Renewable Energy Service Company (RESCO) Model
The RESCO model addresses household or commercial and industrial consumers’ reluctance to purchase solar PV systems due to technical performance risk, high capital costs and lack of access to debt finance by ensuring that they don’t need to pay anything upfront. Instead, the solar developer offering the RESCO requires the consumer to purchase power at a predetermined price for a certain number of years. In a variant of the RESCO model called a “Leasing Model”, the developer leases a third party’s
rooftop, installs a PV system on it and sells energy to a distribution company and / or the third party.
Under both versions of the model, the developer enters into long term Power Purchase Agreement (PPA) with a consumer and provides financing, installation, operation and
maintenance services. Consumers find this option attractive as they do not have to put in any capital upfront and do not take on any energy generation performance risk.
The key drawback of this business is lack of strong legal enforcement of contracts, consumers’ lack of access to some government tax incentives and the bankability of private clients.