OPEX vs CAPEX Solar: Which Is Right for Your Business
By Hardik BhatiaPublishedFor an Indian manufacturer or warehouse operator deciding to go solar, the hardest question isn't whether to install - the savings case is well established-— but how to fund it. The choice between the CAPEX and OPEX models shapes your balance sheet, your tax position, your risk exposure, and your returns for the next 15 to 25 years. Getting it right is a CFO decision, not a facilities one.
Under the CAPEX model, your business buys and owns the solar system outright, may claim available tax benefits such as depreciation, and retains the full economic benefit of the electricity generated — in exchange for the upfront capital and operational responsibility. Under the OPEX (RESCO) model, a developer owns and operates the system on your roof, and you simply buy the power generated at a discounted per-unit tariff, with no upfront capital investment. CAPEX maximises long-term returns; OPEX maximises simplicity and preserves capital.
Here's the full comparison for CFOs and sourcing heads weighing the two.
What is the CAPEX model in rooftop solar?
In the CAPEX model, you fund and own the entire system. You pay the capital cost upfront — from internal accruals or a loan — and the solar plant becomes an asset on your balance sheet. You retain the full economic benefit of the electricity generated after operating costs, may claim the available tax benefits, and take on responsibility for operation and maintenance (usually via a separate O&M contract).
As of 2026, large C&I rooftop systems in India typically range between ₹35,000 and ₹45,000 per kW (roughly ₹35–₹45 per watt), although actual costs vary by project size, roof condition, module and inverter selection, ALMM-compliant sourcing, and site complexity. For a tax-paying business, the economics are strong: with the depreciation benefits available on solar assets and typical industrial tariffs of ₹8–11 per unit, CAPEX projects commonly report payback periods of around 3–5 years — depending on tariff, consumption profile, financing, and tax position — followed by 20-plus years of significantly lower-cost electricity.
CAPEX suits businesses that are tax-paying, have available capital or access to low-cost debt, want the maximum long-term return, and are comfortable owning an operating asset.
What is the OPEX (RESCO) model in rooftop solar?
In the OPEX model - also called RESCO (Renewable Energy Service Company) - a developer installs, owns, finances, and operates the system on your rooftop, and you pay only for the power you use. There is no upfront capital cost. You sign a power purchase agreement (PPA), typically for 15–25 years, that fixes a per-unit tariff below your current grid rate, and you buy the solar generation at that rate.
The developer carries the capital cost, the performance risk, the O&M burden, and — importantly in 2026 — the module procurement and compliance risk (see our explainer on what ALMM List-II means for C&I buyers). Your savings are smaller per unit than under CAPEX because the developer must recover its investment, but they start from day one with no capital deployed and no operational responsibility.
OPEX suits businesses that want to preserve capital for their core operations, prefer predictable operating costs over an asset purchase, cannot use depreciation benefits (more on that below), or simply want solar without becoming a solar plant operator.
OPEX vs CAPEX: how do the two models compare?
The trade-off comes down to what your business values more — maximum return, or minimum involvement and risk. Here's how they differ across the factors that matter to a CFO:
Upfront investment: CAPEX requires full capital outlay (or debt); OPEX requires none.
Who owns the asset: Under CAPEX, you do — it sits on your balance sheet. Under OPEX, the developer owns it for the PPA term.
Savings level: CAPEX delivers the highest long-term financial returns (you retain the full economic benefit of the electricity generated, after operating costs, once the system is paid back); OPEX delivers immediate but smaller per-unit savings, typically framed as a discount versus your grid tariff.
Tax benefits: Under CAPEX, an eligible business may be able to claim depreciation benefits on the solar asset and applicable GST input tax credit, subject to the prevailing tax provisions and its own tax position; under OPEX, those sit with the developer.
O&M responsibility: CAPEX puts it on you (directly or contracted); OPEX keeps it entirely with the developer.
Risk exposure: CAPEX puts performance, technology, and compliance risk on you; OPEX transfers most of it to the developer, who generally assumes procurement, construction, and regulatory compliance responsibilities throughout implementation.
Best fit: CAPEX for tax-paying, capital-available businesses seeking the highest long-term returns; OPEX for businesses prioritising no upfront capital investment, simplicity, and risk transfer.
What tax benefits does CAPEX solar offer — and the Section 115BAA consideration
A tax-paying business under CAPEX may be able to claim depreciation benefits on the solar asset under the Income Tax Act — subject to the applicable depreciation schedule and prevailing tax provisions — along with applicable GST input tax credit, subject to GST rules. These benefits can materially improve post-tax returns and are a large part of why CAPEX payback can be relatively short for an eligible buyer. The exact benefit depends on the depreciation schedule in force, additional-depreciation eligibility, the asset's commissioning date, and the company's own tax structure — so it is not a single fixed figure that applies to every business.
