What are capex and opex for energy projects?
Capex is capital expenditure on assets with a lasting business benefit; opex is the cost of running them. HMRC distinguishes capital from revenue expenditure according to the facts [S1], [S2]. Build 2 separate budgets for equipment and operation, then compare their combined cash flows. Accounting treatment needs your accountant’s review. Checked October 2026.
What is the difference between capex and opex?
Capex means capital expenditure: spending on an asset or enduring business benefit. Opex means operating expenditure: the running-cost side of your budget. HMRC’s capital/revenue guidance makes clear that classification depends on the facts [S1], [S2].
For an energy proposal, separate buying and installing equipment from the cash needed to operate it. Treat this as a comparison tool. Your accountant must decide the accounting and tax treatment; a sales label does not settle it.
What are examples of project costs?
Use the following budgeting categories to request itemised prices. They are planning categories, subject to your accountant’s review.
| Budget | Items to request in the proposal |
|---|---|
| Upfront | Hardware, installation, groundwork and connection work |
| Running | Electricity, software, servicing and insurance |
| Later expenditure | Replacement equipment and removal or reinstatement |
An illustration, not a quote: assume equipment and installation cost £20,000, with £1,200 annual running costs excluding purchased electricity. Over an assumed five-year comparison period, cash outlay is £20,000 + (5 × £1,200) = £26,000 before electricity, tax, financing and replacement. These are assumptions, not market prices or a payback forecast.
A cheaper purchase price does not answer the whole cost question. Ask which running items the quoted fee includes and which remain your responsibility.
How should you compare funding budgets?
Under fully funded charging, ask what the host still pays and what share it receives. For part funded, identify your contribution and the revenue split. For self funded, include the full purchase price and ongoing costs in your cash-flow model.
Use funding comparisons, the business-case template and ROI and payback to compare offers. Do not claim a return from a cost budget alone. Ask your accountant to check tax treatment and your solicitor to check obligations at contract exit.
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Common questions
Does capex mean the same thing as a tax deduction?
No. Capital and revenue treatment depend on the expenditure and tax rules. Keep itemised records and check the classification with your accountant [S1].
Are repairs always opex?
Do not assume so. HMRC’s toolkit separates acquisition, improvement and alteration issues; the precise facts affect treatment. Give your accountant the scope and itemised invoices [S1].
Does paying monthly make equipment opex?
Payment frequency alone does not resolve the capital/revenue question. HMRC considers the substance and enduring benefit of expenditure. Ask your accountant to review the actual agreement [S2].
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Sources
- Capital versus Revenue expenditure toolkit, HM Revenue & Customs,Last checked 16 October 2026
- Capital expenditure and enduring benefit, HM Revenue & Customs,Last checked 16 October 2026