CAPEX vs OPEX (RESCO/PPA) for a 500 kW Factory Plant: The Decision Table

CAPEX means you fund and own the 500 kW plant, keep every unit it saves and claim the depreciation. OPEX, through a RESCO or power purchase agreement (PPA), means a developer funds and owns it and you buy its units at an agreed tariff for a fixed term. The panels are the same; who pays, who owns, who carries the risk and who holds the tax benefit differs.

What really differs between the two routes?

The engineering is identical. A 500 kW rooftop plant needs the same roof study, structure, modules, inverters, protection and DISCOM connection whoever pays. What changes is the commercial wrapper, and four questions sit inside it.

Who puts up the capital? Under CAPEX, you do, from cash or a loan. On our published figures a 500 kW plant is about ₹1.30 crore excluding GST (₹26,000 per kW, from the 500 kW cost page), and it generates in the order of 60,000 units a month in the northern belt at our planning figure of 120 units per kW per month. Under OPEX, you put up nothing, and pay per unit.

Who owns it? The owner carries the asset, the depreciation, the insurance and the risk of poor yield. Who maintains it? The owner, again, though a contractor may be hired. Who keeps the saving? Under CAPEX, you keep it all; under a PPA, the developer takes its return inside the tariff, so your saving is the gap between your grid tariff and the PPA tariff.

A fifth route sits between the two. Bank-financed ownership is still CAPEX, with a loan and a contribution from you; the solar finance page sets out how that works. Whether a RESCO or PPA offer exists for your site is not something an article can answer: it depends on the site, the state regulation and the developer, so treat any RESCO quotation as a quotation to be tested, not as a default.

The decision table

How does accelerated depreciation change the CAPEX case?

The Income Tax Department's depreciation table lists solar energy devices at 40 percent on the written-down-value method. That is the rate of depreciation, not the size of the saving. The cash benefit in year one is about 40 percent times your tax rate, applied to the depreciable cost, so the benefit is a share of project cost. For a ₹1.30 crore plant, year-one depreciation at 40 percent is ₹52 lakh before any part-year rule; what that is worth to you depends on your tax rate and on whether you have enough profit to use it. A loss-making unit gains little from it.

Two cautions. First, the Income-tax Act, 2025 replaced the 1961 Act from April 2026; the rates carry over, but section numbers and any conditions need confirming against the current provision. Most commentaries mention a part-year rule that halves the first-year allowance for assets used for fewer than 180 days, so the commissioning date matters. Your chartered accountant should confirm both. Second, GST on renewable energy devices, including solar power generators, was reduced from 12 percent to 5 percent from 22 September 2025, following the GST Council's 56th meeting. How an EPC contract splits goods and services for GST depends on the invoice, so have it reviewed before you compare an EPC price with a PPA tariff.

Our CAPEX vs OPEX calculator compares the two routes on lifetime rupees with the same energy, term and end boundary for both, and it deliberately leaves out tax and GST, so layer your adviser's view on top.

What should you read in a PPA before signing?

The tariff is the headline and not the contract. Most of the risk sits in clauses that are easy to skim.

• Escalator. A tariff that rises every year can overtake the grid tariff late in the term.
• Take-or-pay and deemed energy. What do you pay when your load is low, the factory shuts or the grid fails?
• Term and exit. The buy-out formula, the earliest exercise date and the price at the end. If the contract is silent, removal or renewal are the options.
• Roof tenure and structure. Who pays if the roof needs repair or you want to re-roof or sell the building?
• Change in law and tariff. What happens if a regulator changes charges such as banking, wheeling or net-metering rules?
• Performance data. Do you get read-only access to the inverter data, so you can check the units you are billed for?
• Security. Deposits, guarantees, step-in rights and lender consents.

Our guide to solar EPC vs PPA and the ten-year comparison go through these in more detail. The Punjab regulation recognises both a consumer-owned plant and a RESCO contract, and keeps the RESCO's payment agreement between it and the consumer; other states differ, so read your own regulator's text.

When does each route tend to win at 500 kW?

These are tendencies, not rules, and the calculator is the test.

CAPEX tends to win where the factory has capital or can borrow, pays a high grid tariff on daytime load, can use the depreciation, plans to own the building for the plant's life and wants the full saving. It also gives control over the O&M contractor and the data.

OPEX tends to win where capital is better spent on core production, the tax position cannot use depreciation, the roof tenure is long but the balance sheet is constrained, or management prefers a vendor to carry yield risk. Weigh that against a smaller saving and a long commitment.

At 500 kW one design point can swing either answer: net metering. The central rules put the net-metering limit at 500 kW, and state regulations also tie the plant to the sanctioned load, so a plant of this size needs a sanctioned load of at least 500 kW to net-meter in full, and the transformer must have headroom. A smaller sanction caps the plant under either route, and the same cap affects the PPA developer's offer.

How Secured Engineers helps

Secured Engineers designs and builds the plant in-house as an EPC contractor, and files the DISCOM net-metering application, the electrical inspector filing and related approvals in-house. Solar can sit under one contract with the factory's electrical, fire and HVAC work. We work from offices in Noida (Delhi NCR) and Ludhiana, across 535+ projects in 18+ states, with 89.77% repeat clients. We supply the EPC for plants you own; where a financed or RESCO route is available for your site is a question we answer after we have seen the site, the sanctioned load and the state rule.

Send us your last twelve electricity bills and the sanctioned load, and we will give you the CAPEX case on your numbers, ready to compare with any PPA offer you hold. Read the solar finance page first if you want the options on one screen, then message us on WhatsApp, call +91 70099 85817, or ask for a free proposal.