Choosing the right financing model for solar installations at factories, warehouses, and industrial facilities isn’t just about upfront cost. It’s about ownership, risk, cash flow, and long-term reliability.
This guide explains CAPEX and OPEX models, compares them side by side, outlines their advantages and disadvantages, and provides a practical framework to decide which approach fits your business goals.
CAPEX Solar Model (Capital Expenditure)
You purchase and own the solar system outright. The initial investment covers equipment, installation, and commissioning. You can recover costs through depreciation, tax incentives, and long-term energy savings. Ownership typically means you’re responsible for maintenance after warranties expire. Basically, the consumer bears the required capital expenditure of full investment of the solar installation. With energy savings, consumers can recover this initial investment within 3-5 years.
Advantages of CAPEX:
- Ownership and long-term cost predictability if energy prices rise.
- Access to tax incentives, depreciation, and potential resale value.
- Direct control over system design, performance guarantees, and maintenance.
Disadvantages of CAPEX:
- High upfront capital requirement and potential impact on liquidity.
- Responsibility for maintenance, upgrades, and performance risk after warranties.
- Longer decision cycles due to budgeting and approval processes.
OPEX Solar Model (Open Expenditure)
You pay for solar services rather than owning the asset. Common OPEX arrangements include Power Purchase Agreements (PPA) with the solar provider for a fixed tenure (between 15-25 years). During this period, the provider will provide them with energy at a negotiated tariff, which would be cheaper than grid power. Once the PPA expires, the rights of the solar plant get transferred to the consumer at zero cost.
The provider owns and maintains the system, while you pay a predictable rate for the solar energy or a monthly service fee. Basically, shifts the responsibility of the solar plant to a third party and makes up for the drawbacks of CAPEX installation.
A customer who wants to switch to green energy but doesn’t have the capital ready to shift to solar, can ask a Renewable Energy Service Company (RESCO) to set up a solar plant.
Advantages of OPEX
- The consumer only pays for the electricity
- The investment and performance risk is borne by a third-party
- The developer takes care of the Operations and management of the plant.
Disadvantages of OPEX
- The developer avails the tax benefits and rebates
- Longer breakeven period
- The consumer has no control over the electricity tariff.
How to Choose the Right Model?
1. Upfront Investment
Under the CAPEX model, you purchase the solar system by paying the full cost upfront. This means you own the asset and enjoy long-term savings on your electricity bills.
In contrast, the OPEX model requires little or no upfront investment. A third-party developer installs and owns the system, and you simply pay for the energy consumed or a fixed monthly charge.
If you have the capital and want to reduce long-term energy costs, CAPEX makes sense. If you prefer conserving cash and want immediate savings, OPEX is better suited.
2. Risk and Responsibility Appetite
Large solar plants involve performance risks — generation can vary due to factors like panel orientation, shading, weather, and equipment quality. They also need regular cleaning and maintenance to perform efficiently.
If you are ready to handle these responsibilities, the CAPEX model is ideal as you’ll have complete control.
If you prefer a hassle-free experience where the developer manages performance and maintenance, go for the OPEX model.
3. Ownership and Tax Benefits
Owning a solar system provides long-term benefits. Businesses opting for the CAPEX model can claim up to 40% accelerated depreciation on their solar investment, reducing their taxable income significantly.
Under the OPEX model, the ownership and associated tax benefits lie with the service provider, not you.
4. Long-Term Savings
With CAPEX, your initial investment is higher, but the electricity cost becomes almost negligible after the payback period (typically 3–5 years). You save more in the long run.
With OPEX, your energy cost remains predictable and low initially, but you’ll continue paying over the years, which may lead to higher total expenditure in the long term.
5. Maintenance and Monitoring
CAPEX: You handle all maintenance, cleaning, and servicing — either through in-house staff or by hiring a third-party vendor.
OPEX: The developer takes care of maintenance, performance monitoring, and repairs, ensuring consistent output.
About Weneera Solar
Weneera Solar is a dedicated solar energy brand established under the legal entity Weneera Consultancy OPC Pvt. Ltd is one of the leading solar companies in India with over 7 years of experience in the industry, 150+ solar installations across Maharashtra, Goa and Gujurat. We are proud to be recognized as a CII-Certified Large Capacity Rooftop Solar Vendor by CII-Godrej GBC and USAID, and maintain ISO 14001:2025 compliance under Solar Power EPC & Engineering Services — affirming our commitment to excellence, environmental responsibility, and industry best practices.
If you are exploring solar solutions, reach out to us at 022-35133386 / 87 to discuss your options.