RESCO / OPEX vs CAPEX Solar Model
- Posted by Infisol Energy
- January 19, 2026
How Businesses Should Decide Between RESCO and CAPEX
For most businesses exploring solar, the confusion does not start with technology. It starts with a simple but uncomfortable question.
Should we invest in a solar plant, or should we just buy solar power?
That single question leads to two models that are often talked about, frequently sold, and rarely explained properly: RESCO / OPEX and CAPEX.
Why There Is Confusion Between RESCO and CAPEX Models
- Both models work
- Both models fail if chosen incorrectly
- Most discussions focus on savings, not risk
- Execution quality is often ignored
What Is the RESCO / OPEX Model in Solar?
- A third-party developer invests in the solar plant
- The plant is installed on your rooftop or at an off-site location
- You do not own the system
- You buy electricity at a fixed tariff under a Power Purchase Agreement (PPA)
What This Means Practically
- No upfront capital investment
- No asset on your balance sheet
- No responsibility for performance or maintenance
- A long-term contract, typically 15 to 25 years
What Is the CAPEX Model in Solar?
The CAPEX model is straightforward.
In this structure:
- The business invests upfront
- The solar plant is owned by the business
- Electricity generated is used internally
- Savings replace grid power costs
Here, solar becomes a physical asset, just like machinery or infrastructure.
What This Means Practically
- Higher upfront cost
- Full ownership and control
- Higher long-term savings
- Responsibility for operations and maintenance
CAPEX requires stronger financial commitment, but it also offers much greater flexibility and lifetime returns.
RESCO vs CAPEX, The Core Differences That Matter
Most comparisons stop at “investment vs no investment”. That is not enough.
Factor | RESCO / OPEX | CAPEX |
Upfront cost | Zero | High |
Asset ownership | Developer | Business |
Contract | Long-term PPA | None |
Tariff after ROI | Fixed | Near zero |
Control | Limited | Full |
Exit flexibility | Low | High |
Lifetime savings | Moderate | Highest |
This table explains why neither model is universally superior.
The Part About the RESCO Model That Often Gets Missed
RESCO works well in many cases, but it comes with realities that are often skipped in sales conversations.
Long-Term Lock-In
A PPA is a binding contract. If your business plans change, relocation becomes complex. Roof usage, structural changes, or plant expansion require coordination with the RESCO developer.
Tariff Rigidity
Even though the tariff is lower than grid power, it never becomes zero. Over a long horizon, this matters.
Buyout Clauses
Many PPAs allow buyout after a few years, but the valuation method is critical. This clause must be examined carefully, not assumed.
Dependency on Execution
Even in a RESCO project, system performance depends heavily on the Solar EPC that designs and installs the plant. Poor execution leads to disputes and underperformance.
What Most Businesses Underestimate in CAPEX
CAPEX is often rejected because of upfront cost, but that is only one part of the story.
Asset Control
With CAPEX, the plant belongs to you. Expansion, repowering, inverter upgrades, or changes in consumption patterns remain under your control.
Long-Term Cost Advantage
Once the system pays back, electricity cost drops dramatically. Over 20 to 25 years, CAPEX almost always delivers higher absolute savings.
Risk Is Manageable
With the right EPC partner and a structured O&M plan, performance risk is predictable and controllable.
CAPEX is not risky by default. Poor execution makes it risky.
The Role of Solar EPC, Why the Model Alone Does Not Decide Success
This is the most overlooked aspect of the entire discussion.
Whether you choose RESCO or CAPEX, the solar plant is still:
- Designed by an EPC
- Procured by an EPC
- Installed by an EPC
- Commissioned by an EPC
A strong Solar EPC ensures:
- Correct system design
- Safety compliance
- Optimised generation
- Long-term reliability
A weak EPC leads to:
- Generation losses
- Fire and safety risks
- Frequent breakdowns
- Warranty disputes
The model determines who pays. The EPC determines how the plant performs.
This is where experienced EPC companies add real value, by helping businesses choose the right model first and execute it correctly.
