The short answer: buy the plant if you have spare capital, an in-house team to look after it and a clear use for any tax benefits. Choose a solar PPA if you would rather keep your capital for your core business and simply pay less for power from the first unit.
Two models, in plain words
Buying solar (CAPEX). CAPEX means capital expenditure: you pay for the plant upfront, you own it, and you look after it. Your saving is the power it produces, after you recover what you spent.
Solar PPA (OPEX). A PPA is a Power Purchase Agreement. OPEX means operating expenditure: you pay a running cost, not a capital cost. A developer such as OORZI designs, funds, builds, owns and runs the plant on your site. You pay only for the units it produces, at a tariff below your grid rate, for a fixed term. This is also called the RESCO model (Renewable Energy Service Company).
Side by side
| Buying (CAPEX) | Solar PPA (OPEX) | |
|---|---|---|
| Upfront investment | Full cost of the plant | None |
| Who owns the plant | You | The developer, for the contract term |
| What you pay | The plant, then upkeep | Only the units you use, below grid tariff |
| Operation and maintenance | Your responsibility | Included, for the full term |
| Performance risk | Yours | The developer's: no power, no bill |
| Saving starts | After payback | From the first unit |
When buying makes sense
- You have capital that is not needed for growth.
- You have, or will hire, people to run and maintain the plant.
- Your finance team can use the tax benefits of owning the asset. Check this with your chartered accountant.
When a solar PPA makes sense
- You would rather spend capital on your own business than on a power plant.
- You want savings from day one, not after a payback period.
- You do not want to manage vendors, breakdowns and cleaning schedules.
- You are an institution, a campus or a public body without a capital budget for solar.
What it looks like in practice
Our signed sites show what a PPA can do. At NCAER in New Delhi, rooftop solar and a Solar Gazebo deliver power 41% below the grid tariff for 15 years. At PDEU in Gandhinagar, Solar Trees and rooftop solar keep the campus power cost 34% below grid for 25 years. Neither customer invested a rupee in the plant.
A middle path: the lease
If you prefer a fixed monthly cost instead of a per-unit tariff, a solar lease works too. You still invest nothing upfront and maintenance stays with us. Compare PPA and lease.
Three questions to decide
- Is capital your constraint? If yes, choose a PPA or lease.
- Who will run the plant for 25 years? If nobody, choose a PPA.
- Do you want savings now or after payback? If now, choose a PPA.
Not sure yet? Try our savings calculator for a quick estimate.
Questions people ask
Is a solar PPA cheaper than grid power?
Yes. Under a solar PPA you pay an agreed tariff that is set below your current grid tariff, so you save on every unit the plant produces.
Who owns the solar plant under a PPA?
The developer owns, operates and maintains the plant for the contract term. What happens at the end of the term, such as extension or transfer, is set out in the contract at the start.
What is the difference between CAPEX and OPEX solar?
CAPEX solar means you buy and own the plant. OPEX solar means a developer owns it and you pay only for the power, as with a PPA or a lease.
How long is a solar PPA?
Typically 15 to 25 years, depending on the site and the agreement.
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