CAPEX - Capital Expenditure by User

CAPEX is the most common form of solar power plant business model in India. In this model consumer owns and pays for the complete project and generally hire a solar EPC company who provide turnkey installation of entire solar power system.
• Allows residential, industrial and commercial customer to own the system.
• The customer sets up rooftop solar project with the intent to reduce his own power costs.
• The customer bears the entire capital expenditure of the project.
• Customer gets benefit by selling the surplus power generated to the DISCOM (Electrical Distribution Company).
• The gains from tariff savings accrue to the roof and solar power plant owner.
• Commercial & institutional clients can also claim the accelerated depreciation.
• EPC also performs annual operation and maintained (O&M) of plant on mutually agreed cost per annum.
• Customer or user enjoys the commercial benefits of the investments in the Solar Power Plant. 


In a RESCO model an ESCO (Energy Service Company) provides energy to the consumers from renewable energy sources, usually solar photovoltaics, wind power or micro hydro. RESCO or BOOT model is about pay as you consume the electricity.

• Solar Power Plant is owned by the RESCO or ENERCO (Energy Company).
• The customer serviced does not own the Solar Power Plant.
• Customer has to sign a Power purchase Agreement (PPA) with actual investor at mutually agreed tariff and tenure (Approx 15-20 years).
• Customer only pays for electricity consumed on a per unit price for power basis.
• RESCO developer is responsible for its annual operations & maintenance (O&M).
• The RESCO may get the benefited by selling the surplus power generated to the DISCOM.
• Land or space of Solar Installation may be provided by user as free or on lease to RESCO.
• RESCO Company will go for contractual obligations till the period of time before they realize their returns.
• RESCO developer enjoys the commercial benefits of the investments in the Solar Power Plant. 

Option - 1


Option - 2


BOOT (Builfd, Own, Operate And Transfer) 

It is a type of RESCO with below mentioned charecteristics:

• The RESCO constructs, owns, operates and transfers the ownership of the rooftop solar project to the customer (Rooftop Owner) after expiry of contract period or as per agreed terms.
• After the transfer of ownership, the customer is responsible for O&M.
• Customer may choose to retain the services of the original RESCO or he may make his own arrangements for O&M requirements

So we can that, savings & free electricity in CAPEX will always be substantially higher than that of the savings in RESCO. In CAPEX, you start real savings after payback & in RESCO, BOOT and OPEX, you start saving from day one of energizing the plant.  

You should choose to go for CAPEX if:

• You demand the quick payback of 3–5 years & free electricity for 25–30 years after it.
• You want your money to be invested in solar to get better risk adjusted returns over a 25 years of time period than other financial or your core business assets to generate more.
• You want to get indirect benefits like accelerated depreciation, Cheaper Electricity.
• CAPEX with a bank loan can be more preferred over BOOT model. 

You should choose to go for RESCO if:

• You are comfortable with long contract period of 15–20 years.
• You can generate cash regularly over your RESCO contract period.
• You want to still enjoy cheaper electricity compared to DISCOM, without investing money in the project.
• You do not trust any EPC Company for quality product and services for the complete Solar Power Plant, and you feel unsafe about your investment.
• You are ready to bear with the unsatisfactory services or disputes by the RESCO (if any).

Talk to us today about how having the support of Nova Energie behind you can make your project a reality today. Together we can make the difference.