CAPEX vs OPEX Solar Comparison Calculator — Ownership vs PPA
Owning the plant or buying its output under a power purchase agreement: compare what each costs you, in today's money, for the same kWh over the same term — with the end of the contract treated the same way on both sides.
- Expansion
- Operating cost
What this tool estimates
The present cost of owning a rooftop plant (EPC, O&M and replacement, less what it is worth to you at the end) against the present cost of PPA payments for the same delivered kWh over the same term, the difference, the cost per kWh of each, and the year owning overtakes the PPA.
What it cannot decide
- Whether the developer's generation estimate is right — both routes are priced on the kWh you enter.
- The legal and commercial terms of the PPA — take-or-pay, early exit, roof tenure and performance are listed below to check, not priced.
- Any tax, depreciation, GST or financing effect — none is assumed; a tax case needs verified figures from your adviser.
- Whether the roof can carry the plant, or how much of the energy your site can use — the yield study, interval data and a structural engineer decide those.
Result
The plant transfers to you at the end, so its value after the term appears under both routes and cancels: only the transfer price separates them at the end.
| Item | Owning, PV | PPA, PV | Owning, ₹ total | PPA, ₹ total |
|---|
| Route | Route, PV | Shared grid, PV | Total, PV |
|---|
Year by year
| Year | kWh | PPA tariff | PPA payment | Owning: EPC, O&M, replacement | Running advantage of owning, PV |
|---|
| Scenario | PPA PV − owning PV |
|---|
Method version 6 October 2026. A screening estimate, not a design: see the limits below.
PPA obligations to check before you compare
The comparison above prices the kWh. These clauses decide what the kWh really cost you — and most of them never appear in a tariff. Read each one in the draft agreement.
| Obligation | What to look for | How it shows up here |
|---|---|---|
| Take-or-pay or deemed generation | Whether you pay for energy the plant could have produced when you could not take it — shutdowns, grid outages, roof works. | Enter the kWh you will be billed for, not just the kWh you expect to use. |
| Tariff and escalation | The year-one tariff, the escalation rule (fixed or indexed) and any reset or change-in-law clause. | The PPA tariff and escalation inputs; the sensitivity rows show what one point is worth. |
| Term and early exit | The lock-in, the termination-payment schedule, and what happens if you sell, relocate or close the site. | Not priced. An exit payment can outweigh years of difference — get the schedule. |
| Roof tenure and access | The roof lease or licence for the term, access for O&M, who pays to remove and refit the plant for roof repairs, consents for a sale or a lender. | Not priced. Ask for the removal-and-refit cost and who carries it. |
| Performance | Any minimum-generation guarantee, how a shortfall is measured and compensated, and your access to monitoring data. | Under ownership you carry this risk through your O&M contract and warranties; under a PPA it is only as good as the clause. |
| End of term | Transfer to you (and at what price), removal, or renewal at a new tariff. | The end-of-term choice and transfer price. |
| Billing and payment security | Who reads the generation meter, how disputes are settled, and any deposit or letter of credit. | Not priced. A deposit is capital the PPA route also ties up. |
How the parties sit with your DISCOM is set by your state's rooftop regulation. In Punjab, for example, the RESCO contracts directly with the consumer for payment, the metering agreement stays between the DISCOM and the consumer, and the DISCOM is not a party to disputes between consumer and RESCO; safe operation and maintenance up to the metering point rests with the consumer or the RESCO that installs the plant (reg 3.1 provisos and reg 6.5 of the PSERC Grid Interactive Rooftop Solar Photo Voltaic Systems Regulations, 2021, consolidated up to the 3rd Amendment, 2026). Confirm the current regulation for your state. For how solar finance options compare, see solar finance.
How this calculator works — and where it stops
What it calculates
What owning a rooftop solar plant costs you against buying the same kWh under a power purchase agreement (PPA), over the same term and with the same end-of-term boundary, in present-value rupees: ownership (EPC cost, O&M and replacement, less what the plant is worth to you at the end) against PPA payments (plus any transfer price), the difference, the cost per delivered kWh of each, the year owning overtakes the PPA, and the return on owning instead (IRR, only when it is unique).