Onsite vs Offsite RESCO Models in Solar
Not all RESCO projects are rooftop based.
Onsite RESCO
- Plant installed at your premises
- Power consumed directly
- Suitable for factories, warehouses, hospitals
Offsite RESCO via Open Access
- Solar plant located elsewhere
- Power supplied through the grid
- Subject to open access charges, banking rules, and DISCOM regulations
Offsite RESCO can work well for large power consumers, but regulatory clarity becomes critical.
How Businesses Should Decide Between RESCO and CAPEX
Instead of asking “Which model is better?”, the right question is:Which model fits our business reality today and five years from now?RESCO / OPEX Is Better If:
- Capital is better deployed in core business
- Management prefers off-balance-sheet assets
- Internal energy teams are limited
- Immediate savings matter more than long-term upside
CAPEX Is Better If:
- Business location is stable long-term
- Balance sheet allows investment
- Energy costs are strategic
- Maximum lifetime savings are the goal
Hybrid Approach
Many mature businesses adopt a mix:- CAPEX for rooftop installations
- RESCO for open access or expansion loads
Common Mistakes Businesses Make When Choosing RESCO or CAPEX
These mistakes are seen repeatedly on the ground.- Choosing RESCO only because it is zero investment
- Choosing CAPEX based only on lowest EPC price
- Ignoring PPA exit and buyout terms
- Underestimating regulatory exposure in open access
- Treating EPC selection as a commodity decision
The Regulatory Layer You Cannot Ignore in Solar Projects
Solar projects interact with:- DISCOM approval processes
- Net metering policies
- Open access charges
- State-specific regulations
Why This Is Ultimately a Business Decision, Not a Solar One
Solar technology is mature. Panels and inverters perform reliably when installed correctly.The real variables are:- Cash flow priorities
- Risk appetite
- Contract comfort
- Long-term business plans
Where a Solar EPC Advisor Fits In
An EPC company that only installs what is sold to them adds limited value.An EPC partner that:- Understands both models
- Explains trade-offs honestly
- Designs systems for long-term performance
- Focuses on execution quality
Final Perspective on Choosing Between RESCO and CAPEX
There is no universal answer to RESCO vs CAPEX.- CAPEX wins on total money over time
- RESCO wins on ease and capital preservation
Frequently Asked Questions
Which is better for businesses, RESCO or CAPEX?
There is no single better model for every business. RESCO suits companies that want zero upfront investment and minimal operational responsibility, while CAPEX suits businesses that want asset ownership and higher long-term savings. The right choice depends on capital planning, risk appetite, and long-term business goals.
What is the RESCO or OPEX model in solar?
The RESCO or OPEX model is a solar arrangement where a third-party developer owns, operates, and maintains the solar plant, and the business pays only for the electricity generated under a Power Purchase Agreement (PPA).
What is the CAPEX model in solar?
In the CAPEX model, the business makes the upfront investment to install the solar plant and owns the system. The electricity generated offsets grid consumption, resulting in higher lifetime savings and full control over the asset.
What are the risks or limitations of the RESCO model?
The RESCO model involves long-term contractual commitments, limited flexibility during the PPA tenure, and dependency on the developer’s execution and maintenance quality. Buyout clauses and tariff escalation terms should be reviewed carefully before signing.
Can a business switch from RESCO to CAPEX later?
Many RESCO agreements include buyout options after a specific period, but the feasibility depends on contract terms, asset valuation, and remaining tenure. This should be evaluated at the time of agreement, not assumed later.
Moving Forward with the Right Solar Model
Choosing between RESCO and CAPEX is rarely about solar alone. It is about how a business plans its capital, manages risk, and thinks long term.
The same model can deliver strong results for one company and create constraints for another. That difference usually becomes clear only after looking at the site, the load profile, and the way the business operates.
If you are evaluating solar and want to be sure the model truly fits your business, it helps to speak with people who look at the full picture, not just projections.
You can connect with us, either by calling +91 80808 75082 or by sharing your details on the website. A short conversation at the right stage often prevents a long-term compromise.