Many large factories in Tamil Nadu use far more electricity than their roofs can produce. A 1 MW rooftop plant may cover only 15–30% of a big HT consumer's annual use. Group captive solar solves this. Several consumers jointly own a share of a large solar (or wind-solar hybrid) plant elsewhere in the state, and the power is delivered to their factories through the grid under open access. Because the consumers are legally "captive" owners, they avoid some of the heaviest open access charges and can cut their power cost substantially.
What is group captive solar?
In a captive arrangement, a business generates electricity for its own use. In group captive, a developer sets up a large solar or hybrid plant, usually ground-mounted in a high-irradiation part of Tamil Nadu, through an SPV. Several industrial and commercial consumers buy a minority stake in that SPV and sign long-term power purchase agreements, typically for 15–25 years. The power is wheeled through the TNPDCL and TANTRANSCO network and adjusted against each consumer's HT bill.
Tamil Nadu is one of India's most active group captive markets because of its large renewable base, especially wind, and its high HT industrial tariffs. Wind-solar hybrid group captive projects are common here because wind generates in the evenings and during the monsoon months, when solar output is lower.
The 26% equity and 51% consumption rules
To qualify as captive under the Electricity Rules, 2005:
- Ownership: the captive users together must hold at least 26% of the equity share capital with voting rights in the SPV that owns the plant.
- Consumption: the captive users together must consume at least 51% of the electricity generated, measured over the financial year.
- Proportionality: in group captive, each member's consumption must be roughly in proportion to its shareholding, within a permitted variation.
Compliance is verified every year. If the conditions are not met, the power can lose its captive status and attract the surcharges it was exempt from, which can wipe out much of the saving. Good developers manage allocations and track compliance month by month.
Charges and savings in Tamil Nadu
The cost of group captive power is not just the PPA tariff. Your landed cost includes:
| Component | What it is | Applies to group captive? |
|---|---|---|
| PPA tariff | Price per unit paid to the SPV | Yes |
| Transmission and wheeling charges | For using the grid to carry power to your factory | Yes |
| Transmission and distribution losses | Part of the power lost in transit | Yes |
| Banking charges | For storing surplus units to use later in the billing cycle (8% in kind under TNERC's 2025 GEOA regulations) | Yes, if you bank |
| Scheduling, metering and SLDC charges | Operational charges for open access | Yes |
| Cross-subsidy surcharge | Compensation to the DISCOM for consumers leaving the grid supply | No (exempt for captive) |
| Additional surcharge | For the DISCOM's stranded supply commitments | No (exempt for captive) |
Industry analyses have estimated that Tamil Nadu industries can save up to about ₹2 per unit with open access solar, and commercial consumers more, against grid tariffs. Actual savings depend on the PPA tariff, current TNERC charges, banking, your HT tariff (about ₹7.50 a unit for HT I industrial) and how well generation matches your consumption. Always compare offers on landed cost per unit, not the headline tariff.
What a business invests in group captive
Because the 26% rule applies to the SPV's equity, not the total project cost, the investment is much smaller than buying a plant outright. A typical SPV is funded about 70% by debt and 30% by equity. Captive users buying 26% of that equity therefore invest roughly 8% of the project cost.
| Illustration: 1 MW share of a ground-mounted solar plant | Approximate figure |
|---|---|
| Project cost attributable to 1 MW | ₹3.5–4.5 crore |
| Equity portion (about 30%) | ₹1–1.35 crore |
| Captive users' 26% of equity | About ₹27–35 lakh |
| Annual generation from 1 MW | About 15–17 lakh units |
This is an illustration only. Actual equity requirements, plant costs and generation vary by developer, technology and location. The equity is typically returned at the end of the term, or as agreed in the shareholder agreement.
Group captive vs rooftop vs RESCO
| Rooftop (CAPEX) | Rooftop (RESCO) | Group captive | |
|---|---|---|---|
| Where the plant is | Your roof | Your roof | Off-site, anywhere in Tamil Nadu |
| Upfront investment | Full plant cost | None | 26% of SPV equity (about 8% of project cost) |
| Size limit | Your roof area and connection limits | Your roof area and connection limits | Can cover most of your annual demand |
| Grid charges | None for self-use | None for self-use | Transmission, wheeling, losses, banking |
| Savings per unit | Highest | Moderate | Moderate, depends on charges |
| Complexity | Low | Low | High: SPV, compliance, open access approvals |
| Best for | Any business with a usable roof | Roof available, no capital | Large HT consumers whose demand exceeds roof capacity |
For most businesses, the best approach is rooftop first, then group captive for the rest. Install as much rooftop solar as your roof and connection allow, then use group captive or hybrid open access to cover the remaining daytime and night-time demand. See zero-investment solar for factories (RESCO / OPEX) and rooftop solar plant costs.
