Solar EPC vs PPA for a Factory: Ownership, Tariff and Who Carries the Risk

With solar EPC you pay a contractor to build the plant and you own it, so you carry the capital cost and the performance risk and keep the savings. With a PPA a developer owns the plant on your roof and sells you power at an agreed tariff, so you pay no capital cost but accept a long contract. Neither is better for every factory.

The comparison

Read this as a map, not a recommendation. Your tariff, tax position, roof condition and plans for the building decide the answer.

Cost and tariff: what to compare

For EPC, use the plant cost, annual savings and a maintenance allowance. The published Secured Engineers C&I band is ₹24,000–32,000 per kW excluding GST (see the solar EPC page), so a 500 kW plant is roughly ₹1.2–1.6 crore, indicative. The CAPEX vs OPEX calculator compares the models over the same period.

For a PPA, ask for the tariff, the escalation clause, the term, the minimum offtake and the exit price. Compare the tariff with your grid tariff over the same years. A tariff that is lower today but escalates every year may cross your grid tariff later. A flat tariff for the whole term is simpler.

Who carries which risk

• Performance risk: under EPC, the contractor warrants equipment and workmanship but you carry generation risk after handover. Under a PPA, the developer is paid for what the plant produces, so it has an incentive to keep it running.
• Credit and counterparty risk: under a PPA you depend on the developer's survival for the whole contract term. Ask about its financial strength and what happens if it exits.
• Regulatory risk: rules on net metering, banking and open access change. Check which party bears the risk of a change in law.
• Roof and building risk: a roof repair, building sale or lease expiry can disrupt a PPA. Read the access and relocation clauses.
• Financial risk: under EPC, you carry the capital. Under a PPA you carry the tariff obligation, whatever your production.

Decision rules

These are rules of thumb, not advice.

• If you own the building, can spend capital and want the lowest long-run energy cost, EPC usually fits.
• If capital is better used in production and the roof is secure for the whole term, a PPA may fit.
• If you may sell or move within a few years, check the PPA's transfer clause, or choose EPC and sell the building with the plant.
• If you are unsure of your daytime load, size conservatively under either model.
• If you want depreciation benefits, confirm with your tax adviser and the current rules on the Income Tax Department site.
• If both look close, compare the total cost over the same period using a calculator, then ask both parties for the worst case.

See our PPA glossary entry and CAPEX versus OPEX entry.

Questions to ask before you choose

For an EPC: what is the module and inverter warranty, who maintains the plant, and what is the performance commitment? For a PPA: what is the tariff and escalation, what is the term, what is the buy-out price, who owns the environmental attributes, and what happens at the end of the term? Ask for a draft contract and have your counsel read it. Also ask whether a financed purchase gives you the benefits of ownership with a payment schedule closer to a PPA; see our solar finance page.

A worked comparison, in outline

Take a 500 kW plant. Under EPC, the indicative outlay is ₹1.2–1.6 crore ex-GST from the published band, and annual savings are the units generated multiplied by your grid energy rate, less maintenance. Under a PPA, there is no outlay and the annual cost is the units generated multiplied by the PPA tariff. The difference between your grid rate and the PPA tariff is the PPA saving per unit; the difference between your grid rate and zero, after payback, is the EPC saving per unit. Plot both over ten and twenty years, include a realistic maintenance cost, an inverter replacement at the right point and the PPA escalation, and see which line is lower in the years you care about.

That is also where financing fits. If you buy with a loan, the EPC model gives you ownership with a payment schedule, and the calculator on our solar EMI page shows monthly payments. The comparison is then between a loan instalment and a PPA bill, with ownership in one case and none in the other.

How Secured Engineers helps

We build solar plants on an EPC basis, meaning you own the plant, and we handle the design and approvals. We are happy to give you the EPC numbers for your site so you can compare them with any PPA offer in front of you. Design is done in-house, and approvals (Fire NOC, CEIG, DISCOM net-metering) are filed in-house. Mechanical, electrical, plumbing, fire and solar work can sit under one contract. We work from offices in Noida and Ludhiana, with 535+ projects across 18+ states and 89.77% repeat clients.

If you have a bill, a drawing or quotations in hand, send them and we will tell you what is missing. See solar finance, message us on WhatsApp, call +91 70099 85817, or ask for a free quote.