In OPEX or OPerational EXpenditure model, the end customer need not worry about the project cost as it is done through a financial institution/ ESCO company. Only a small investment is made upfront by the customer and the remaining installation cost is taken care by the Finance Institution. The system design, installation, operation and maintenance are taken care by the EPC company. The EPC company assures a guaranteed saving every month, a percentage of the saving is repaid back to the ESCO company for a certain period. The monthly repayment is less than the monthly savings creating a positive cash flow for the customer. After the contract period the ownership of the plant is transferred to the customer.
Opting OPEX model the customer need not worry about the finance as it is taken care by the third party and the customer is free from financial risks. Regular monitoring and savings are provided by the EPC company. However, the accelerated depreciation and taxes cannot be claimed by the customer.