CAPEX or OPEX: which solar model fits your balance sheet
Own the system outright or buy the power per unit? An honest comparison of CAPEX and OPEX/PPA models for Indian commercial and industrial solar.
- CAPEX: you buy and own the system. Every unit it generates is yours, and eligible businesses can claim accelerated depreciation on the asset.
- OPEX / PPA: an investor owns the system on your roof and you buy the power at a contracted rate per unit, with no capital outlay.
- CAPEX generally gives the highest long-term value; OPEX gives simplicity and keeps capital free.
- Three questions usually decide it: do you own the building, can your tax position use the depreciation, and what else would that capital do?
- Neither model is universally better — it depends on your balance sheet, not on the solar.
There are two common ways to put solar on a commercial roof in India: buy the system, or buy the power. The right answer has less to do with solar than with your balance sheet, your tax position and your appetite for owning assets.
CAPEX — you buy it, you own it
You fund the system (from cash or through financing), and it becomes your asset. Every unit it generates is yours; there's no per-unit payment to anyone. Eligible businesses can claim accelerated depreciation on the asset, which materially changes the first-year arithmetic.
Suits: businesses with available capital or good credit, a stable long-term occupancy of the building, and a tax position that can actually use the depreciation benefit.
OPEX / PPA — someone else owns it, you buy the power
An investor funds, owns and maintains the system on your roof. You sign a power purchase agreement and pay a contracted rate for each unit you consume from it. No capital outlay, and performance risk sits with the owner.
Suits: businesses that would rather not deploy capital into a non-core asset, or that want the operating simplicity of paying only for what they use.
The comparison
| CAPEX | OPEX / PPA | |
|---|---|---|
| Upfront cost | You invest | None |
| Who owns the asset | You | The investor |
| What you pay ongoing | O&M only | Contracted rate per unit |
| Tax treatment | Depreciation on the asset (subject to eligibility) | Operating expense |
| Performance risk | Yours, managed under O&M | The owner's |
| Long-term value | Highest — you keep everything the asset makes | Lower, in exchange for zero capital |
Three questions that usually decide it
- Do you own the building, and for how long? A 25-year asset on a roof you may leave in four years is a different conversation.
- Can your tax position actually use the depreciation? If not, a large part of the CAPEX advantage doesn't land.
- What else would that capital do? If deploying it in your core business returns more than the solar asset, OPEX may be the rational choice even if CAPEX looks better on paper.
We won't tell you one model is universally better. We'll model both against your site's actual numbers and show the working — including the assumptions we had to make and how sensitive the result is to each one.
Tax benefits, including accelerated depreciation under Section 32 of the Income Tax Act, 1961, are subject to eligibility — consult your tax advisor. Financing and OPEX structures depend on credit assessment by the relevant partner.
Bring your own numbers.
We'll read your bills and tell you what we see — including if the answer is 'not yet'.