Group captive solar gains ground as a business advantage in India

Group captive solar is becoming a serious option for Indian businesses. Tata Power, one of the country's largest power companies, says more and more companies are looking at this model to cut their electricity bills and meet clean energy targets.

The group captive model lets a group of consumers jointly own a solar plant. They get power at a lower rate than what the grid charges. The rules say each member must take at least 51% of the power from the plant. The developer can sell the rest to the grid.

Tata Power has built several group captive solar projects across India. The company says the model works well for industrial and commercial users. These users often pay high tariffs for grid power. Group captive solar can cut those costs by 20% to 30%.

The Indian government has pushed open access rules. These rules let large power users buy electricity directly from generators. Group captive is a part of this framework. It gives companies more control over their power supply.

One big advantage is the cost. Solar power tariffs have dropped sharply in recent years. Group captive projects now offer power at rates between Rs 2.50 and Rs 3.50 per unit. That is far below the Rs 5 to Rs 8 per unit that many industrial consumers pay to state utilities.

Another benefit is reliability. Group captive plants are usually built near the consumers' factories or offices. This cuts transmission losses and avoids grid congestion. Companies get stable power without depending fully on the state grid.

Tata Power has set up group captive projects for clients in steel, cement, and manufacturing. The company handles the land, permits, and construction. The client pays a monthly tariff for the power. No upfront investment is needed.

But the model has hurdles. State regulations vary widely. Some states charge cross-subsidy surcharges and additional duties. These fees can eat into the savings. The rules also require each consumer to hold at least 26% equity in the project. That can be a barrier for smaller firms.

Tata Power says it works with clients to navigate these rules. The company has a team that handles state-level approvals and compliance. It also helps clients structure the ownership to meet the 26% equity rule.

The group captive model is not new. But it is growing fast. India's total installed solar capacity crossed 70 GW in 2023. Group captive projects make up a small but rising share. Industry analysts expect this share to grow as more companies sign up.

Tata Power has a target of building 10 GW of renewable capacity by 2025. Group captive solar is a part of that plan. The company sees it as a way to serve corporate clients while adding to the country's green energy mix.

For businesses, the math is simple. Lower power costs, stable supply, and a green image. Group captive solar gives them all three.

Tata Power has already signed long-term power purchase agreements with several large companies. The company did not share names or numbers. But it said the pipeline of new projects is strong.