Factory Rooftop Solar: CAPEX vs PPA vs Leasing — Which Investment Model Wins

"Own it, or let them install it free?" — the million-baht question before you touch the roof

Industrial electricity costs in Thailand climb almost every year, so nearly every factory owner wants solar to cut costs — but most get stuck on the same question:

"Should I pay to install it myself, or let a solar company install it for free and just buy the power from them at a discount?"

This is a million-baht decision: choosing wrong means either tying up capital you didn't need to or locking into a 20-year contract at a price that isn't worth it. This article compares the three main models clearly, with numbers and the contract traps to watch.

The 3 models in one minute

The core difference: CAPEX = own it + full benefit + full risk, while PPA/Leasing = no lump sum + lower risk, but you share the upside with someone else.

Model 1: CAPEX — self-funded, full ownership

Pay the installation cost up front (or finance it); once commissioned, the system is a factory asset.

Pros

• Save the full price on every self-consumed unit (~THB 4.5–5.5/kWh) + export the surplus via NEM
• Best long-term ROI: 4–6 year payback, then 20+ years of pure profit
• Claim BOI (income-tax exemption + machinery import-duty exemption) and depreciation yourself
• An asset that raises enterprise value and supports carbon reporting (you keep the RECs/credits)

Trade-offs

• Requires a lump sum or credit line — hits cash flow
• The factory carries the technical risk (panel degradation, inverter failure) and owns O&M + insurance

Best for: factories with capital/good credit, taxable profits (so BOI + depreciation pay off), that own their building and plan to stay long-term.

See full payback numbers and installation steps — Solar for Factories & Warehouses: Is the ROI Worth It?

Model 2: PPA — free install in exchange for discounted power

An on-site Power Purchase Agreement (PPA): the developer (IPP/ESCO) installs the system on your roof for free and owns it, while the factory signs a contract to buy the power the system produces at a per-unit rate below the grid tariff (typically 20–40% lower) for 10–25 years (around 15 is common).

Pros

• Zero capital — cuts your bill from day one without touching credit lines / OD
• The developer handles O&M + insurance and carries all the performance risk
• May stay off-balance-sheet depending on contract structure and TFRS 16 assessment

Trade-offs

• Smaller savings than CAPEX — you still pay 60–80% of the grid price (the gap is the developer's margin)
• Usually carries an escalation rate of ~1–3%/year, so later years may not be as cheap as expected
• BOI, depreciation, and RECs/carbon credits belong to the developer
• Long lock-in tied to the building → selling/leasing the factory gets complicated

Best for: factories that don't want to tie up capital, that are loss-making / pay little tax (so BOI is worthless to them), or that want to avoid all technical risk.

Model 3: Leasing — fixed rent, you keep all the power

The lessor installs the system; the factory pays a fixed monthly rent (unlike PPA, which is priced per unit produced). The power produced is yours to use in full, less the rent.

• End of term usually carries a buyout / ownership-transfer option
• Under TFRS 16, most leases are recognized as a right-of-use asset + lease liability (on balance sheet)
• Best for: factories that want eventual ownership without paying the lump sum up front, and are confident in production volume

Caution: in Thailand, CAPEX and PPA are far more common than true leases. Many providers say "rent" but actually mean PPA or hire-purchase — read the payment structure carefully to see whether you pay "per unit" or "fixed rent."

Side-by-side comparison of the 3 models

*Depends on contract terms and TFRS 16 assessment — consult your auditor.

Real numbers: a 100 kWp system over 10 years

Assumptions: ~THB 3.2M install · ~13,000 kWh/month · mostly self-consumed · THB 5/kWh → solar offsets roughly THB 700,000/year of grid power.

Figures are illustrative and depend on actual tariff, sun, roof orientation, and each provider's terms — use them to compare the cash-flow shape, not as guaranteed numbers.

Reading the table: CAPEX gives the highest total return if you have the capital and stay long-term (and you end up owning an asset that keeps earning for another 15 years) · PPA gives "zero investment, zero risk" in exchange for much smaller profit · Leasing sits in between.

5 factors that decide which model fits

1. Budget / credit — have a lump sum or low-rate credit → CAPEX; don't want to touch OD/cash flow → PPA
2. Tax position — taxable profits + BOI-eligible → CAPEX gains a lot more (tax savings + depreciation); loss-making or already tax-exempt → BOI is worthless → PPA
3. Roof/building ownership — own it + staying long → CAPEX; renting/may relocate → PPA or Leasing (settle the transfer terms)
4. Technical risk appetite — don't want maintenance/warranty headaches → PPA; have a team or partner to maintain it → CAPEX
5. Planned time horizon — the longer you hold, the further CAPEX pulls ahead; medium or uncertain → PPA/Leasing

Before signing a PPA: 6 clauses you must read (or lose out for 20 years)

1. Discount rate & escalation — how many % below grid? How much does it rise each year? (High escalation = later years may cost more than the grid.)
2. Buyout price & end-of-term transfer — at 15–25 years, do you get the system free or must you buy it? At what price?
3. Who owns the RECs / carbon credits — if you must report carbon to customers / export to the EU (CBAM), spell this out.
4. Performance guarantee — does the developer guarantee minimum output? How are shortfalls compensated?
5. Sale/sublease conditions — the contract is tied to the building; a factory buyer must assume it (can affect the deal).
6. Roof/structure liability — who is liable if the roof leaks or the structure is damaged by the install? How much does insurance cover?

Before choosing any model, you need to know the roof can take the load — assess roof structure and wind load per DPT 1311

Summary: how to choose without regret

• Capital + taxable + long stay + own the building → CAPEX wins, and you own an asset that earns for 25 years
• No appetite for investment / little tax / want to avoid risk → PPA (but read the 6 clauses above carefully)
• Want eventual ownership but pay over time → Leasing

For financially strong factories in Thailand, CAPEX usually delivers the best lifetime return when the credit line, roof, and tax position are in place — while PPA is the smart choice when you want lower bills without touching capital at all.

Want to know whether your factory should choose CAPEX, PPA or Leasing — and, if you self-fund, how much budget it needs and how fast it pays back — request a quote and free assessment. Our Sahawatthanakit team assesses your roof, designs the system (choose the inverter architecture · panels that pass IEC 61215), and compares investment models against your factory's real numbers.