Solar Business Model

Solar energy power plants (both utility and rooftop scale) have seen tremendous amount of growth in last few years. With such growth in conjunction with the country’s ambitious target of 100 GW, the market is to achieve new heights. However, acting as a hitch to such target (from consumer’s perspective) may be selecting the correct investment plan (or more commonly business model) by which a consumer can get desired return. Right now two major solar business models are –

1. Renewable Energy Service Company (RESCO MODEL)

In the solar business model RESCO or BOOT Model ( Build Own Operate Transfer) is about pay as you , save from a Photo Voltaic Solar Power Project.

The main characteristics of a RESCO are:

  • The household serviced does not own the generation equipment, which is owned by an external organisation such as a Government agency or the RESCO;
  • The user does not carry out maintenance, all maintenance and repair service is provided by the RESCO;
  • The user pays a service charge that covers the capital repayment requirement and the cost of providing for maintenance and repairs.

The concept is much like that of a conventional electric utility in that the generation equipment is not owned by the user and the electricity that is generated is made available to the customer for a fee. The fee charged to the user includes any required capital replacement cost and all operating, maintenance and repair costs plus a profit for the operating organisation.

There are two significant differences between the conventional utility approach and that of the RESCO. For a RESCO:

  • Generation may be distributed among many households instead of being centralised at a power station;
  • Many organisations regulated by the government may provide services independently of each other.

2. CAPEX MODEL

In this solar business model, the entire investment comes from the power consumer, consumer generally hire a solar EPC company who provide turnkey installation of entire solar power system and hand over assets to consumers. EPC also do annual operation and maintained (O&M) of plant on mutually agreed cost per annum.

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