Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services.
In other words, it is the total cost needed to bring a project to a commercially operable status.
Whether a particular cost is capital or not depend on many factors such as accounting, tax laws, and materiality.
For example, a fossil fuel power plant's capital costs include the following: They do not include the cost of the natural gas, fuel oil or coal used once the plant enters commercial operation or any taxes on the electricity that is produced.
Government generally provides subsidies through investments and partnerships in the initial capital costs of research and manufacturing infrastructure that cannot be matched by investor-owned companies.