Compare OPEX Vs CAPEX Models

OPEX Vs CAPEX

Switching to solar power is a commendable move for your business, and a cost-effective one too in the long run. However, there are a lot of underlying technicalities you need to know before making the final move to go green.

When you are considering buying solar power, you would generally find two options in the market – Investing into a rooftop solar plant or buying solar power under a power purchase agreement (PPA). Both the options can be availed under two models: the capital expenditure (CAPEX) model or the operating expenditure (OPEX) model. In this section, we help you make an informed decision by highlighting the differences between the two in terms of their merits and disadvantages, and which model suits your business better.

OPEX

Build-Own-Operate

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CAPEX

EPC

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SSK Green Max owns the asset

OWNERSHIP

Customer owns the asset

Zero upfront investment by the customer. Can instead invest that capital into its core business.

INVESTMENT

100% investment borne by customer

Quickly replicable and scalable because additional projects don’t need internal CAPEX approvals

MANAGEMENT APPROVAL TIMELINES

Typically requires long lead time for CAPEX approvals at senior management level.

Pay only for electricity generated, no hidden costs

WHAT YOU PAY FOR

Pay only for O&M charges after system purchase, no tariff for solar electricity generated

20-40% cheaper than Grid electricity Tariff

PER UNIT SAVING

Capital repaid through generated electricity

Turnkey solution, therefore SSK Green Max bears O&M cost

O&M

Customer pays separately for O&M

Savings from day 1 (Zero days)

PAYBACK

As high as 4 years

SSK Green Max handles all technical matters

TECHNICAL KNOW HOW

Dedicated team needed at customer’s end to evaluate system design, installation and operation

SSK Green Max bears all the performance risk and is incentivized to maximized generation because revenues are linked entirely to generation

PERFORMANCE RISK

Customer bears all the performance risk and must manage equipment & downtime losses

No Tax benefits for customer

TAX BENEFITS

Customer can claim tax benefit through accelerated depreciation

SSK Green Max prerogative

REGULATORY RISK AND APPROVALS

Owners prerogative

OWNERSHIP
  • SSK Green Max owns the asset
  • Customer owns the asset
  • Zero upfront investment by the customer. Can instead invest that capital into its core business.
  • 100% investment borne by customer
  • Quickly replicable and scalable because additional projects don’t need internal CAPEX approvals
  • Typically requires long lead time for CAPEX approvals at senior management level.
  • Pay only for electricity generated, no hidden costs
  • Pay only for O&M charges after system purchase, no tariff for solar electricity generated
  • 20-40% cheaper than Grid electricity Tariff
  • Capital repaid through generated electricity
  • Turnkey solution, therefore SSK Green Max bears O&M cost
  • Customer pays separately for O&M
  • Savings from day 1 (Zero days)
  • As high as 4 years
  • SSK Green Max handles all technical matters
  • Dedicated team needed at customer’s end to evaluate system design, installation and operation
  • SSK Green Max bears all the performance risk and is incentivized to maximized generation because revenues are linked entirely to generation
  • Customer bears all the performance risk and must manage equipment & downtime losses
  • No Tax benefits for customer
  • Customer can claim tax benefit through accelerated depreciation
  • SSK Green Max prerogative
  • Owners prerogative