RESCO Model & Third-Party Solar
How Renewable Energy Service Companies (RESCO) operate, their obligations, and the contractual framework protecting consumers.
The RESCO Model
Third-party renewable energy system ownership and operation
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. |
Site Leasing & Space Rental
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
Legal framework governing RESCO & CAPEX connections
| 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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