Ownership choices at a glance
- With CAPEX, your business buys and owns the plant, uses its output and may claim 40% depreciation if eligible.
- With OPEX or RESCO, a developer funds and owns the plant. Your business buys its power under a PPA, commonly lasting 15 to 25 years.
- Typical business payback for an owned system is 3 to 5 years, subject to the roof, tariff and site audit. The owner also carries maintenance costs.
- RESCO keeps initial capital available for other work, but developers usually screen roof size, electricity demand, credit and property rights.
If your facility pays ₹8 to ₹12 per unit for grid power, rooftop solar deserves a close look. A cold store, hospital, factory or institutional campus may use much of its solar output during working hours. The illustration allows for possible energy-cost reductions of 40% to 80%, but your own bills and operating pattern must support any such estimate. Ask for a site-specific commercial estimate.
The first choice is how to pay for the plant. Under CAPEX, you buy the equipment and keep the benefit of the power it makes. Under an OPEX or RESCO arrangement, a developer places its equipment on your roof and sells you the electricity. Your business needs a sound roof and long-term access to it under either arrangement.
Compare more than the first year's saving. Look at your cash available for investment, borrowing cost, tax position, who must maintain the system, the PPA tariff and what happens when the agreement ends. Use the same generation and grid-tariff assumptions for both options.
How direct ownership works
In a CAPEX project, your company holds title to the solar plant. It can use internal funds or combine them with a term loan. The example structure in this comparison uses about 20% equity and 80% debt, although the actual margin depends on your lender and credit file.
Your EPC contractor, such as Ray2Volt, designs, supplies and commissions the modules, inverter, mounting and electrical protection. Ray2Volt prepares new commercial and industrial quotations using DCR panels unless a verified exemption applies. Once the plant runs, the generated electricity belongs to your business.
You do not pay a developer for each solar unit, but you still pay for cleaning, inspections, repairs and any later equipment replacement. Against the illustrative ₹8 to ₹12 grid tariff, the typical payback for an owned business installation is 3 to 5 years after a site audit. The panels have a 12-year product and 30-year performance warranty; the inverter product warranty is 8 to 10 years by model. Those warranties do not remove ongoing service costs.
How a RESCO power agreement works
In a RESCO project, a third-party developer pays for and owns the equipment on your roof. Your business normally contributes no initial plant capital. The developer needs agreed roof access for construction, operation and maintenance throughout the contract.
You buy the generated electricity under a power purchase agreement, or PPA. The example terms used here run for 15 to 25 years and quote ₹4.00 to ₹5.50 per unit, possibly with annual escalation. That example tariff is described as 30% to 50% below the grid rate. Your actual proposal may differ, so compare the full tariff schedule, taxes, minimum purchase terms and grid charges.
The PPA should state who handles DISCOM permissions, insurance, monitoring, cleaning and inverter replacements. These usually sit with the developer. Your finance and facilities teams still need to review monthly generation and the PPA bill so underperformance is noticed promptly.
Read the performance clause: A PPA may set a generation commitment and a remedy when the developer's equipment underperforms. Check the measurement method, exclusions and compensation formula. The word "guarantee" alone does not show how much risk moves to the developer.
Compare cost, responsibility and ownership
The table uses illustrative financing and contract ranges. Treat them as questions to test against written loan or PPA offers. In particular, "free" power after loan repayment still carries maintenance and possible replacement costs.
| Point to compare | CAPEX paid from cash | CAPEX funded with a loan | RESCO PPA |
|---|---|---|---|
| Initial capital | 100% from the business | 15% to 20% margin in this example | ₹0 plant capital from the customer |
| Ongoing solar cost | No per-unit developer charge after payback; service costs continue | Loan EMI for 5 to 7 years, then service costs continue | Contracted PPA tariff, shown here as ₹4 to ₹5.50 per unit |
| Depreciation treatment | 40% if eligible | 40% if eligible, plus possible interest deduction | Developer owns the asset and may claim depreciation |
| Operations & maintenance | Business responsibility | Business responsibility | Developer responsibility under the PPA |
| Accounting position | Business fixed asset | Fixed asset and loan liability | Operating expense, often described as off-balance-sheet; confirm accounting treatment |
| Contract or loan period | No PPA; continuing ownership | 5 to 7 year loan in this example | 15 to 25 year PPA in this example |
| Illustrative minimum size | 10 kW or more | 20 kW or more | 100 kW to 250 kW or more |
| 25-year financial outcome | Potentially highest lifetime saving, subject to costs | High net saving after interest and upkeep | Ongoing discount against grid power under PPA terms |
Check the tax and accounting effect
An eligible business that owns solar equipment may claim depreciation at 40% on written down value under section 33 of the Income-tax Act, 2025. The Act took effect from 1 April 2026. The deduction reduces taxable profit; it is not a cash subsidy or a 40% refund of the plant price.
For a profitable company, using a larger deduction earlier can improve cash flow. One illustrative calculation moves payback by about 10 to 14 months. That result depends on taxable profit, commissioning date, tax regime and the rate actually available to your business. Have your chartered accountant compare the tax schedules before adding any benefit to the project return.
