Solar plant with Zero Investment

Yes, it is possible to install a solar power plant on your factory rooftop with zero upfront investment under the BOOT (Build–Own–Operate–Transfer) model.

What is Zero upfront solar model

A model in which a solar developer installs and operates a solar power plant on customer's rooftop and bills monthly for the electricity generated by installed solar power plant, at a pre-agreed tariff per unit (kWh). This tariff can be equal to, lower than, or in some cases slightly higher than the current DISCOM rate, depending on the commercial arrangement. Customer pays tariff for a fixed contract period (PPA tenure). At the end of this tenure, the plant is transferred to customer and from that point onwards customer enjoy near-free electricity for the remaining life of the plant.

How Zero upfront solar model works

Example: Assume the following

1. Current grid electricity tariff: ₹8.50/kWh

2. Sanctioned load: 100 kVA

3. Average monthly electricity bill: ₹1,20,000

Model 1: Long-Term PPA (Long PPA)

In long term Model, the developer:

1. Installs the solar power plant at zero upfront cost to customer.

2. Customer signs a long-term Power Purchase Agreement (PPA), typically for 10 or 15 or 20 years at a fixed tariff that is lower than the current DISCOM rate.

During the PPA period:

1. Customer pay only for the solar energy generated at the agreed tariff.

2. The developer is responsible for plant performance, operation, and maintenance.

At the end of the PPA term (for example, after 15 years):

1. The plant is transferred to customer, often at₹ 1/-

2. Customer continue to enjoy nearly FREE ELECTRICITY from the plant for the remaining technical life (up to ~25–30 years) at minimal operating cost.

In long term PPA

Upfront cost to customer Zero

PPA tariff rate below DISCOM rate

PPA tenure 15 to 20 Years

Depreciation benefits Taken by developer

Generation Risk In developer's scope till the end of PPA (NO generation, No payment)

Customer Pays for Only for generated electricity

Model 2: Short-Term PPA (Short PPA)

Short-Term Model is slightly different:

1. The developer installs the solar power plant at zero basic cost, but GST is paid by customer at the time of commissioning.

2. The plant is billed to customer on Day 1, making customer, the owner of the asset from the beginning.

3. Because customer is the owner, customer is eligible to claim accelerated depreciation benefits as per applicable tax laws.

In the developer’s books, the project is treated as being on loan, and customer repay this loan indirectly through the tariff, that customer pay for generated units:

1. Customer pay a per-unit tariff for 5–7 years or as per contract.

2. This tariff may be equal to, higher than, or sometimes slightly lower than your DISCOM rate, depending on the structure.

3. Example: Tariff of ₹8.50/kWh for 5 years.

After the short PPA period (for example, 5 years):

1. Customer effective repayment is over.

2. Customer start saving significantly on power costs & these savings continue for the remaining life of the plant (up to ~30 years).

In short term PPA

Upfront cost to customer GST payable (8.9%)

PPA tariff rate May be higher/ lower/ equal to existing DISCOME rates

PPA tenure 5 to 7 Years

Depreciation benefits Taken by customer

Generation Risk In developer's scope till the end of PPA (NO generation, No payment)

Customer Pays for For generated electricity & may be for maintenance, insurance charges

BOOT / RESCO vs CAPEX (Self-Investment)

Under CAPEX (self-investment), you invest 100% of the project cost and take full responsibility for performance and maintenance. Under BOOT/RESCO, you shift much of that responsibility and risk to the developer.

Advantages of BOOT/ RESCO

Upfront investment Zero or very low by customer

Maintenance In developer's scope

Generation Risk born by developer

Engineering Done by developer

Disadvantages of CAPEX

Upfront investment Born by customer 100%

Maintenance Customer's responsibility

Generation Risk born by customer

Engineering Done by customer or by hired consultant

Minimum Eligibility Criteria for BOOT / RESCO

To make a BOOT/RESCO project commercially viable, developers generally look for minimum consumption and infrastructure:

1. Electricity bill

   • BOOT: Minimum ₹50,000 per month

   • RESCO: Minimum ₹2,00,000 per month

2. Sanctioned load

   • BOOT: Minimum 50 kVA

   • RESCO: Minimum 200 kVA

3. Rooftop area

   • RCC or tin-shed roof, shadow-free

   • Approx. 80 sq. ft. per kW of solar capacity required

4. Land (if ground-mounted)

   • Own or leased land, with lease period at least equal to the PPA tenure

Documents Required for BOOT / RESCO Evaluation

For a developer or financier to evaluate and approve a BOOT/RESCO project, you will generally be asked for:

1. Electricity bills of the last 12 months

2. Google Maps location of the factory

3. ITR (Income Tax Returns) for the last 3 years

4. Balance sheets for the last 3 financial years

5. Computation statements for the last 3 years

6. PAN details

7. Credit rating of at least BBB+ (required for RESCO)

8. Minimum turnover of ₹4 crore (required for RESCO)