Frequently Asked Question Related To Solar

Which is the best model of buying solar – CAPEX, Deferred Payment Agreement (DPA) or Power Purchase Agreement (PPA)?

From the cost perspective, the CAPEX model of going solar is considered the best model of buying solar followed by DPA and PPA. The reason behind this consideration is that since the cost solar PV system is paid upfront under CAPEX, the cost of solar energy is lower in CAPEX than in DPA and PPA. Under DPA, the cost of the solar system is split into monthly instalments and the entire cost of installation is initially borne by the installer, you are therefore required to pay a minimum interest in your monthly instalments. This increases the overall cost of the solar system. Under PPA, the Solar PV installation cost is borne by the installer and you only pay for the per unit cost of electricity that you consume and therefore the Levelized cost of solar energy is higher in PPA than in CAPEX and DPA.

Also, additional benefits like Accelerated depreciation and relaxation in taxes can only be availed in CAPEX or DPA, because availing these benefits requires ownership of the solar system.

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