CAPEX vs OPEX vs LEASED: Choosing the Right Rooftop Solar Ownership Model for Your Facility
Category
CAPEX vs OPEX vs LEASED: Choosing the Right Rooftop Solar Ownership Model for Your Facility
CAPEX vs OPEX vs LEASED: Choosing the Right Rooftop Solar Ownership Model for Your Facility_v2
The single decision that stalls most C&I rooftop solar projects is not the technology or the vendor. It is ownership. Who pays for the system, who owns it, and who carries the risk if generation falls short. Get this wrong and you either lock up capital you needed elsewhere or sign a 25-year contract on terms you regret by year three.
This piece breaks down the three models that matter for Indian commercial and industrial consumers: CAPEX, OPEX and LEASED. The right one depends on your balance sheet, your tax position and how long you plan to stay in the building.
What is the difference between CAPEX, OPEX and LEASED models for rooftop solar in India?
In short:
CAPEX: You buy the system. You pay the full cost upfront, own the asset, claim the depreciation and keep every unit of generation. Highest savings, highest capital commitment.
OPEX: A developer builds, owns and operates the system on your roof. You pay only for the power you consume, at a fixed per-unit rate under a power purchase agreement. Zero upfront cost, lower savings.
LEASED: You rent the system for a fixed periodic fee regardless of how much it generates. You operate it but do not own it during the lease.
The trade-off is consistent across all three. The more capital and risk you take on, the more you save per unit. The less you commit, the more you pay for the convenience.
This decision matters more every quarter. Solar's share of India's renewable capacity climbed to 56.4% in Q2 2026 (Mercom India), and financing structures are what let C&I consumers act on that momentum without draining capital (PV Magazine India).
The CAPEX model: own the asset, capture the full upside
Under CAPEX you fund the entire installation, typically ₹35,000 to ₹45,000 per kW for a C&I rooftop system depending on size and configuration. The system is yours from day one.
Why CFOs like it
The economics are the strongest of the three. With no developer margin baked into a tariff, your effective cost of solar power can land between Rs. 3 to 3.5 per unit over the asset life, well below most C&I grid tariffs.
Two tax levers make CAPEX more attractive than the sticker price suggests. Accelerated depreciation lets you write down 40% of the asset value in the first year under the Income Tax Act, plus normal depreciation, which front-loads a significant tax shield. GST input credit on the system is also recoverable for most C&I consumers.
What you take on
You own the performance risk. If a module underperforms or an inverter fails out of warranty, that is your repair bill. You also carry operations and maintenance, either in-house or through an annual contract. Payback typically falls in the 3.5 to 5 year range, after which the power is close to free for the remaining 20 years of system life.
CAPEX suits asset-heavy manufacturers with stable balance sheets, a taxable profit to absorb depreciation and a long-term commitment to the site.
The OPEX model: zero upfront, pay per unit
Under OPEX, also called the RESCO or PPA model, a developer finances, installs, owns and maintains the system. You sign a power purchase agreement and pay only for the electricity you actually use, at a contracted tariff that is usually 20% to 40% below your grid rate.
Why energy managers like it
There is no capital outlay and no asset on your books. Operations, maintenance and performance risk sit entirely with the developer, whose revenue depends on the system generating well. That alignment of incentives is the model's core strength. If the system underperforms, the developer earns less, so keeping it running is their problem, not yours.
Most OPEX PPAs run 15 to 25 years with a fixed or mildly escalating tariff. Many include a buyout clause that lets you purchase the system at a depreciated value after five to seven years, switching to CAPEX-style economics once the developer has recovered its capital.
What to watch
The tariff includes the developer's financing cost and margin, so lifetime savings are lower than CAPEX. Read the escalation clause carefully. A 3% annual escalator compounds into a materially higher tariff by year ten. Check the minimum offtake or deemed generation clauses too, because some PPAs charge you for power the system could have produced even if you did not draw it.
