Currently, the following business models are in vogue namely, self-owned (capital expenditure [Capex] model), Renewable Energy Service Company (RESCO) model and third-party owned model. “RESCO” means an energy service company which provides renewable energy to the consumers in the form of electricity.
Capex Model: Consumers develop solar rooftop plant within their premises to own, operate and generate electricity for self-consumption and sell excess electricity to the utility (under net metering) or sell entire electricity to the utility (under gross metering). Generally, self-owned business model is preferred for its simplicity. However, this model also has disadvantages such as high capital cost for the consumer and high technology and performance risk.
RESCO Model: : A RESCO builds, owns and operates GRPV plant in the premises of a consumer to generate and sell electricity to the consumer. Consumer may further engage in net metering or gross metering arrangement with DISCOM.
In RESCO, consumer does not invest in the GRPV power plant; instead, a RESCO developer invests and sets up the system. RESCOs are specialized solar developers; they can handle technology and operation risks in a better way. However, RESCO model faces several challenges such as power off-take risks, contractual risks, etc.
Third Party Model: A Rooftop or Land Owner may lease out / rent the Rooftop Space/ Land to a Solar Project Developer on a mutual commercial arrangement. Under this arrangement, the owner of the roof / land engages a turnkey installer to design and install the project. The Commercial arrangement between the project developer and the Roof / Landowner will be submitted to the Buyer of the Solar Power / Distribution Licensee for the records.
Suitability of these models depend on one’s ability to meet the costs.