CAPEX (upfront payment): Capital cost of project to be paid upfront by buyer ie. before commissioning.
OPEX (PPA/BOT) : Capital cost of project is borne by the developer/installer and buyer pays monthly installments against actual generation at pre-determined tariff for contract period (eg. 20 years)
In CAPEX, you start real savings after payback &
In OPEX, you start saving from day 1.
But the savings & free electricity in CAPEX will always be substantially higher than savings in OPEX.
In nutshell, the choice between CAPEX or OPEX is decided by financial goal. Choose to de-risk your energy bills and get highest ROI.
CAPEX is your choice if you have spare cash which
- demands the quick payback of 3–5 years & free electricity for 25–30 years after it.
- can be invested in solar to get better risk adjusted returns over a 25 years period than other financial or your core business assets to generate more returns, then you can pay complete amount upfront
- can be partially invested in other financial or your core business assets to generate more returns, then you pay 30% down-payment and take 70% loan
OPEX is your choice if you have spare cash or you can generate cash regularly over your OPEX contract period, which
- shall be invested in other financial or your core business assets to generate more returns than savings through solar , then you can pay monthly in PPA mode against actual generation at pre-determined unit rate over long term
- you are comfortable with long contract period of 15–20 years