RESCO Model & Third-Party Solar
How Renewable Energy Service Companies (RESCO) operate, their obligations, and the contractual framework protecting consumers.
The RESCO Model
Operational Framework
Under the Renewable Energy Service Company (RESCO) or OPEX model, a third-party developer finances, installs, owns, and operates the renewable energy system on the consumer's premises (or an off-site location). The consumer enters into a Power Purchase Agreement (PPA) directly with the RESCO to procure the generated electricity at a predefined tariff over a contracted tenure, typically 15 to 25 years.
Because the asset is owned by a third party but interconnected to the DISCOM grid via the consumer's sanctioned load, the RERC mandates specific tripartite-style regulatory protections to govern disputes, safety, and commercial settlements.
| Operational Aspect | Regulatory Rule & Obligation |
|---|---|
| Commercial Agreement | The RESCO enters into a direct Power Purchase Agreement (PPA) with the consumer to sell the generated solar energy. Commercial disputes are settled mutually without DISCOM or RERC intervention. |
| Grid Interconnection | The DISCOM's formal Connection Agreement is signed strictly between the DISCOM and the consumer—it is not a tripartite agreement. The system utilizes the consumer's sanctioned load. |
| Financial Liability | The RESCO bears 100% of the CapEx for setting up the photovoltaic system, including metering, interconnection hardware, and the actual cost of any service line modifications mandated by the DISCOM. |
| Security Deposit | The RESCO must pay a Capacity Security Deposit to the DISCOM that is double the standard self-owned consumer rate. |
| Statutory Compliance | The RESCO is responsible for obtaining all environmental and grid-connection approvals prior to commissioning, and must comply with all technical/safety standards (CEA, RERC, IEC). |
| Disconnection Policy | The DISCOM shall not disconnect a consumer's grid access solely on the grounds of a payment dispute between the consumer and the RESCO. |
An eligible consumer may lease their rooftop space, land, or water bodies to a RESCO to set up the RE system. For Virtual Net Metering (VNM): any landowner (even a non-consumer) may lease space to a RESCO or a Utility-Led Aggregator. The DISCOM plays no role in, and is not a party to, the commercial lease arrangement between the RESCO and the site owner.
Connection Agreements — Key Terms
| Agreement Framework | Legal Parties Involved | Stamp Paper Required | Duration | Termination Clause |
|---|---|---|---|---|
| Net Billing Agreement | Consumer + DISCOM | Standard | 25 years | Mutual consent |
| Net Metering Agreement | Consumer + DISCOM | Standard | 25 years | Mutual consent |
| VNM — CAPEX (Self-Owned) | Eligible Consumers + DISCOM | Rs. 100/- non-judicial, notarized | 25 years (or license validity) | 90-day notice (to Lead Consumer) |
| VNM — RESCO | RESCO + DISCOM + Consumers | Rs. 100/- non-judicial, notarized | 25 years (or license validity) | 90-day notice (to RESCO & Lead) |
| GNM — CAPEX (Self-Owned) | Consumer (Parent) + DISCOM | Rs. 100/- non-judicial, notarized | 25 years (or license validity) | 90-day notice (to Parent) |
| GNM — RESCO | RESCO + DISCOM + Consumer | Rs. 100/- non-judicial, notarized | 25 years (or license validity) | 90-day notice by any party |
| Requirement Category | Mandatory Clauses & Duties |
|---|---|
| Universal Prerequisites (Applies to all agreements) |
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| VNM Lead Consumer Duties (Specific to Virtual Net Metering) |
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