CAPEX vs OPEX Solar for Factories — the 10-Year Total Cost Compared

Every factory solar conversation reaches the same fork within ten minutes: buy the plant, or buy the power? The CAPEX model spends your capital and hands you an asset. The OPEX model — RESCO, PPA, "zero-investment solar" in the brochures — spends a developer's capital and hands you a long contract. Both are legitimate. But they are not the same product wearing two price tags, and the honest comparison runs over ten years, not over the first invoice.

We execute CAPEX projects and have audited enough OPEX contracts to know where the bodies are buried in each. Here is the comparison we give boards.

The two models, plainly

CAPEX: you pay the turnkey price — the C&I rooftop benchmark runs ₹40,000–50,000 per kW — and own everything: the generation, the depreciation benefit, the O&M responsibility, the asset on your balance sheet.

OPEX / RESCO: a developer finances, builds and owns the plant on your roof. You sign a power-purchase agreement — commonly 10 to 25 years — buying its generation at a contracted tariff set below your grid rate, usually with an annual escalation, a lock-in, and a year-wise buyout schedule if you exit early.

Side by side

Factor	CAPEX (you own)	OPEX / RESCO (developer owns)
Upfront cash	Full turnkey cost (or your own debt)	Nil to nominal
Per-unit economics	Generation is yours; cost ≈ O&M spread over units after payback	PPA tariff + escalation, every unit, all tenure
Tax treatment	Accelerated depreciation (currently 40% WDV, conditions apply) for eligible assessees	PPA payments are opex — simple, but the depreciation stays with the developer
O&M & performance risk	Yours — contract it with generation commitments and real verification	Developer's — but verify the PPA actually penalises underperformance
Balance sheet	Asset + any debt on your books	Typically off balance sheet (accounting treatment depends on the contract — verify)
Flexibility	Modify, expand, add storage at will	Every change negotiated with the owner of your roof's plant
Exit	None needed — it's yours	Lock-ins, buyout schedule, termination compensation
End of term	Plant still generating (25-year module warranties are standard)	Transfer at contract terms — condition depends on how it was maintained

The 10-year total cost, structurally

Strip the brochures and the arithmetic has three phases:

• Years 0–1: OPEX wins on cash flow by definition — you spent nothing. CAPEX absorbs the turnkey cost, softened by depreciation for profitable owners.
• Years 1 to payback (~3.5–4.5 for typical C&I rooftops): CAPEX savings are grid tariff minus O&M per unit; OPEX savings are grid tariff minus PPA tariff. Both save money; CAPEX saves more per unit but is still recovering its capital.
• Payback to year 10 and beyond: the CAPEX plant now generates at O&M cost — a small fraction of any tariff — while the OPEX consumer keeps paying the PPA rate, which has been escalating annually. This back half is where CAPEX runs away with the total.

The crossover logic is robust to reasonable assumptions; what moves it is your cost of capital, your tax position, and the PPA's escalation clause. Model your own case in the CAPEX vs OPEX calculator — it runs both structures on your bill and tariff — and pressure-test the ownership case with the payback calculator.

Where OPEX honestly wins

An honest comparison names the cases for the other side, and they are real:

• Capital genuinely constrained or better deployed in the business — if your working capital earns more than the solar spread, buying power is rational.
• Balance-sheet or covenant constraints — where debt headroom is contractually precious, off-book power has a price worth paying.
• No appetite for asset ownership — a well-drafted PPA with real performance commitments outsources the plant's whole life.
• Weak tax absorption — loss-making or exempt entities can't monetise depreciation, which removes a large CAPEX advantage.

The clauses that decide the OPEX outcome

Two PPAs with identical headline tariffs can differ by crores over tenure. Before signing, read for: the escalation rate (compounding annually across 15–25 years), minimum offtake / deemed generation (you may owe for units you couldn't consume in a shutdown year), the buyout schedule (year-wise, and often not generous mid-term), roof-lease and access terms, what happens on sale or lease of the premises, and who files and owns the regulatory position — net metering, banking, and any change-in-law risk. Read the draft agreement against this list before the roof survey, not after the signature.

The paths between the two — hybrids and exits

The models are less binary than the brochures suggest, and the in-between paths are worth knowing before you sign either way:

• The mid-term buyout. Most PPAs carry a year-wise buyout schedule. A factory that starts OPEX for cash-flow reasons can acquire the plant later — but the schedule is written by the developer's financiers, so the crossover year where buying out beats continuing is worth computing on day one, not in year six.
• Debt-funded CAPEX. Ownership doesn't require cash. A term loan against the plant keeps the depreciation and the post-payback economics with you while spreading the outflow — for a bankable factory this often dominates both pure models, which is exactly why OPEX marketing rarely mentions it.
• Phased ownership. Own the tranche your daytime base load absorbs today; expand as load grows. A roof is not a one-shot decision unless a 25-year PPA makes it one.
• The roof is the asset you're really committing. Under OPEX, your roof carries someone else's plant for decades — every re-roofing, expansion or sale of the premises now has a third party at the table. Price that in, whatever the tariff says.

Whichever bidder is across the table, make them answer the same sheet: tariff and escalation, tenure, minimum offtake, buyout by year, O&M commitments with penalties, insurance, and who owns the net-metering file. Symmetric questions expose asymmetric contracts quickly.

What we do differently

We are a C&I solar EPC, so we earn on engineering either way: building your CAPEX plant, or engineering and auditing the plant a developer puts on your roof. That is exactly why our advice runs on arithmetic — the calculator's output, your tariff, your tax position — and we will tell you in writing when OPEX is your better answer. The approvals — CEIG, DISCOM net metering — ride in-house in both models.

The three takeaways

• CAPEX usually wins the 10-year total for capital-capable, tax-paying factories — the post-payback years of near-free generation are the whole argument.
• OPEX buys speed and preserves capital — a rational choice when cash, covenants or tax position argue for it, priced by the PPA's fine print.
• The decision is a model, not a preference — run both structures on your own bill before any vendor's spreadsheet does it for you.

Weighing solar for your factory this year? Book a Free Project Blueprint & Statutory Approvals Roadmap or call +91 70099 87817.