Under CAPEX you buy the solar plant outright and keep every unit it generates for the next twenty-five years. Under OPEX, also called a solar PPA or the RESCO model, a developer funds, owns and maintains the plant on your roof and you buy only the units it produces, at a tariff below your grid rate, with no capital outlay at all.
| Question | CAPEX | OPEX / PPA |
|---|---|---|
| Who pays for the plant | You | The developer |
| Upfront capital required | Full system cost | None |
| Who owns the asset | You, from day one | The developer, for the contract term |
| What you pay | One-time cost, then maintenance | A tariff on each unit generated |
| Accelerated depreciation | Available to you | Sits with the developer |
| Performance risk | Yours | The developer’s |
| Maintenance and cleaning | Yours to arrange | Included in the tariff |
| Typical term | No contract, you own it | Fifteen to twenty-five years |
| When savings begin | After payback, then large | From the first billing cycle |
| Lifetime saving | Highest | Lower, but no capital at risk |
| Best suited to | Long-tenure occupiers with capital to deploy | Sites wanting savings without capex, or on a leased roof |
What is the CAPEX model in solar?
CAPEX means you buy the plant. You pay the system cost once, the asset goes on your books, and from commissioning every unit it generates displaces a unit you would otherwise have bought from the grid. Accelerated depreciation is available against it, and once the system has paid for itself the generation is effectively free for the remainder of its life.
The trade is that the capital is yours and so is the risk. If the plant under-performs, if an inverter fails out of warranty, if nobody cleans the modules for a year, that is your generation lost and your repair bill.
What is the OPEX or PPA model in solar?
Under OPEX the developer finances, builds, insures, owns and maintains the plant on your roof. You sign a power purchase agreement and pay only for the units the plant actually delivers, at an agreed tariff set below your grid rate. There is no capital outlay and the saving starts with the first billing cycle.
Because the developer keeps the asset, the developer also keeps the risk. Generation shortfalls, module cleaning, inverter replacement and warranty claims are all their problem, and their revenue depends on solving them. That alignment is the real argument for OPEX, more than the absence of capex.
Which model saves more money?
CAPEX wins on total lifetime saving, and it is not close. You pay once and then keep everything the plant produces for two decades or more. OPEX gives you a smaller saving, because the tariff has to cover the developer’s capital, risk and margin, but it gives it to you immediately and without putting any of your own money at risk.
So the question is not really which saves more. It is whether the capital is better spent on a solar plant or in your own business. A manufacturer earning a strong return on working capital often finds that OPEX frees money for something that earns more than a solar plant would.
What happens at the end of an OPEX contract?
Contracts differ, and this is the clause to read closely before signing. Most provide for one of three outcomes at the end of the term: the plant transfers to the site owner, the agreement renews at a revised tariff, or the developer removes the plant and restores the roof. Some include a buy-out option that can be exercised earlier.
Ask for the end-of-term position, the buy-out formula and the roof reinstatement obligation to be explicit in the document rather than agreed verbally.
What should you actually ask an OPEX developer?
An OPEX agreement runs for fifteen to twenty-five years, which is longer than many businesses keep a machine, a lease or a lender. That makes the important question not whether a developer can build a plant, but whether they will still be operating one a decade from now, and whether they own assets themselves or only sell them.
Ask how much capacity the developer owns and operates on its own balance sheet, how old the oldest plant is, and who answers the phone when generation drops on a Sunday.
What Greentek owns and operates
Greentek finances, owns and operates more than 14 MW of rooftop solar on customer sites across Andhra Pradesh, Telangana and Tamil Nadu under OPEX agreements. These are not projects sold and handed over; they are assets Greentek carries and is paid on only when they generate.
- Sungwoo Hitech and Sungwoo Stampings, Dharmapuri, Tamil Nadu. Two adjacent rooftop plants of 5.6 MW DC each, 11.2 MW DC and 8 MW AC combined, the largest OPEX asset in the portfolio.
- Kajaria Ceramics, Srikalahasti, Andhra Pradesh. A 3 MW behind-the-meter plant offsetting consumption at the tile facility directly rather than exporting to the grid.
- Chemo India, Hyderabad, Telangana. A 250 kW plant now in its sixth year of operation, the longest-running plant Greentek owns.
Frequently asked questions
Is OPEX solar cheaper than CAPEX?
No. Over the full life of the plant CAPEX costs less, because you are not paying anyone else’s cost of capital, risk or margin. OPEX is cheaper in the sense that it costs nothing today and reduces your electricity bill from the first month. Which one is better depends on what else your capital could be earning.
What is a solar PPA?
A power purchase agreement is the contract behind an OPEX plant. It fixes the tariff you pay per unit generated, the term, the escalation if any, the performance obligations on the developer and what happens at the end. The plant sits on your roof but belongs to the developer for the length of the agreement.
Can I buy the plant later if I start on OPEX?
Often yes, if the agreement provides for it. Many OPEX contracts include a buy-out option exercisable after an initial lock-in, priced on a schedule agreed at signing. If that matters to you, negotiate it into the contract at the start rather than assuming it will be available later.
How long does a solar OPEX contract run?
Typically fifteen to twenty-five years, matched to the useful life of the plant. Shorter terms are possible but push the tariff up, because the developer has fewer years over which to recover the capital.
Does an OPEX plant sit on my balance sheet?
That depends on how the agreement is structured and on how your auditor reads the lease standards. A pure unit-based tariff where the developer retains control of the asset is normally treated as an operating cost, but the assessment is specific to the contract. Put the draft in front of your auditor before assuming the treatment.
What happens if an OPEX plant under-performs?
You pay for units generated, so a plant that produces less earns the developer less. That is the structural protection. A well-drafted agreement goes further and sets a minimum guaranteed generation with compensation if it is missed, so ask whether one is offered and what happens when it is not met.