OPEX suits consumers who want savings without capital deployment, lack the taxable profit to use depreciation, or are not ready to own a 25-year asset.
The LEASED model: rent the system, keep the generation
Leasing sits between the two. You pay a fixed lease rental, monthly or annual, and in return you operate the system and keep all the generation. Unlike OPEX, your payment does not vary with output.
Where it fits
Leasing converts a capital purchase into a predictable operating expense while letting you capture full generation. It can work for consumers who want CAPEX-like generation upside but prefer an off-balance-sheet structure, subject to how the lease is classified under Ind AS 116 accounting rules.
The catch
You carry the generation risk. A fixed rental does not flex if output drops, so a bad solar year or a long fault still costs you the full lease fee. Operations responsibility usually sits with you unless the contract says otherwise. Leasing is the least common of the three models in Indian C&I solar and terms vary widely, so the contract structure matters more here than anywhere else.
Side by side comparison
Factor
CAPEX
OPEX
LEASED
Upfront cost
Full system cost
None
None or low
Who owns the asset
You
Developer
Lessor
Who runs O&M
You
Developer
Usually you
Performance risk
You
Developer
You
Tax benefits
Depreciation + GST credit
Limited
Depends on structure
Lifetime savings
Highest
Moderate
Moderate to high
Best for
Asset-heavy, profitable, long-term sites
Capital-light, risk-averse consumers
Off-balance-sheet preference
How storage mandates are starting to move the math
The ownership decision no longer ends at the panels. State storage mandates are pulling batteries into rooftop economics.
Why this matters to your ownership choice: a battery is expensive, technically complex and degrades faster than a solar module. If your state mandates storage, the case for OPEX strengthens, because you shift that capital cost and the degradation risk to the developer rather than carrying it yourself.
Which model should you choose?
Start with three questions.
Do you have the capital and the taxable profit? If yes, CAPEX delivers the lowest cost per unit and the fastest long-run returns. The depreciation shield only helps if you have profit to offset.
How long will you occupy the site? A 25-year PPA on a leased building is a liability if your tenancy ends in seven years. Match the contract tenure to your site horizon.
Who should carry performance risk? If you do not want to manage inverters, cleaning schedules and warranty claims, OPEX puts that burden on the developer.
For most C&I consumers without spare capital, OPEX is the pragmatic default. For profitable manufacturers on owned land with a long horizon, CAPEX wins on pure economics. Leasing is worth modelling only when off-balance-sheet treatment is the deciding factor.
What to do this week
Pull your last twelve months of electricity bills and isolate two numbers: your effective per-unit grid tariff and your annual consumption during daylight hours. Those two figures decide more than any vendor pitch. Then model all three ownership structures against your own cost of capital, not a generic IRR. If your state has a storage mandate, ask every developer to quote solar-plus-storage under OPEX before you commit to owning anything. Talk to Ampera before you sign, because the cheapest model on a spreadsheet is rarely the cheapest after the contract clauses are read.
FAQ
What is the cheapest rooftop solar ownership model in India?
CAPEX delivers the lowest cost per unit over the asset's life because there is no developer margin or financing cost in the tariff, and you can claim accelerated depreciation and GST input credit. It requires the highest upfront capital.
What is the OPEX model for rooftop solar?
OPEX, also called RESCO, means a developer finances, builds, owns and maintains the system on your roof. You pay only for the power you consume under a power purchase agreement, with no upfront cost and the performance risk on the developer.
Can I switch from OPEX to CAPEX later?
Often yes. Many OPEX PPAs include a buyout clause allowing you to purchase the system at a depreciated value after five to seven years, after which the economics resemble CAPEX.
Does a state storage mandate change my ownership decision?
It can. Mandated batteries add cost and degradation risk. Shifting that to a developer under OPEX is often cheaper and less risky than owning storage yourself.
How long are rooftop solar PPAs in India?
Most OPEX PPAs run 15 to 25 years. Match the tenure to how long you expect to occupy the site, particularly on leased premises.