There's also an important structural consideration that catches many companies: a business that has opted into the concessional corporate tax regime under Section 115BAA (the 22% rate) generally forgoes certain incentives and additional deductions, which can materially change the economics of an owned solar asset compared with a company under the regular regime. For such a company, part of CAPEX's financial advantage may be reduced — which can tilt the decision toward OPEX, or at least change the payback math.
The practical takeaway: the "right" model depends partly on your specific tax position, and that should be confirmed with your finance team or a tax advisor before you commit — not assumed from a generic payback chart. SustVest is not a tax advisor, and this is general information, not tax advice.
How do net billing and policy changes affect the OPEX vs CAPEX choice?
Recent policy shifts have made system design — and therefore developer competence — more important under both models. As several Indian states continue revising distributed solar regulations — including moving certain consumer categories toward net-billing frameworks and introducing grid support charges — the value of a rooftop project increasingly depends on maximising self-consumption rather than exports (we cover this in detail in net metering vs net billing for industrial solar).
This affects the two models differently. Under CAPEX, you own the risk of a poorly sized system that over-exports into low net-billing rates. Under OPEX, a competent developer designs for self-consumption and carries that risk for you — though a weak developer can still get it wrong, which is why developer selection matters as much as model selection. In some cases, pairing either model with battery storage can improve the economics, depending on your load profile.
Which model should my business choose?
As a starting framework: choose CAPEX if you are tax-paying, have accessible capital, and want maximum lifetime returns; choose OPEX if you want to preserve capital, avoid operational responsibility, or cannot use depreciation benefits. In practice, the decision often hinges on three questions:
Can we deploy the capital without straining core operations? If capital is scarce or better used elsewhere, OPEX preserves it.
Can we actually use the tax benefits? If you're under Section 115BAA or not currently tax-paying, some of the CAPEX tax advantages may be reduced or unavailable.
Do we want to own and operate an asset, or just buy cheaper power? This is as much a strategic preference as a financial one.
Many businesses also run a hybrid approach across multiple sites — CAPEX where capital and tax position allow, OPEX where they don't. There is no universally correct answer; there is only the right answer for your balance sheet, tax position, and appetite for involvement.
The bottom line for industrial buyers
CAPEX and OPEX are not better or worse — they're suited to different businesses. CAPEX rewards those who can fund it and use the tax benefits with the highest lifetime returns; OPEX rewards those who value capital preservation, simplicity, and risk transfer with immediate savings and zero investment. The most expensive mistake is choosing on upfront cost alone without modelling your specific tax position, capital cost, and load profile over the full asset life.
SustVest delivers rooftop solar under both OPEX/RESCO and CAPEX models, and will model both against your facility's load, tariff, and tax position so you can compare like-for-like — as a CRISIL Top-10 Rooftop Solar Developer with 83+ projects across 13+ states. Book a free site assessment to see which model gives your business the better outcome.
Frequently Asked Questions
What is the difference between OPEX and CAPEX solar models? Under CAPEX, your business buys and owns the solar system, paying upfront and retaining the full economic benefit of the electricity generated plus any available tax benefits. Under OPEX (RESCO), a developer owns and operates the system on your roof and you buy the power at a discounted tariff with no upfront cost. CAPEX maximises long-term returns; OPEX maximises capital preservation and simplicity.
Is OPEX or CAPEX better for a manufacturing business? It depends on your capital availability, tax position, and appetite for owning an asset. CAPEX suits tax-paying businesses with available capital seeking maximum returns; OPEX suits businesses that want zero investment, predictable costs, and risk transferred to the developer. Many companies use CAPEX at some sites and OPEX at others.
What is the payback period for CAPEX rooftop solar in India? For tax-paying industrial buyers with good daytime consumption and typical tariffs, CAPEX payback is commonly reported in the range of 3–5 years, aided by available depreciation benefits, followed by 20-plus years of savings. Actual payback varies by tariff, consumption pattern, system cost, and tax position.
Can any business claim depreciation benefits on solar? Not automatically. Depreciation benefits on a solar asset apply to tax-paying businesses under CAPEX, subject to the applicable depreciation schedule and tax provisions. Companies that have opted into the Section 115BAA concessional 22% regime generally forgo certain incentives and additional deductions, and loss-making companies cannot use the benefit immediately. Confirm your eligibility with a tax advisor.
Does the OPEX model require any upfront investment? No. Under the OPEX/RESCO model, the developer funds, owns, and operates the system. You pay only for the power generated, at a contracted per-unit tariff typically below your grid rate, with no capital outlay.
Who handles maintenance under OPEX vs CAPEX? Under OPEX, the developer is responsible for all operation and maintenance for the PPA term. Under CAPEX, maintenance is your responsibility, usually managed through a separate O&M contract with a service provider.
Sources
2026 C&I rooftop solar pricing bands (₹35,000–₹45,000/kW): industry pricing guides, 2026
Depreciation benefits on solar assets and Section 115BAA treatment: Income Tax Act provisions; confirm current position with a tax advisor
Industrial tariff ranges and CAPEX payback observations: industry reporting, 2026
OPEX/RESCO tariff-discount framing: industry norms