Under RESCO, your company does not own the plant and cannot claim its asset depreciation. The developer may claim it instead. Your PPA payments are operating costs, subject to the accounting and tax treatment that applies to your contract. Ask your accountant to review the agreement, including any right to buy the plant later.
Our guide to solar depreciation calculations walks through an illustrative written down value schedule.
Confirm before signing: Tax and finance figures are indicative, and schemes and rules can change. Ask your chartered accountant to confirm depreciation eligibility and PPA accounting for your entity. Ray2Volt does not give tax or investment advice.
What a RESCO developer will assess
A developer commits its own capital for a 15 to 25 year agreement. It will usually check whether the site can generate enough predictable, billable electricity to support that investment. A zero-capital offer is therefore subject to screening.
- Plant size: Many developers look for 100 kW to 250 kW or more, needing about 8,000 to 20,000 sq ft of shade-free roof. Smaller sites may have too much legal and operating work relative to output.
- Credit record: The comparison uses a BBB+ or stronger CRISIL or ICRA rating and three to five years of audited profitable accounts as possible screening criteria. Ask each developer for its own requirements.
- Roof rights: The owner or long-term lessee must be able to grant access for the entire PPA term. Property title, existing charges and lease expiry can affect approval.
- Daytime load: A six-day or seven-day operation, such as manufacturing, a hospital or major retail site, can consume more output directly. Share interval meter data if you have it.
Choose a model for your facility
Ask for two cash-flow sheets based on the same system size and generation profile. For CAPEX, include capital, loan interest, tax treatment and upkeep. For RESCO, include every year of PPA payments, escalation and the end-of-term option.
CAPEX may fit when
- You have cash to invest or can secure a workable MSME loan. An illustrative debt range is 7.5% to 9.5% a year; check current offers in our solar loan guide.
- Your business has taxable profit and your chartered accountant confirms that 40% depreciation is available and useful.
- You want the full value of the generated power over a 25-year planning horizon and can fund maintenance after the typical 3 to 5 year payback.
- Your proposed plant is under 100 kW and RESCO developers are unlikely to bid for that site.
RESCO may fit when
- You need available capital for business expansion and your internal hurdle rate is above 25% in the example.
- You have a strong credit file, roof rights for the PPA term and space for around 100 kW or more, roughly 8,000 sq ft in this comparison.
- You prefer the developer to handle routine operation and equipment performance under a clear contract.
- You want a contracted discount without taking a plant loan. An illustrative PPA scenario models a 30% to 40% bill reduction, which needs testing against your own tariff. See our institutional solar options.
A financed ownership option: The example uses 15% to 20% margin and roughly 80% bank finance over five years. Compare the EMI with measured bill savings, then allow for remaining grid charges. The plant remains your business's asset when the debt is cleared.
Use an annual output estimate of about 4 to 4.5 units per kW each day, or roughly 1,400 to 1,600 units per kW a year, only as a starting point for Andhra Pradesh. Roof shade and your daytime demand decide the useful output. For machinery-heavy sites, read how factory solar sizing changes that calculation.
Use signed terms: All rates, payback periods and discounts above are indicative. Schemes and contract terms can change. Confirm tax eligibility with your chartered accountant and have your finance team review the PPA or loan. Ray2Volt provides EPC services and does not give tax or investment advice.
Questions about CAPEX and RESCO
Who owns the panels under CAPEX and RESCO?
With CAPEX, your business pays for and owns the plant, including when it uses a loan. Under RESCO, the developer funds and owns the equipment on your roof, then sells you its output under a PPA. Check roof-access and insurance clauses in either case.
Which arrangement can save more over 25 years?
Ownership can produce a higher lifetime saving after capital, interest and upkeep are paid, because there is no continuing PPA tariff. Typical business payback is 3 to 5 years after a site audit. Compare a full 25-year cash-flow model for your site; neither outcome is guaranteed.
Can my business claim solar depreciation under a RESCO PPA?
Your business normally cannot claim depreciation on equipment owned by the developer. An eligible plant owner may claim 40% on written down value under section 33 of the Income-tax Act, 2025. Ask your chartered accountant to confirm the treatment of your particular agreement.
How large a site does a RESCO developer usually want?
The example screening range is 100 kW to 250 kW, needing about 8,000 to 20,000 sq ft of shade-free roof. Developers also check your credit, property rights and daytime load. A smaller project may be easier to fund as CAPEX.
What happens to the plant when a PPA ends?
Some agreements transfer the plant to the roof owner for a nominal amount, such as ₹1 or scrap value, after a 15 to 25 year term. Others set different options. Read the transfer, removal and residual-value clauses before signing; there is no universal automatic handover.
Ray2Volt Solar Private Limited
We design, install, and service rooftop solar for homes and businesses across Tirupati district and Andhra Pradesh, from PM Surya Ghar residential systems to commercial and industrial plants. Every enquiry starts with a free power audit.
Compare CAPEX and RESCO for your site
Send us your electricity bills and usable roof area. We will prepare a site-based solar estimate that your finance team can use to compare ownership and PPA offers.
