Group Captive Solar: How to Set Up a Shared Solar SPV for Your Company

The group captive solar structure is one of the most powerful but least understood options for large industrial energy consumers in India. When structured correctly, it allows multiple companies to co-invest in a shared solar plant — each holding the minimum required equity — and source captive power at a delivered cost significantly below the grid tariff, without paying cross-subsidy surcharge (CSS). This guide explains how it works and whether it's right for your business.

The Legal Foundation

The group captive structure derives from Section 9 of the Electricity Act, 2003, which permits captive generation. The Electricity Rules, 2005, further define captive generating plants: a plant qualifies as captive if the captive users hold not less than 26% of the ownership in the plant and consume not less than 51% of the aggregate electricity generated by the plant annually.

How a Group Captive SPV Works

The structure involves creating a Special Purpose Vehicle (SPV) — typically a Private Limited Company — that owns and operates the solar plant. Industrial consumers who wish to source captive power acquire equity stakes in this SPV, each holding at least 26% individually (or collectively, in the case of multiple smaller stakeholders). The SPV builds, owns, and operates the solar plant — either through in-house engineering or by contracting an EPC company like ARIA Green Energy.

The solar power generated by the SPV is allocated to member-consumers in proportion to their equity and consumption entitlement. This power is wheeled through the grid to the consumer's facility using open access — but as captive power, it is exempt from the cross-subsidy surcharge, which can be a saving of ₹1–2/unit for many HT industrial consumers.

Cost Advantage Over Conventional Open Access

For an HT-1 industrial consumer in Telangana with a CSS of ₹1.5/unit, the group captive structure saves this charge entirely — equivalent to approximately ₹75 lakh per year on a 1 MW consumption load sourced entirely from open access solar. Combined with the low solar PPA cost within the group (typically ₹2.5–3/unit for a well-structured SPV), the effective delivered cost is ₹4.0–4.5/unit versus a grid tariff of ₹7.5–8/unit — a saving of ₹3–4/unit.

Compliance Requirements

Group captive structures require rigorous annual compliance: (1) Annual certified audit confirming that each member has consumed ≥51% of their proportional generation and holds ≥26% equity; (2) Annual Renewable Purchase Obligation (RPO) certification — captive solar consumption counts toward RPO compliance, eliminating the need to buy separate Renewable Energy Certificates; (3) SLDC scheduling compliance for the solar plant; (4) Wheeling agreement renewal with TSSPDCL/APEPDCL annually.

Is Group Captive Right for You?

Group captive makes the most sense for consumers with: annual electricity bills above ₹5 crore (justifying the SPV formation and compliance costs), appetite for equity investment in a solar SPV (capital is deployed, not just opex), and preference for maximum long-term cost reduction over simplicity. For smaller consumers or those preferring a zero-capex arrangement, a RESCO PPA from ARIA Green Energy delivers significant savings without the SPV complexity. ARIA advises clients on the optimal structure after modelling both options against your specific load profile and financial parameters.