Three Business Models We Offer

The current solar rooftop landscape features a range of innovative investment options. There are various business models under which the solar projects can be developed for commercial purpose. The following are the three business models that we offer to help you start your solar journey.

1. Current CAPEX model- capital expenditures are provided by consumer
2. OPEX/LEASE model-capital expenditures are covered by third party.
3. Deferred Payment Agreement model-capital expenditures are covered by developer and customer pays in form of EMI

Let’s elaborate on what each of these models entail and find out which is the ideal fit for your budget and unique energy needs.

1. Capex Model (Capital Expenditure Model)

Currently, this is the most common and popular model for rooftop solar installations in India. The capital expenditure (Capex) modelis a self-funding model in which the consumer purchases the rooftop solar systemby making 100% of the payment upfront. As the owner of the solar system, he is responsible for all upfront capital costs associated with establishing a rooftop solar system. These costs include expenses used to set up, maintain, and operate the project. They also include the price of the equipment, labour, upgrades, and other materials.

Consumers who want to go the CAPEX route can contact manufacturers or installers to get a rooftop solar system.

Around 90% of all rooftop solar installed capacity in India falls under this category.

Highlights Of This Model:

1. This model has the benefit of being simple and straightforward.
2. It allows customers to have complete control over the product. They are in charge of the technology employed and, more significantly, the quality of the components used in their projects.
3. Any residual power or excess generation can be injected back into the grid.
4. This model is beneficial to those who are interested inclaiming tax benefits under the depreciation model of an asset and availing GST benefits.
5. It does not take long for consumers to see returns on their capital investments under this model.

The cost recovery period is usually not more than four years.

6. In the CAPEX route, consumers also enjoy a lower Levelized Cost of Energy (LCOE).

2. OPEX/B.O.O.T/LEASE Model (Operational expenditure model)

In this model, the developer owns the solar project. He invests capital in a rooftop solar system and sells power to the consumer at a lower rate than the grid tariff, but at a rate that allows the developer to earn profit. Because the customer pays only for the electricity consumed rather than the system, this type is known as the Renewable Energy Service Company (RESCO) or “third party” model.

The ‘third party’ refers to the company entering the typical contractual relationship between building owner and distribution utility as the third party.Rooftops installed under the OPEX or RESCO models require customers to sign a long-term, legally enforceable contract for the roof on which the solar system is installed. In addition, they must sign a long-term power purchase agreement (PPA) for power delivery.PPAs can last up to 25 years, with the consumer agreeing to pay a pre-determined rate over that time. Any extra electricity that is generated can be fed back into the grid.

Around 10% of all rooftop solar installed capacity in India falls under this category.

Highlights Of This Model:

1. All the capital expenses and technical risksare borne completely by the developer and the consumercan go solar without any large upfront investments.
2. The developer remains the system’s owner for its entire lifetime and provides operation and maintenance services throughout.
3. This model is appropriately suited for consumers who lack the means to operate and maintain projects or who are unwilling to make a long-term capital investment in a technology they do not understand.

3. DPA (Deferred Payment Agreement) Model

A third option is the deferred payment model.This model allows businesses to transition to solar with the option of easy monthly instalments (EMIs). Under the programme, the entirecost of the solar equipment is split in form of EMIs (Equated Monthly Instalments) which is paid by the customer over a period of 5 – 7 years. The customer has to just pay just pay a down payment of 30%. Because the monthly instalments from this model are always less than or equal to the instalments in DPA, the solar system pays for itself.

HighlightsOf This Model:

1. This model makes solar systems affordable for any small, medium, or large business looking to meet their green initiatives.
2. The entire cost of installation is initially borne by the installer.
3. It enables businesses to pay a portion of the cost up front, and the solar system pays for itself over time.