Solar is the most abundant source of energy and has been widely recognized to promote sustainability. Needless to say, one must go solar as it has a lot of economic and environmental benefits for the consumer. However, the only hurdle between solar companies and consumers is the initial investment involved in setting up a Solar PV system. In this article, we will be sharing solar energy information on different investment models adopted by solar companies and how it is beneficial for different demographics.
Different solar investment models were formulated to offer consumers a viable ground-mounted or rooftop solar installation solution. It also provided a growth opportunity for the industry and the solar companies involved. Here are 4 different solar investment models popularly adopted by solar companies to encourage individuals to buy solar.
A CAPEX model is the traditional solar investment model where a consumer pays for the solar installation cost. The consumer then owns the solar system and bears the responsibility to maintain it. The benefit of this model is that the solar electricity produced is free and the consumer does not incur any generation costs.
In an OPEX model, the solar system integrator or a third party investor/developer invests in the solar installation at the customer’s premises. Since the solar system integrator or developers invest, they will own the system and also incur all the maintenance costs associated with it.
However, the consumer enters into a power purchase agreement (PPA) with the solar system integrator/developer to purchase and consume all the solar electricity generated by PV for a long-term period (15-20 years). This model is popular in the US, where approximately half the rooftop solar installation is owned by OPEX developers. The model has recently been recognized globally and remains the same in India as consumers do not incur upfront capital costs. In most scenarios, tri-party agreements are formed between the consumers, O & M service provider and investor to maintain generation guarantees and seamless functioning of the OPEX business model.
3. Open Access Solar Power
In an open-access solar model, power is generated from a solar farm at one location and distributed to one or multiple designated consumers at another location. Similar to an OPEX model, the solar system integrator and/or solar developer bears the ownership and maintenance costs. These projects are generally implemented in rural areas because it is easy to find large shade-free areas at a feasible price.
Once Solar PV systems are installed, they are connected to a grid, into an existing sub-station. The power will then go through the existing grid infrastructure to large consumers in the state.
The idea of open access solar power is to provide cheaper electricity than utility grid providers offering the end-users economic solar electricity without any capital investments.
4. Captive Solar Farms
Captive solar farms is an investment model generally adopted by large-scale industrial users or organizations for their own captive consumption. Since large-scale industries and organizations consume high electricity, generating solar electricity by themselves offers them cheaper or zero electricity costs. They also avoid distribution and transmission losses and enjoy power stability. Generation capacities can also be increased as this model does not have the disadvantage of space. Captive solar farms also offer the flexibility of setting up a solar power plant away from the organization. However, based on the distance, organizations might incur additional costs.
How can ABS Renew Power help you?
With a commissioning experience of more than 3MW solar projects across India, we are focused to provide our customers with the right solar EPC solutions based on our expertise in feasibility analysis, structural design, engineering, and operational maintenance. We have successfully installed multiple projects for various sectors like residential, industrial, commercial, and institutional to name a few.
Buy Solar to encourage a sustainable future
Flexible investment options, deflating solar costs, and the growing solar industry are some of the major factors encouraging solar projects. With the biggest hurdle of capital investment incurred by the end-user resolved by OPEX solar investment model, other models like Captive Solar Farms and Open Access Solar Power has provided a much more economical solution for large-scale organizations and rural areas. Visit us next time for more solar energy information.