2. Various Models
S.No Comparison Point CAPEX OPEX Lease
1
Ownership of the
plant
Customer EPCComp. -Till the tenure of the PPA Leasing Partner
2 Investment
Customer invests directly in
the plant and places an EPC
(Engineering, Procurement
and ConstructionOrder on
EPCComp. . O&MOrder can
be placed separately
EPCCompany invests the initial CAPEX
and maintains the plant till the tenure of
the PPA
Financial Institution invests the major
amount in CAPEX and in-turn leases the
plant to Customer. EPC order places by
Financial Institution to EPCCompany.
O&M order can be directly placed by
Customer to EPCComp.
3 AgreementType
Engineering Procurement
and Construction
Power Purchase Agreement LeaseAgreement
4 Cash flow
Initial investment by
Customer only O&M cost to
be born separately after
commissioning of the project
Monthly electricity charge at a pre-fixed
rate till the tenure of the Agreement
Monthly EMI to be paid till the lease
period
5 Feasibility Available in all States
Not available in States like Karnataka and
Gujarat
Depends on location and assessment by
Financial Institution
Various Financial Models
4. Pros & Cons - CAPEX
S.No Pros Cons
1
Ownership of the plant with customer which
provides flexibility in future expansion and
changes
High initial investment of close INR 46.2 Cr.
2
Accelerated depreciation benefit of 40%
availableYear onYear
Operation and Maintenance of solar plant including
the risk of generation.
3
ROI of just around 3 years. Post which free
electricity from solar plant with minimal
O&MCost of around 1.5% of the project cost
per year
Replacement of components, if required. Mandatory
replacement of Inverters every 10-12 years.
4 Higher overall savings
5. OPEX Model
Ownership with EPC
Solar Company
Initial Investment by
Solar EPC Company
Power Purchase
Agreement for
10/15/25 years
Operation &
Maintenance by
Solar EPC Company
Solar electricity
cheaper than Grid
electricity
6. Pros & Cons - OPEX
S.No Pros Cons
1
Hassle free installation and Maintenance as
end to end responsibility of EPCComp.
Low Flexibility ofOperations as long term agreement
signed
2
Entire Operation and Maintenance of plant
including equipment repair/replacement by
EPC Comp. Power for 15 years.
NoAccelerated depreciation available
3 No Initial investment LowerOverall savings over a period of 25 years
4
No risk ofGeneration as O&M taken up by
EPC Comp.
No Link between PPATariff and Grid tariff. Risk of PPA
tariff to be more than Grid tariff
7. Lease Model – Financial /
Operational
Ownership with
Solar EPC Company
Initial Investment by
Solar EPC Company
LeaseAgreement for
3 to 8 years
Operation &
Maintenance by
Solar EPC Company
Insurance to be
taken by customer
ResidualValue in
case of Operational
Lease
8. Pros & Cons - LEASE
S.No Pros Cons
1
Hassle free installation and Maintenance as
end to end responsibility of EPC Comp.
Low Flexibility ofOperations as long term agreement
signed
2
Accelerate depreciation benefit given to the
customer
Residual value in case of Operational Lease
3
Minimal initial investment (only 20-25% of
Security deposit)
Generation risk with the Customer
4
Interest benefit of SD transferred to the
customer
LowerOverall savings over a period of 25 years
5
No Link between Lease value and Grid tariff. Risk of
savings to be reduce if grid tariff reduces.