CAPEX vs OPEX Solar: Which Model Is Better for Industries in Kerala?

If you're evaluating solar energy for your factory or commercial building, you'll quickly run into two fundamentally different options: CAPEX solar and OPEX (or RESCO) solar. They both deliver renewable power. But they're very different businesses — and the right choice depends entirely on your financial profile and priorities.

Here's a straightforward breakdown of both models, with an interactive comparison to help you decide.

CAPEX Solar: You Own It, You Benefit Most

In a CAPEX model, your company invests upfront in the solar plant — whether on your rooftop or on ground-mounted land near your facility. The plant is yours. The savings are yours. The depreciation benefit is yours.

• Upfront investment: ₹40–60 lakh per MW (rooftop); ₹50–70 lakh per MW (ground-mount)
• Accelerated depreciation: 40% in Year 1 under Income Tax Act
• Payback period: 5–7 years for most South Indian industrial sites
• Post-payback: virtually free power for 15–20 years
• IRR: 18–25% depending on location, tariff, and incentives

OPEX / RESCO Solar: Zero Capital, Day-One Savings

In an OPEX or RESCO (Renewable Energy Service Company) model, a developer installs and owns the solar plant on your premises. You sign a long-term PPA with the developer and pay a fixed per-unit rate — typically 30–40% below your grid tariff.

• No upfront investment required from your side
• Developer handles O&M, insurance, and performance guarantees
• You pay only for units consumed at the agreed PPA rate
• Savings from day one — no waiting for payback
• Treated as operational expenditure, not capital asset

Side-by-Side Comparison

Which Industries Typically Choose CAPEX?

• Manufacturers with strong balance sheets seeking maximum long-term ROI
• Companies using accelerated depreciation for tax efficiency
• Businesses with surplus land or large unshaded rooftop areas
• Companies with 10+ year stable presence at the facility

Which Industries Typically Choose OPEX?

• Companies preferring capital-light operations
• Businesses without dedicated energy management teams
• Those seeking guaranteed savings without performance risk
• Industries with leased premises where plant ownership is complicated