Differences and Benefits for Businesses
As India accelerates its transition to renewable energy, businesses are increasingly looking at captive solar power plants and group captive power models to meet their energy demands sustainably and cost-effectively. These two models are emerging as smart alternatives to traditional grid power, especially for industrial and commercial consumers who want greater control over electricity costs and a cleaner energy profile.
In this article, we’ll explore what captive solar power plants and group captive power plants are, how they work, the key differences between them, and which one may be best suited for your business.
What is a Captive Solar Power Plant?
A captive solar power plant is a solar energy system set up by a company to meet its own electricity needs. The company invests in the plant, either on-site (rooftop or ground-mounted within the facility) or off-site, and uses the generated power exclusively for its operations.
According to the Electricity Act 2003, a power plant qualifies as "captive" if:
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The consumer owns at least 26% of the equity of the plant, and
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Consumes at least 51% of the power generated.
Key Features:
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Usually built and operated by a single company.
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Can be located within or outside the consumer's premises.
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Helps reduce electricity bills and carbon emissions.
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Requires capital investment and long-term planning.
What is Group Captive Power?
A group captive power plant is a variation of the captive model where multiple users come together to jointly invest in a power plant and use the electricity for their combined consumption. This model allows companies that may not have the scale to invest in a solar plant alone to still benefit from solar power.
To qualify as a group captive power plant:
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The captive consumers must hold at least 26% equity in the plant.
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Together, they must consume at least 51% of the total power generated.
Key Features:
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Shared investment and shared electricity consumption.
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Ideal for medium-scale industries or commercial users.
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Typically operated by a developer who builds and maintains the project.
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Reduces upfront financial burden through shared ownership.
Captive vs Group Captive Solar Power: What’s the Difference?
Why Choose Captive or Group Captive Solar Power?
With rising power tariffs and sustainability goals, both models offer multiple advantages:
1. Cost Savings
Captive and group captive solar models significantly reduce electricity bills. Consumers only pay transmission and wheeling charges, avoiding cross-subsidy surcharges applicable to open access power purchases from third parties.
2. Energy Security
Having a dedicated solar source insulates businesses from grid outages and price volatility, especially during peak hours.
3. Sustainability
Switching to solar helps reduce carbon footprints and meet ESG (Environmental, Social, and Governance) targets. This can also improve brand reputation and stakeholder trust.
4. Return on Investment (ROI)
While captive models demand a higher upfront cost, they deliver strong long-term ROI through substantial energy savings. Group captive projects offer a quicker path with reduced capital exposure.
Challenges and Considerations
Though beneficial, these models also come with certain challenges:
Captive Solar Power Plant:
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High initial investment
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Land and infrastructure requirements (especially for off-site plants)
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Long-term commitment and maintenance responsibilities
Group Captive Power:
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Need to coordinate with multiple parties
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Shared decision-making and legal structuring
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Dependence on the project developer for performance and maintenance
Who Should Choose What?
Regulatory and Policy Support
The Indian government supports captive and group captive power models under open access policies. States like Maharashtra, Karnataka, Tamil Nadu, Gujarat, and Andhra Pradesh have created frameworks that allow smooth wheeling and banking of power, making solar adoption more practical.
Additionally, there are tax benefits, accelerated depreciation (AD) options, and Renewable Energy Certificates (RECs) available in some cases, further improving project economics.
Conclusion
Both captive solar power plants and group captive power plants are innovative and practical solutions for businesses seeking green energy and cost efficiency. While the captive model gives complete ownership and maximum control, the group captive route makes solar power accessible to those with limited resources or smaller power requirements.
Choosing the right model depends on your energy needs, financial capacity, and long-term sustainability goals. With proper planning and execution, both approaches can help your organization transition toward a cleaner, more resilient energy future.
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