OPEX/PPA/BOOT MODEL versus ROOFTOP ON EMI
With today’s fast-paced lifestyle and the rise of e-commerce, there is an explosion of purchasing possibilities for the consumer. Given the overload of choices available in the market today, all it takes is a click to purchase a product. Not only have customers’ options and convenience risen, but their purchasing power has also increased as a result of multiple financing options that allow them to opt for an affordable payment plan, rather than paying the entire price of the item upfront.And it’s not just retail that has a plethora of financing choices.Today, you can get almost anything on credit, or finance, be it your own house, car, healthcare plans smartphones, appliances, or even a holiday.
Therefore, we ask a pertinent question, can you shop around for a solar system without digging any hole in your pockets?
The answer is YES!
The solar landscape in India has now started evolving with many new opportunities and innovative financing models. These instruments are often tailored to the specific needs of customers.
Today, irrespective of the scale of your project — a standalone bungalow, apartment, commercial complex, or manufacturing unit — you can benefit and become completely self-sufficient with solar power with easy and hassle-free financing Schemes for both Residential Customers as well as SMEs.
Here we navigate through two popular financial choices available so you can make the right choice for your solar shopping.
EASY FINANCING SOLUTION FOR BUSINESS OWNERS
While solar is quite cost-effective in the long run, its price still remains one of the biggest hurdles for consumers who are thinking of going solar. There are two models that bring this relatively higher investment amount down to a smaller number.
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- OPEX/PPA/BOOT/Lease model
- Rooftop on EMI
Keep reading to fully understand each of these models in detail and how each one works.
1. OPEX/PPA/BOOT/LEASE MODEL or Zero Investment Solar power Plant
In India, the Solar PPA, Solar Lease, and Solar BOOT models (all of which signify the same thing) are more common.This modelis now competitive for commercial and industrial customers across much of India. This particular model, which provides customers solar at rates cheaper than grid electricity at no upfront cost, has taken hold among most owners of industrial establishments, educational institutions, commercial buildings, hospitals, health care business, food processing industry, dairy, or any other energy-intensive industry like plastics, pharmaceuticals, textiles, steel, etc.
Solar OPEX, Solar PPA, Solar BOOT – all three terms refer to a similararrangement of purchasing solar power under a long-term agreement from a recognized solar company in India. To understand this model in greater detail, read on.
- The customers’ rooftop is utilized for a fixed-term period.
- Power is supplied to the consumer under a long-term agreement between the two parties for sale and purchase of power.This agreement is known as Power Purchase Agreement (PPA).
- The energy consumer is required to pay a pre-agreed tariff for the actual number of energy units supplied/ consumed.
- The consumer enjoys cheap, infinite, constant & independent power during the PPA (power purchase agreement) tenure.
- All risk of non-performance of the project is to be borne by the solar power company, which is also the owner of the solar project.
Benefits of this model:
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- This model offers the consumer an opportunity to acquire the required infrastructure needed to upgrade to solar, without the high capital expense and risk associated with the technology and performance.
- It also lowers consumer risk as the plant is owned and maintained by a third-party energy company.
- The consumer only pays as per actual generation and consumption and also avails benefits of around 30-40% on their electricity bills.
2. ROOFTOP ON EMI
Anotherfinancing model that is emerging as a game-changer in the solar rooftop segment is the equated monthly installments or EMIfinancial facility for rooftop solar power plants.Under this arrangement, the Rooftop Owner/ Consumer pays an upfront cost of 30% of the capital required for the commissioning of the project. He thereafter convertshis solar plant purchase to equal monthly installments (EMIs) spanning over a few years. Customers will have to submit the standard KYC documents of the applicants among other financial documents. There are no hidden fees or collateral required with the EMI financing.
Benefits:
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- This model offers the consumer an opportunity to make a small down payment and pay the remainder in convenient EMIs which will be spread over a period of several months.
- This arrangement has little to no impact on the planned expenses for the consumer’s family.
- The consumer saves huge amounts in electricity bills.
- The consumer enjoys the benefits of the solar plant for more than 25 years.
IN A NUTSHELL
This chart provides a quick overview of the twopopular financing models available for consumers.
Now that you have better clarity on what each financing model has to offer, what might be the total cost, and how much initial investment will be required of you, you can start your solar journey better prepared.
Still confusedabout the operational risks, technology, or warranty, among other things?
Speak to our project experts for a range of competitive financing options similar to the ones discussed in this article. Simply click here.