Captive vs group captive vs open access: choosing your model

Every industrial solar conversation eventually arrives at the same question: what structure? The physics is identical — panels, inverters, the grid — but the commercial and regulatory wrapper determines your savings, your risk, and how the asset sits on your balance sheet.

After 500+ client engagements since 2008, here is the practical guide we wish every CFO had before the first meeting.

You own the plant — on your rooftop, your land, or a remote site delivering power through open access. You consume what you generate. Capex (or a loan) sits on your balance sheet, and so do the returns: typically the lowest per-unit cost of any model, full depreciation benefits, and exemption from the cross-subsidy surcharge that burdens third-party open access transactions.

The catch is scale and commitment. You need the consumption to absorb the plant’s output, the capital (or borrowing capacity) to build it, and the appetite to own an energy asset for 25 years.

The group captive structure exists for everyone who wants captive economics without building a whole plant. Multiple consumers jointly hold equity in a generating company — the rules require captive users to hold at least 26% of equity and consume at least 51% of the power — and each draws power in proportion.

Done properly, every participant gets the cross-subsidy surcharge exemption and a tariff far below grid rates, with an equity ticket sized to their offtake rather than the whole project. The structure needs careful legal design — equity proportionality, consumption verification, exit clauses — which is exactly where an experienced developer earns their fee.

Simplest of all: a developer owns the plant, you sign a power purchase agreement, power flows over the grid. No capex, no equity, no asset ownership — just a contracted tariff below your grid rate.

The trade-off is the cross-subsidy surcharge and additional surcharge, which apply to third-party sales in most states and eat into savings. Net savings are real but thinner — and exposed to regulatory drift, since surcharges are revised periodically.

One more honest note: state regulations differ meaningfully — banking provisions, wheeling charges, and surcharge levels change the answer across borders. The right structure in Gujarat is not automatically the right structure in Tamil Nadu. Model it on your actual bill, your actual state, your actual load curve. We do that analysis before recommending anything.