Inputs
- Delivered solar energy in year one, kWh — one figure for both routes, including any deemed or take-or-pay energy the PPA bills — and its annual decline.
- Comparison period (the PPA term, whole years) and your discount rate.
- Owning: the EPC cost; O&M in year one and its escalation; a replacement cost (0 if none) and its year; what the plant is worth to you at the end of the term (0 for nothing).
- PPA: the year-one tariff in ₹/kWh and its escalation; what happens to the plant at the end of the term — it transfers to you (with its price) or is removed or re-contracted.
- Optional: grid costs that remain under both routes and their annual change — shown beside the totals, never in the difference.
Method
- For each year 1 to T: kWh = year-one kWh × (1 − decline)^(year − 1); PPA payment = tariff × (1 + escalation)^(year − 1) × kWh; O&M = year-one O&M × (1 + escalation)^(year − 1); the replacement cost in its year.
- Present values at your discount rate, end-of-year; the EPC cost is paid today.
- Ownership PV = EPC cost + PV(O&M) + PV(replacement) − PV(end value).
- PPA PV = PV(PPA payments). When the plant transfers to you, add PV(transfer price) and subtract the same PV(end value) — the end value then cancels between the routes.
- Difference = PPA PV − ownership PV: positive means owning costs less; negative means the PPA does.
- Cost per delivered kWh = each route's PV ÷ the discounted kWh (a levelised cost).
- Owning instead of contracting, as cash flows: minus the EPC cost today, then each year's PPA payment avoided less O&M and replacement, with the end adjustment in the last year (the end value, or the transfer price when the plant transfers). Their NPV is the difference; their discounted payback is the year owning overtakes the PPA; their IRR is reported only when unique.
- Shared grid costs, if entered, are discounted the same way and added to both totals.
- Sensitivity: PPA tariff 10% lower, PPA escalation 1 point lower, EPC cost 10% higher, delivered energy 10% lower, discount rate 2 points higher — one at a time.
Assumptions
- Both routes deliver the same kWh and the site uses them the same way, so the value of the energy, any net-metering credit and the remaining grid bill are identical and cancel.
- Amounts are nominal rupees of their year; the replacement cost, end value and transfer price are entered as they would be in their year.
- No tax, accelerated depreciation, GST or financing effect is assumed for either route; a tax case needs verified figures from your own adviser.
- The discount rate is yours; the tool recommends none. At 0% the comparison is plain rupee totals.
Limitations
- Take-or-pay, early-exit payments, roof tenure and performance guarantees are listed for checking, not priced — each can change the answer.
- No security deposit, letter of credit or other capital the PPA may require.
- Does not test the developer's generation estimate: both routes rely on the kWh you enter.
- Nothing beyond the term except the end value: if you would keep an owned plant longer, that value is the only place it shows.
- Not a legal or tax review of the agreement.
Worked example
Produced by running this calculator with the inputs below.
Inputs
- Delivered energy 1,00,000 kWh a year, no decline, for 2 years
- Discount rate 0% (plain rupee totals)
- Owning: EPC ₹4,00,000; O&M ₹20,000 a year, no escalation; no replacement; end value 0
- PPA: ₹3/kWh, no escalation; the plant is removed at the end
Working
- Ownership = ₹4,00,000 + 2 × ₹20,000 = ₹4,40,000.
- PPA = 2 × 1,00,000 kWh × ₹3 = ₹6,00,000.
- Difference = ₹6,00,000 − ₹4,40,000 = ₹1,60,000 in favour of owning.
- Cost per delivered kWh: owning ₹4,40,000 ÷ 2,00,000 kWh = ₹2.20; PPA ₹3.00.
- Owning instead of contracting: −₹4,00,000 today, then ₹3,00,000 − ₹20,000 = ₹2,80,000 in each year. Owning overtakes the PPA after 1.43 years, and the IRR of these flows is 25.69%.
Result. Ownership is lower by ₹1,60,000 over the two years.
Sensitivity — what moves the answer
- PPA tariff 10% lower (₹2.70/kWh): owning still lower, by ₹1,00,000.
