plant, own it, keep all the savings and claim 40% depreciation
- OPEX / RESCO: a developer builds and owns the plant and sells you power per unit, usually for 15 to 25 years
- CAPEX gives the highest lifetime savings; OPEX preserves cash and moves performance risk to the developer
- Contract length, exit clauses, roof or land rights and tariff escalation decide whether an OPEX deal is good
- Arrays Ingenieria builds on the CAPEX model and installs for developers who run OPEX projects
The two models in one minute
Under CAPEX (capital expenditure) you buy the plant. An EPC contractor designs, supplies, builds and commissions it; you own it from day one, and every unit it generates is power you do not buy from the grid.
Under OPEX, also called RESCO (renewable energy service company) or a PPA (power purchase agreement), a developer builds and owns the plant on your roof or land and sells you its power at an agreed tariff per unit for a long term. You pay nothing upfront, but you share the savings with the developer.
Side-by-side comparison
| Factor | CAPEX (you own) | OPEX / RESCO / PPA (developer owns) |
|---|---|---|
| Upfront cost | Full plant cost | None or minimal |
| Who owns the plant | You | The developer, for the contract term |
| Savings on power bill | Highest: every unit is yours | Lower: you pay the PPA tariff per unit |
| Depreciation (40% WDV) | You claim it | Developer claims it |
| Operation and maintenance | Your responsibility (or an O&M contract) | Developer's responsibility |
| Performance risk | Yours (protected by warranties) | Developer's (you pay only for units delivered) |
| Contract term | EPC contract plus warranties | Typically 15 to 25 years |
| Balance sheet | Asset on your books | Usually an operating expense |
| Typical payback | About 3 to 5 years for C&I | Not applicable; savings from day one |
The numbers that decide it
Your tariff and your tax position
The higher your grid tariff and the more of the day your site consumes power, the faster a CAPEX plant pays back. A business paying corporate tax gains more from depreciation (see our depreciation guide).
Your cost of capital
If cash is tight or reserved for core expansion, OPEX lets you start saving without spending. Some businesses fund CAPEX plants with term loans; banks lend readily against solar because the savings are predictable.
Your horizon on the site
If you own the building or land and will be there for 25 years, CAPEX usually wins. If your lease is short, an OPEX contract that matches the lease, or a CAPEX plant designed to be relocated, may suit better.
What to check in an OPEX or PPA contract
- Tariff and escalation: a fixed tariff or a small escalation; compare it with your grid tariff path.
- Term and early exit: the buy-out price if you sell the building or want to own the plant early.
- Minimum offtake: whether you must pay for units you cannot use (for example on holidays).
- Roof and land rights: access, roof repairs and what happens if you need to re-roof.
- Performance guarantee: a generation guarantee and compensation for shortfall.
- End of term: whether the plant transfers to you, and in what condition.
Which model for which business
| Your situation | Usually better |
|---|---|
| Profitable business, owns the site, wants the highest lifetime savings | CAPEX |
| Tea estate with land and steady factory load in the season | CAPEX (ground-mount) |
| Cash-constrained, or capital reserved for core expansion | OPEX / PPA |
| Short lease on the premises | OPEX matched to the lease, or a relocatable CAPEX plant |
| Developer or EPC major needing site crews | Hire an I&C partner |
We build on the CAPEX model for owners, and we are the installation & commissioning partner for EPC companies and developers who run OPEX and utility projects, so we see both sides.
Tell us your bills, roof or land, and plans; we will show you CAPEX numbers you can compare with any PPA offer.
Get a free solar quoteFrequently asked questions
What is the difference between CAPEX and OPEX solar?
Which is cheaper over 25 years?
Can I switch from OPEX to owning the plant later?
Does Arrays Ingenieria offer OPEX or PPA?
Sources
- Taxguru: Depreciation under the Income-tax Act, 2025
- pv magazine India, 4 Sep 2025: GST on solar cells, modules cut to 5%
This guide explains public policy in plain language for planning purposes. Rules, rates and deadlines change: confirm the current position with the notifying authority, your DISCOM and your tax adviser before you commit. Last checked 11 Oct 2026.
About the authors. Arrays Ingenieria is an ex-servicemen-led solar EPC and installation & commissioning company working Pan-India, from Assam's tea estates to industrial rooftops. Our story · Our projects
