CAPEX vs RESCO (OPEX) Solar Model
Verdict
Verdict: CAPEX delivers substantially higher lifetime savings — you own the asset and keep every unit after a 3–5 year payback — and is the right answer whenever capital is available, especially for tax-paying businesses that can claim accelerated depreciation. RESCO wins when capital is unavailable or the organisation genuinely cannot own and maintain an asset, trading roughly 40–60% of lifetime savings for zero investment and zero responsibility.
Side-by-Side Comparison
| Criterion | CAPEX (Own It) | RESCO / OPEX (PPA) |
|---|---|---|
| Upfront investment | Full system cost | Zero |
| Asset ownership | You own it | Developer owns it |
| Lifetime savings (25 yr) | Highest | Roughly 40–60% of CAPEX |
| Typical payback | 3–5 years | Not applicable (no outlay) |
| Accelerated depreciation | Available to businesses (40% WDV) | Claimed by the developer |
| O&M responsibility | Yours (or an AMC) | Developer’s |
| Performance risk | Yours | Developer’s |
| Contract lock-in | None | PPA of 10–25 years |
| Balance-sheet treatment | Capital asset | Operating expense |
Bold green marks the stronger option on that criterion. Figures are typical Indian market values as of 2026 and vary by brand, site, and supplier.
Choose CAPEX (Own It) If…
- You have (or can raise) the capital — solar loans at 7–10% still beat the savings curve
- You are a profit-making business able to use 40% accelerated depreciation
- Your society has healthy reserves and wants the asset on its own books
- You want freedom from a 15–25 year contract with a third party on your roof
Choose RESCO / OPEX (PPA) If…
- Capital is genuinely unavailable and borrowing is not an option
- The organisation cannot take on O&M or performance responsibility
- You want a guaranteed tariff below grid rates with no operational involvement
- Tenancy or ownership uncertainty makes a 25-year owned asset impractical
Read the PPA Before the Price
In a RESCO deal, the tariff headline matters less than the contract. Scrutinise: annual tariff escalation (2–3% is common; 5% compounds painfully over 25 years), minimum offtake or deemed-generation clauses that bill you for power you did not use, buyout schedule and price if you want to purchase the plant later, roof licence terms, and what happens if the developer is acquired or fails.
Societies should have the PPA legally vetted before the general body votes. The document, not the presentation, is what you are approving.
The Middle Path Most Miss
Many societies default to RESCO because "there is no money" without testing a solar loan. Because rooftop solar pays back in 3–5 years while loans run 5–7 years at 7–10%, a financed CAPEX project is frequently cash-flow positive from year one — the savings exceed the EMI — and the society still owns the asset outright afterwards.
Run all three scenarios — cash CAPEX, financed CAPEX, and RESCO — before deciding. The calculator below models the first and third; add your EMI to compare the second.
Frequently Asked Questions
- Which is better for a housing society, CAPEX or RESCO?
- CAPEX gives higher lifetime savings and asset ownership; RESCO gives zero investment and zero responsibility. Societies with reserves — or access to a solar loan — usually do better with CAPEX.
- What is a typical RESCO tariff in India?
- Commonly ₹4.5–6.5 per unit depending on project size, location, and offtaker credit, set below the prevailing commercial grid tariff. Always check the escalation clause alongside the headline rate.
- Can I buy out a RESCO plant later?
- Only if the PPA includes a buyout schedule with defined pricing. Negotiate this clause before signing — retrofitting it later gives you no leverage.