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RESCO took 40 percent of C and I. Compete or join

Third party owned rooftop went from a fifth of commercial additions to nearly half. What that does to an EPC selling capex, and the arguments that still win.

GridZero5 min read

RESCO and OPEX rooftop solar models competing with capex EPC sales in India

You quote a factory Rs 60 lakh for 150 kW. A developer offers the same factory the same 150 kW for nothing upfront, at a tariff below what they pay the DISCOM today.

You are not in the same conversation, and increasingly you are losing it.

What the shift looks like

Under a RESCO or OPEX arrangement, a developer owns the plant on the customer's roof and sells them the electricity under a long term power purchase agreement. The customer pays no capital cost and buys units instead.

Reported figures put the OPEX and PPA share at roughly 35 to 40 percent of Indian commercial and industrial rooftop additions in FY25, up from around 20 percent in FY22. C and I rooftop PPA tariffs are generally quoted in the Rs 3.50 to Rs 5.50 per unit range, against grid tariffs that in most states sit well above that.

Meanwhile grid connected rooftop capacity reached 25.73 GW as of 31 March 2026 against a programme target of 40 GW, so the segment is still growing underneath the shift.

Why finance directors like it

Be honest with yourself about why you are losing these deals. It is not usually price.

  • No capital. The money stays in the business, where its return is usually higher than a solar plant's.
  • No performance risk. If the plant underperforms, the developer eats it, because they are paid per unit.
  • No operations. Cleaning, maintenance and replacement are somebody else's problem for twenty years.
  • It is an expense, not an asset. It looks like electricity, which is a line the CFO already has.

Against all that, "you will own it" is a weak argument on its own.

The arguments that actually survive

Three do, and they are specific rather than emotional.

1. Accelerated depreciation belongs to the owner. A business buying its own plant can claim depreciation against taxable profit in the first year. Under a RESCO, the developer claims it, not the customer. For a profitable company paying tax, that is a large number missing from the comparison, and it is frequently absent from the developer's proposal. The mechanism and its September timing are in commission in September or your customer loses half the tax break.

2. The PPA escalates. Most carry an annual escalation, often in the two to five percent range. A capex system's cost of generation does not escalate at all after it is paid for. Model both over the full contract length rather than comparing year one against year one, which is the comparison the developer's proposal invites.

3. The roof is committed for twenty years. The customer cannot easily re-roof, expand, sell the building or change their mind. Ask whether the plant can be bought out, at what price, and what happens on a change of ownership. A good developer has clear answers. A bad contract is where this model hurts customers, and pointing that out is legitimate.

The other move: stop competing with them

A RESCO developer needs somebody to design, procure, build and maintain the plant. That is what you already do.

Working as the EPC contractor for developers is a different business from retail selling: lower margin per job, much larger volumes, payment from a professional counterparty rather than a factory owner, and no sales cost per site. It also comes with tighter specifications and real liquidated damages, so it suits an EPC with process discipline rather than one that improvises.

Several EPCs run both: retail capex for customers who want to own, and contracted delivery for developers who need hands. That is usually a better answer than pretending the OPEX share will go back down.

If you want to offer OPEX yourself, be clear-eyed. It needs balance sheet or a financing partner, an appetite for twenty year credit risk on a single customer, and an operations capability, because the revenue only arrives if the plant generates. Selling it is easy. Funding it is not.

What to change in your C and I proposal

Assume a competing OPEX offer exists, and pre-empt it on one page: capex with depreciation, against the PPA with its escalation, over the same number of years, on the customer's own tariff. Include ownership at the end of the term, and what each option does to the roof.

The point of that page is not to win every comparison. It is to be the vendor who presented the comparison honestly, which is who they call when the twenty year contract starts to feel long. What else belongs in that document is in what actually goes in a solar proposal, and the sequencing argument for larger loads in rooftop first, then open access.

The short version

  • OPEX and PPA arrangements are reported at 35 to 40 percent of C and I rooftop additions in FY25, up from about 20 percent in FY22. PPAs typically land at Rs 3.50 to Rs 5.50 per unit.
  • Customers choose it for no capital, no performance risk, no operations, and because it reads as an expense.
  • Three arguments survive: depreciation belongs to the owner, the PPA escalates while owned generation does not, and the roof is committed for twenty years.
  • Building for developers is a real business, with lower margin per job and no per-site sales cost.
  • Offering OPEX yourself needs balance sheet, twenty year credit appetite and an operations capability.
  • Put both options on one page in every C and I proposal.

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