In India, principally there are two major business models:
CAPEX – capital expenditures are provided by the rooftop owner;
RESCO – capital expenditures are covered by third party.
1. CAPEX Model
CAPEX mode is the most common business model for solar deployment in India. In this model the consumer purchases the solar system, by making 100% of the payment upfront or financing the system, often through a bank.
2. Renewable Energy Service Company (RESCO) Model
Under this model, a RESCO developer finances, installs, operates and maintains the rooftop solar power plant. The developer signs an agreement with the rooftop owner. The rooftop owners may consume the electricity generated, for which they have to pay a predecided tariff to RESCO developer on a monthly basis for the tenure of the agreement. Based on the consumption choice and requirement, the model is further divided into two types – Rooftop Leasing and Power Purchase Agreement (PPA).
2.1 Rooftop Leasing
Under this arrangement, the RESCO developer leases the rooftop and pays a fixed lease/rental to the building owner over the time of the lease period for installing the solar panels of the rooftop. The RESCO developer exports the solar energy to the utility at a predetermined feed-in-tariff (FiT) approved by the regulator
2.2 Power Purchase Agreement
Here the RESCO developer invests in solar rooftop asset, and sells the generated power to the building owner in favor of a lower solar power tariff. The excess power could be sold by the building owner to the utility through net metering system.