- PPA escalation 1 point lower (−1% a year): ₹1,57,000.
- EPC cost 10% higher (₹4,40,000): ₹1,20,000.
- Delivered energy 10% lower: ₹1,00,000 — the PPA bills fewer kWh while the cost of owning stays put.
- Discount rate 2 points higher (2%): ₹1,43,637 — discounting favours the route that pays later, here the PPA.
How engineers use the result
To put a developer's PPA offer and an EPC quotation on the same footing before negotiating either — same kWh, same term, same end boundary, at the owner's discount rate — and to show which terms (tariff, escalation, end of term) move the answer most.
When a professional design must replace it
Before signing: the kWh should come from a yield study you trust (not only the developer's), the EPC and O&M figures from quotations for the same plant, and the PPA's take-or-pay, exit, roof-tenure and performance clauses should be reviewed by your legal and finance advisers — this tool prices none of them.
Sources
- PSERC (Grid Interactive Rooftop Solar Photo Voltaic Systems) Regulations, 2021, consolidated up to the 3rd Amendment (2026), PSPCL memo of 8 Jul 2026 — Punjab, checked 6 Oct 2026 — reg 3.1 provisos: a consumer may own the plant or contract with a RESCO; the RESCO's payment agreement is directly with the consumer, the metering agreement stays between the DISCOM and the consumer, and the DISCOM is not a party to their disputes; reg 6.5: safe operation and maintenance up to the metering point rests with the consumer or the RESCO that installs the plant. Other states: confirm with your regulator
- Present value, levelised cost and IRR — standard discounted-cash-flow definitions; IRR is reported only when the cash flows change sign once
Questions people ask before using it
What information do I need before comparing CAPEX with a solar PPA?
The developer's term sheet or draft PPA — year-one tariff, escalation rule, term, how deemed or take-or-pay generation is billed, what happens at the end of the term and the early-exit schedule. An EPC quotation for the same plant on the same roof, an O&M quotation and the inverter warranty terms. The kWh the plant will deliver each year, ideally from the same yield study the developer used, so both routes are priced on identical energy. And your discount rate — the return your business expects on capital.
Which site conditions could change the CAPEX vs OPEX result?
Anything that changes the kWh you pay for or the years you stay. Shutdowns, single-shift operation or grid outages matter under a take-or-pay or deemed-generation clause, because you may pay for energy you could not use. Plans to sell, relocate or expand the building bring the early-exit schedule into play. A roof that needs repair or replacement within the term means removing and refitting the plant — check who pays under each route. On leased premises the landlord's consent governs any roof lease. And the sanctioned load or contract demand can cap the plant size under net metering, whoever owns the plant.
What should I send an engineer for a project-specific review of a PPA offer?
The PPA term sheet or draft agreement, any EPC quotation for the same plant, twelve months of electricity bills, interval load data if you have it, the roof drawings or layout, the single-line diagram and your sanctioned load or contract demand. The review prices both routes on the same kWh and end-of-term boundary, and lists the contract obligations this calculator cannot price. You can attach your inputs to the optional review request below; it shows exactly what it would send first.
What happens at the end of a PPA term?
It depends entirely on the contract, which is why the calculator asks. Some agreements transfer the plant to you, at a stated price or free; others let the developer remove it, or renew at a renegotiated tariff. When the plant transfers, its value after the term belongs to you under both routes, so it cancels and only the transfer price differs. When it is removed or re-contracted, only the owned plant keeps a value — enter what it is worth to you, or 0 to be conservative.
Is a PPA zero cost?
Zero capital, not zero cost. You pay for every unit, usually with an escalation, for the whole term, and the contract carries obligations — minimum offtake, exit payments, roof access — that ownership does not. A PPA moves the capital and the operating risk to the developer, which can be the right trade for your balance sheet; whether the payments cost more than owning the same plant is what this comparison shows.
How much does PPA escalation matter?
It compounds. A tariff that rises every year makes the later years of the term the most expensive, and those years carry the least discounting. Enter the escalation your draft contract actually states and check the sensitivity row for one point lower — the change in the difference shows how much the clause is worth negotiating.
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