Solar OPEX vs CAPEX: What Are the Differences and Which Model Suits You?

OPEX Model

In the OPEX model, a 3rd party energy service company (ESCO) invests the CAPEX and the Operator pays monthly for the energy usage. The responsibility of ensuring 24×7 Power availability including site operation, maintenance & refueling lies on ESCO’s shoulder.

  • Zero investment for the MNO.
  • Indicates direct savings.
  • No operational hassle.
  • Let the experts do.

Financial Analysis:

CAPEX ModelOperator has to invest all CAPEX either from its own source or from capital market; therefore financial risk belongs to Operator.IRR and NPV of Green Power deployment is significantly more attractive.For mass deployment, CAPEX investment is a barrier since it may require hundreds of millions of dollars.OPEX ModelOperator does not have to invest for CAPEX, therefore no financial risk to deploy green power.IRR and NPV increases for telecom site since site OPEX reduces.Since mass deployment increases the business opportunity for ESCO, it comes more viable to invest.

Operational Analysis:

CAPEX ModelRegular day-to-day site operation is the responsibility of the operator.All cost related to site operation is incurred by the operator.Site uptime and SLA maintenance is typically on the operator. If it fails the Operator bears all financial loss/penalty.OPEX for technical operation is low.OPEX for site operation is high.OPEX ModelSite operation is a responsibility for the ESCO; therefore Operator does not need to deploy resource for site operation.Operator pays only based on energy usage, a pre-agreed rate, therefore operational cost is forecast-able and comparatively lower than DG based energy cost.SLA and Uptime is the responsibility of the ESCO. If it fails, the ESCO bears the penalty.

Strategic Analysis:

CAPEX ModelAll asset of green power belongs to the operator, therefore increases portfolio & branding value of the organization.Maximize utilization of existing assets.Easy to cope with variable changes.Multi 3rd parties´ engagement makes the model complex for operator to handle at last mile.Increase debt for organization.OPEX ModelEasy to control last mile performance since the ESCO is the only last mile partner.Full benefit of GHG emission reduction.Increases complexity of state management.Not so easy to cope with increased power requirement on a regular basis.Reduces the risk of unforeseen energy OPEX due to market change and consumer inflation.
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