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Understanding the Two Solar Business Models: CAPEX & RESCO

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Solar Energy is one of the most reliable sources of renewable energy available to us today. The world is currently racing to make this technology widespread, especially with the ever-looming threat of global warming. Renewable energy, which has minimal to none carbon footprint, is essential to make our world and our environment a better and healthier place to be in.

The government of India is encouraging every Indian to opt for clean and green solar energy. To promote convenient adoption and use of solar energy, public and private sectors have been informed by the Ministry of Finance to offer a loan at the minimal interest rate for encouraging Solar Ideology to every home, business, office, and other places. It is vital for the customer and investor that they choose the right business model to minimize the risk and maximize the Return on Investment.

There are two Solar Business Models in India, and both models have their pros and cons. It all depends on your objectives. An in-depth analysis is very important to find out which solar business model is suitable for your business. As per the project size, investment amount, and different financial needs, two solar business models are followed in India.

1. CAPEX Model.

It is the most common model form of the solar power plant business model in India. In this model, the customer generally hires a solar EPC (Engineering, Procurement, and Construction) company that provides the installation of the entire solar power system and hand over access to the consumer. One of the major advantages of this model is that the customer is eligible to claim the accelerated depreciation to gain tax savings from the government.CAPEX Business Model

Highlights:

  • Allows Residential, Industrial, and Commercial to own the system.
  • The customer sets up the rooftop solar project with the intent to reduce his power costs.
  • The customer bears the entire capital expenditure of the project.
  • The customer gets benefit by selling the surplus power generated to the DISCOM.
  • The gains from tariff savings accrue to the roof and solar power plant owner.
  • Commercial & Institutional clients can also claim the accelerated depreciation.
  • EPC also performs the annual operation and maintained (O&M) of the plant on mutually agreed cost per annum. 

       

2. RESCO Model.

Renewable Energy Service Company is an energy service company which provides energy to the customer from renewable energy sources usually from Solar Photovoltaic, Wind Power or Hydropower. RESCO about pays as you consume electricity. Since it is operated and maintained by the RESCO, it carries a longer production run than the CAPEX model.Highlights:

  • Solar Power Plant is owned by the RESCO and ENERCO (Energy Company).
  • The customer service does not own any rights on the solar energy system.
  • Customers have to sign the Power Purchase Agreement (PPA) with an actual investor at a mutually agreed tariff and tenure.
  • The customer only pays for electricity consumed as per units for power basis.
  • RESCO developer is responsible for its annual operation and maintenance.
  • RESCO gets the benefit by selling surplus power generated to the DISCOM.

Contact us today to get a free solar panel installation quote.

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7 Reasons Why Solar Panel is Good for Your Home

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In urban and rural India, many homes are switching to this clean energy for various reasons which give them ample benefits which we will be discussing in this blog. There is nothing wrong with switching to a better option for energy production other than the traditional grid system. Most of the people are aware that solar is a home efficient upgrade and eager to reduce the carbon footprints from their surroundings.

In terms of economic, environmental and personal, Solar Installation carries various benefits and let us give you some insightful reasons why solar energy is good for your home.

1. Drastic change in the electricity bill.

It doesn’t matter if you are a homeowner, business or a non-profit organization, the electricity bill can take up a large portion of your expenses. With having Solar panels at your rooftop, you can save up to 60% amount in your electricity bill. Also, you’ll be generating the electricity for free for the next 25 to 30 years without being dependent on the electricity grid.

2. Less maintenance cost for solar panels.

Solar panels don’t have any moving parts which remove the chances of wear and tear of any parts. Therefore it involves fewer maintenance costs. Solar panels are meant to be tested to withstand high winds and extreme weather conditions which makes them so durable and long-lasting.

3. Earn a great return on investment.

Solar panels are not the expense; they are the best investment for the future. Net metering policy in India allows you to sell your excess generated power to the government. Tariff of this excess power is different in different-different states. Please refer to your state net metering policy.

4. Increase your property value.

Due to recent estate reports, it has been noticed that the houses or any place with an installed solar panel system gets higher property values and sell more quickly than non-solar homes. Those who are looking to sell their place with solar installed can enjoy this option while calculating their property value.

5. Protection of the environment.

Solar is an excellent way to reduce your carbon footprint. A typical residential solar panel will eliminate three to four tons of carbon emissions each year—the equivalent of planting over 100 trees annually.

6. Be independent for your electricity consumption.

One of the best advantages of having a solar panel at your home is you don’t have to be at the mercy of utility providers. The electricity board raises their cost at any point in time, but you won’t be affected because you produce your solar electricity.

7. Be futuristic.

Technology is changing day by day, and if you are upgrading with it, then nothing is better than that. Many reports have stated the fact that it is going to be the ‘Solar age’ ahead of where every gadget will going to be with Solar cells. Now it is up to you whether you be in a traditional way or welcome the future with open arms.

We hope you got the idea why Solar panel is good for your home. Contact us today to get a free solar panel installation quote.

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What is Solar Panel and How Does it Work?

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Solar Energy is one of the biggest booms worldwide known as ‘clean energy’ and is available in abundant quantity. Our sun is a natural nuclear reactor that releases a packet of energy called photons that travel to millions of miles away from the sun to the earth in about 8.5 minutes. Every hour, enough photons reach and impact our planet to generate solar energy for our household and commercial purpose.

Solar Panels are the devices that absorb the sun’s rays and convert them into electricity or even heat for that matter. It is a collection of solar or photovoltaic cells, which can be used to generate electricity through a photovoltaic effect. The cells are arranged in a grid-like pattern where they store and convert the energy. We can all have ample benefits by tapping into this resource, but the real question arises – How do rooftop solar panels work?

Sun releases atom in the atmosphere where the solar rooftop attracts these atoms and separate electrons and atoms. Photons are particles of light. The process of separating the photons from their atoms produces solar electricity.

Let’s have a look at how solar panels work:
Step 1:

Solar Panel collects sunlight where the photovoltaic (PV) cells are installed. PV cells take photons and convert them into electricity. It produces the Direct Current (DC) electricity, but DC power can’t power your home on its own. That’s where the Solar Inverter comes into the picture.

Step 2

Solar Inverter helps in converting the type of current. The most important thing to know about the solar inverter is it converts the Direct Current (DC) into Alternating Current (AC). This can be useful for the power to be used at your home.

Step 3

Solar Electricity then passes through Net Meter, which makes it more suitable for the application of your home. In some cases, where the solar panel is not producing enough electricity for the usage of your home, there Net Meter helps you to get electricity from the traditional electricity grid in your area. It also keeps track of the solar electricity units produced as well as consumed by your house and sent back to the electricity grid. 

Step 4:

If your solar energy produces more than it consumes, the net meter sends the excess energy back to the electricity grid. You get a concession for providing the electricity to the grid in your next month’s electricity bill as per the agreement between you, your solar provider, and energy company in your area. Solar Panel generates electricity when the sun is up and shining, but we use electricity most during the night time when we are not producing solar power. That is why you should stay connected with your electricity grid.

That’s how the Solar Panel works. Interested in going Solar? Galaxy Solar offers you some really good deal and professional service for your residential, commercial, and industrial solar installation. 

Contact us today to get a free solar panel installation quote.