CAPEX vs MYSUN DPA vs PPA: How to Pick the Right Financing Model to Go Solar
Posted: Jan 14, 2022
Going solar has proven to be a profitable investment decision for large corporations, SMEs and MSMEs across the globe. In fact, every single MYSUN customer is saving a fortune on power bills every year. During the current turbulent economic times, these savings are coming in very handy.
However, when it comes to going solar, one of the biggest challenges businesses face is the Capital cost of Solar Systems. To most businesses, paying the cost upfront puts stress on their working capital, and that deters them from completing their solar journey. However, with plenty of Financing Models available, going solar is extremely affordable.
With the help of this blog, we will help you understand the three solar financing/buying options that your business can opt for when going solar. We will also help you identify the best option for your business taking into consideration your unique requirements.CAPEX - Pay the Capital Cost of Solar Upfront
The term CAPEX means Capital Expenditure. Under this model of going solar, you will pay the capital cost of the solar system upfront. This gives you the best deal as your business avoids paying any interest and in the long run, turns out to be the most profitable. The Levelized cost of electricity and the total cost of the solar system is the lowest under this model of going solar. This also gives your business the highest Return on Investment. If your business has a strong cash flow and a substantial balance, then the CAPEX model of going solar is the right option to opt.MYSUN DPA - Defer the Cost of Solar in Easy Instalments
MYSUN DPA or Deferred Payment Agreement will allow your business to defer the Capital Cost of the solar system over a period of time. This gives flexibility to your business and allows it to pay for the solar system in easy instalments over a period of 3-5 years. With a minimum payment of 25~30%, your business can reap all the benefits of owning a solar system like reduced electricity expenditures and accelerated depreciation. Since the cost of the solar system in DPA is split over a few years, the monthly instalments under DPA attract a minimum interest rate. However, at MYSUN these instalments are designed to be less than or equal to the monthly savings on power bills that your business will make with solar. Therefore, in a way, your solar system will pay for itself. MYSUN DPA is a great option for your business if it is looking to go solar with a controlled cash outflow.PPA(Power Purchase Agreement) - Pay Nothing for the Solar System
The PPA model of buying solar allows your business to go solar without buying the solar system. In this model, the rooftop solar system which is installed on the rooftop or the campus of your business is owned and managed by your solar installer or a third party company. Your business here is required to sign a Power Purchase Agreement(PPA) to buy the solar energy generated by the installed solar system at an agreed tariff. The benefit with this model is that the solar tariff for your business is fixed for a period of 15~25 years depending on the contract and your business is relieved from paying the capital cost and maintenance of the solar system. The Levelized cost of solar electricity, in this case, is however slightly more than CAPEX and DPA.Identify your Best Solar Financing / Buying Option with MYSUN Solar Calculator
The MYSUN Solar Calculator, one of the most innovative and pioneering solar investment calculation tools, has helped millions of business owners in India evaluate their best solar buying/ financing option. All you need to do is submit your location, consumer category and average electricity bill amount.
For example, for an industrial setup in Jaipur, Rajasthan with Average monthly electricity bill of Rs 10 Lakhs, the 25 years Cash Outflow is highest in case of Grid Electricity, followed by PPA, DPA and CAPEX. This makes CAPEX the best deal with the highest savings for the industry.
Similarly, the Levelized cost of electricity for the industry will be lowest in case it went solar under CAPEX, followed by DPA, PPA and then the Grid electricity.
The total savings that the business will be generating after going solar under CAPEX will be Rs 18.3 Crores at an ROI of Rs 35.6%.Go Solar with your Best Solar Financing/ Buying Model today
With multiple solar financing and buying options available with MYSUN there is no reason for your business to not optimize its expenses. By reducing millions in power expenses your business will not only save big today but also open a source of accumulating capital for important business investments. Solarize your business today. Speak to MYSUN Solar Advisors on +91 8448380218 or write to them at firstname.lastname@example.org to get a free personalized solar buying assistance.
Source url- https://www.itsmysun.com/capex-vs-mysun-dpa-vs-ppa-pick-right-financing-model-go-solar/
MYSUN is India’s largest online rooftop solar company with operations in multiple states in North, Central and Western India. The company provides most advanced technology and highest quality solar services in Delhi, Ghaziabad, Gurgaon, and Noida amo