CAPEX stands for Capital Expenditure. In this type of financing model, all the equipment, design, installation as well as commissioning costs are paid up-front by the customer. The customer either chooses to operate and maintain plant on his own or hire a third party for yearly free.
Within CAPEX, Customer can finance the solar power plant in two ways:
1. Upfront cash
2. Mix of loan and cash.
Banks offer up to 70-80% of solar plant cost as a loan.
In terms of benefits, Customer enjoys all the benefits from the installation of a solar power plant. Benefits come in two ways:
1. Savings in electricity bills
2. Tax benefits from Accelerated Depreciation.
The payback period on investment ranges between 2-4 years in CAPEX model; while Return on Investment (RoI) is generally in the higher 20’s (25-30%).
Want to know if CAPEX fits your needs?
What will be the cost associated with your project?