What Is CAPEX And OPEX Model Of Solar?

Explore the differences and benefits of CAPEX vs OPEX solar models in our latest blog. Understand which financing option best suits your needs.

If you are considering switching to solar energy for your home or business, you have just taken the first step toward a cleaner and greener power source. Moreover, solar energy can significantly reduce your power bills and annual power costs.

And when it comes to getting solar power for your home or business, then there are two ways to go about it – The CAPEX and OPEX model. 

The OPEX Model – An Overview

OPEX stands for operating expenses model and is a system of ownership where the developer or the solar developer owns the entire solar system. The customer pays only for its electricity consumption generated by the solar panel system, and not for anything else. 

The customer also need to sign a PPA or a Power Purchase Agreement for the energy supply you get.

Advantages of the OPEX model

The OPEX model of ownership provides you with certain benefits like:

1. Zero installation and maintenance costs

Since the solar developer takes responsibility for the system, they will bear the entire cost of solar installation and will also provide you with operational and maintenance services throughout the lifetime of the project.

2. Maintaining system for optimal efficiency

Your solar developer will take responsibility for maintaning your system so that it runs with optimal efficiency and performance. They will be responsible for taking care of any drops in performance.

Disadvantages of the OPEX model

The OPEX model, however, has certain disadvantages to it also, which are highlighted below.

1 .You’re not the owner

The first drawback of the OPEX model is that you aren’t the owner of the solar system.  The solar system that is installed in your home or business still belongs to the developer.

2. Contractual obligations

Some types of OPEX agreements can include certain agreements in the contract, like penalties for early termination. Thus, if your circumstances change within the contract period, you may have to pay extra in accordance with your contract.

CAPEX Model Of Ownership – An Overview

The CAPEX model of ownership is a model based on self-financing. Here, the customer will have to bear all the costs incurred in installing the rooftop solar system. The costs here include all expenses that will be used for setting up, maintaining, and operating the project. Moreover, the equipment costs, labor charges, upgrades, and other material expenditures are included here.

If you opt for the CAPEX model, then all you need to do is contact a reputed solar panel company in philippines like Nativ Techniks Inc. to own your solar system. 

Once set up, you can have complete ownership of your solar plant and enjoy reduced electric bills for the entire lifetime of your panels.

Advantages of the CAPEX model of ownership

Some advantages of the CAPEX model of ownership are illustrated below.

1. Complete ownership of the model

You get to have complete ownership of your solar plant and can decide on the type of technology you want and the quality of your panels’ components.

2. Lower operational costs

Customers get to have reduced electric bills that helps them save more in the long run. Also, lower electric bills mean lower operational costs, which in turn, makes their business more competitive.

3. Complete control of your model

You have the freedom to make modifications to your system, upgrade it, and expand it without having to depend on someone else to do it for you.

4. Increased asset value

When you own a solar panel system, it can increase the net value of your property and also appeal to prospective tenants or buyers.

Disadvantages of the CAPEX model

Even the CAPEX model has some downsides to it, which is illustrated below.

1. Customer has to bear all associated risks

A main disadvantage of the CAPEX model is that the customer has to bear all risks involved in owning and operating a solar system, like management, maintenance, and downsides.

2. High investment

The cost of purchasing a solar system can be quite high. And in the CAPEX model, the customer has to bear the entire cost of ownership.

Which model is right for you?

If you have the initial capital to invest in a solar power system, then you can opt for a CAPEX model. A CAPEX model has a huge potential for payback once your initial investment pays off, and you can even develop a 30% equity.

On the other hand, the OPEX model is favored by small businesses and industries that don’t want to bear the high initial costs of owning a solar power system. Moreover, market liquidity and shareholder options also make it a viable choice for low-risk profile businesses that have financial restrictions.

Final thoughts

It is up to you to determine the type of ownership you want, which will suit your needs. We at Nativ Techniks offer consultation for the type of ownership you need and will offer you the best option based on your requirements and budget. Contact us today at +639176310032, or mail us at wecare@nativtechniks.com and get the best quality and industry-standard rooftop solar panels now.