Who group captive solar suits
- HT industrial and commercial consumers with large, steady annual consumption, typically several lakh to crores of units
- Factories whose roofs are too small, shaded, old or leased to carry enough solar
- Multi-site companies wanting one renewable source for several plants in Tamil Nadu
- Companies with renewable energy or emissions targets from customers, export markets or group policy
- Businesses comfortable with a 15–25 year commitment and annual compliance
Group captive is usually not suitable for LT consumers, small units or businesses that may relocate or shrink within the contract period.
How the group captive process works
Review 12–24 months of HT bills and time-of-day consumption to size your share and understand banking needs.
Size the rooftop plant first, then work out how much demand is left for group captive.
Compare landed cost, technology (solar or wind-solar hybrid), track record, financial strength and compliance management.
Share subscription and shareholders' agreement for the SPV equity, plus a long-term PPA with tariff, term, exit and compliance clauses.
The developer applies for open access through the state's single-window process, with metering and scheduling arrangements in place.
Generation is adjusted against your HT bill each billing cycle, and captive compliance is verified every financial year.
Risks and what to check before signing
- Landed cost, not tariff: insist on a per-unit landed-cost calculation under current TNERC charges.
- Regulatory change: how are changes in wheeling, banking or surcharges shared between you and the developer?
- Captive compliance: who tracks the 26% and 51% conditions, and who pays if they fail?
- Co-members: other consumers in the SPV affect compliance. Check exit and replacement provisions.
- Generation guarantee: minimum annual generation, with compensation for shortfalls.
- Demand changes: what happens if your consumption falls, or you sell or close a plant?
- Developer strength: execution record, balance sheet, and O&M capability over 25 years.
- Exit and equity return: how and when your equity is returned at the end of the term or on early exit.
Frequently asked questions
What is group captive solar in Tamil Nadu?
It is an arrangement where several consumers jointly own at least 26% of the equity in an off-site solar or hybrid plant and consume at least 51% of its output. The power reaches their factories through the grid under open access, and they are exempt from cross-subsidy and additional surcharges.
What are the 26% and 51% rules?
Under the Electricity Rules, 2005, captive users must together hold at least 26% of the equity share capital with voting rights in the generating company, and consume at least 51% of the electricity it generates over the financial year, roughly in proportion to their shareholding in group captive.
How much can a factory save with group captive solar?
It depends on the PPA tariff, current open access charges, banking and your grid tariff. Industry analyses have estimated savings of up to about ₹2 per unit for Tamil Nadu industries. Always compare offers on landed cost per unit.
How much do I need to invest in group captive?
Only your share of 26% of the SPV's equity, typically around 8% of the project cost attributable to your share. For a 1 MW share, that is roughly ₹27–35 lakh, depending on the project.
Is group captive better than rooftop solar?
Not usually on a per-unit basis. Rooftop solar used on site avoids grid charges and saves more per unit. Group captive is best for covering demand that your roof cannot, so most businesses should install rooftop solar first.
Who is eligible for green energy open access in Tamil Nadu?
Eligibility is set by TNERC's Green Energy Open Access Regulations, 2025, and applies mainly to HT and EHT consumers. Captive generating plants have a right to open access. Check the current regulations and your connection details with your developer.
Can group captive be combined with rooftop solar?
Yes. Many factories install rooftop solar to cover part of their daytime demand and use group captive or hybrid open access for the rest, including evening and night-time consumption through wind or banking.
Rooftop, RESCO or group captive: which suits your plant?
Arka Solar Energy is a solar EPC company in Chennai. Share 12 months of HT bills and we'll size the rooftop plant your premises can carry and show how much demand is left for off-site options, with the savings for each.
This guide is general information as of November 2026, not legal, regulatory, financial or tax advice. Captive rules, open access eligibility and charges are set by central rules, TNERC and TNPDCL/TANTRANSCO and change from time to time. Investment, cost and savings figures are illustrative. Verify current regulations and take professional advice before entering a group captive arrangement.