A decisive energy shift is underway on India’s factory floors. Large and mid-sized manufacturers are installing captive renewable energy—especially private solar and wind-solar hybrids—to meet their own power needs, hedge against tariffs, and cut carbon without waiting on the public grid. In Tamil Nadu, one of India’s most industrialized states, captive and open access renewables now underpin a sizable share of industry’s electricity—a microcosm of a national pivot from monopoly-era electricity to decentralized clean power. This transformation is not loud, but it’s profound: captive renewables are improving energy security, lowering costs, and accelerating green growth—one industrial roof, ground mount, and group-captive SPV at a time.
Key Highlights
Industries across India are adopting captive and open access renewables to self-supply power, lowering costs and cutting grid dependence.
Group captive rules (26% ownership, 51% consumption) enable multi-buyer industrial SPVs to procure clean power efficiently.
Tamil Nadu and Maharashtra are among the leaders in cumulative open access solar, with Karnataka topping national totals.
Open access installations jumped 77% in 2024, with steel, data centers, and cement among top offtakers.
Policy clarity and grid upgrades remain critical to scale banking, scheduling, and connectivity for industrial clean power.
The Industrial Why: Cost, Control, Carbon
For commercial and industrial (C&I) consumers, electricity is both a line item and a strategic risk. High and volatile tariffs, peak-hour surcharges, and occasional curtailments can erode margins and disrupt operations. Captive renewables—procured either through on-site assets or off-site open access projects—address three core needs:
Cost advantage: Long-term contracts or owned assets lock in predictable, often lower tariffs than grid power.
Reliability: Purpose-built projects and portfolio procurement improve availability; pairing with storage can stabilize critical loads.
Sustainability: Clean electrons help meet supplier mandates, investor expectations, and export-market requirements for low-carbon manufacturing.
That’s why energy-intensive segments—steel, cement, data centers, petrochemicals—have become the fastest adopters of open access solar and hybrids, using power purchase models tailored to their demand profiles.
The Models: Captive, Group Captive, and Open Access
India’s policy architecture enables industries to self-supply or co-invest in renewable projects, with specific benefits for “captive” use:
Captive generating plant: A user (or users) builds or procures a plant primarily for its own consumption, with benefits like exemption from cross-subsidy surcharge if conditions are met. A captive facility is an electricity generation asset used and managed for own consumption in industrial/commercial settings.
Group captive: Multiple consumers co-invest via an SPV to aggregate demand from a single plant. India’s Supreme Court clarified that captive users must collectively hold at least 26% ownership and consume at least 51% of the electricity generated annually; proportionality applies to groups. azbpartners
Open access: Consumers (typically >1MW) wheel power from off-site plants through the grid. Solar open access has become a powerful route for C&I decarbonization, representing nearly one-fifth of large-scale solar additions in Q1 2025 and surging 77% in 2024 installations overall. mercomindia.
Together, these models unlock flexibility—on-site rooftop or ground-mount for quick wins, and off-site utility-scale projects for deeper decarbonization and portfolio hedging.
The Tamil Nadu Signal—and a National Surge
Tamil Nadu, long a wind leader with wide industrial bases in automotive, textiles, and engineering, illustrates the scale and relevance of captive and open access power. While state-level mixes fluctuate, Tamil Nadu consistently ranks among India’s top three for cumulative solar open access alongside Maharashtra, with Karnataka in the lead nationally. Energy agencies in the state recognize the role of captive co-generation (e.g., bagasse) and renewables for in-house industrial use, underscoring policy openness to decentralized supply.
Nationally, solar open access momentum is unmistakable. India added 6.9GW of solar open access in 2024—31% of large-scale solar additions—with robust demand from steel (33.2% offtake), data centers (13.6%), and cement (12.4%). As of March 2025, cumulative solar open access reached 21.5GW, despite a Q1 2025 slowdown from module supply constraints, connectivity delays, and banking-rule uncertainties. The direction is clear: captive and group captive are becoming mainstream procurement. mercomindia
What’s Driving Adoption: Economics and Policy
Tariff arbitrage: In high-tariff states with dense industrial loads—like Maharashtra and Tamil Nadu—open access economics deliver compelling savings. Many C&I consumers report 30–50% energy cost reductions via group captive structures.
Supply-chain pressure: Export-market buyers, financiers, and ratings stakeholders increasingly require Scope 2 reductions; clean PPAs are an auditable solution.
Portfolio resilience: Pairing solar with wind (and, increasingly, storage) smooths diurnal and seasonal variability; hybrid open access now accounts for about a third of quarterly additions.
Legal certainty: The Supreme Court’s clarification on 26% ownership and 51% consumption reduces regulatory ambiguity, supporting bankability of group captive SPVs.
The Hurdles: Banking, Connectivity, and Module Supply
Despite rapid growth, friction remains in scaling captive renewables:
Banking policies: Different interpretations across states on banking percentages and cycles complicate energy accounting and PPA economics, especially for seasonal industries.
Approvals and interconnections: Transmission capacity, synchronization between state and central processes, and shifting ISTS waivers contribute to commissioning delays.
Supply volatility: Periodic module shortages or ALMM-related windows can cause quarter-to-quarter installation swings.
Addressing these will determine whether captive renewables remain a “quiet revolution” or become the dominant paradigm of industrial power.
Technology Choices: From Rooftops to Hybrids (and Storage)
Rooftop and on-site: Quick to deploy, rooftops often offset daytime loads; ground-mounts within industrial campuses add capacity with minimal wheeling complexity.
Off-site utility-scale: Group captive projects deliver scale for large loads and aggregated SMEs; wind-solar hybrids improve utilization and tariff stability.
Storage: As costs fall, batteries enhance firming and time-shifting, turning variable renewables into dependable process power—important for continuous operations and peak shaving.
Digital optimization: AI-driven forecasting, automated scheduling, and portfolio energy management improve settlement accuracy and reduce imbalance penalties.
State-by-State Landscape: Leaders and Lessons
Karnataka: The pioneer and national leader in cumulative solar open access, combining conducive tariffs with policy clarity—an early proof point for C&I renewables at scale.
Maharashtra: Now a quarterly leader, boosted by high industrial tariffs and clearer open access rules—strong economics for large C&I portfolios.
Tamil Nadu: With deep industrial demand and wind heritage, TN remains a top-three market in cumulative open access, and continues to recognize captive co-gen and renewables as integral to industrial resilience.
These markets demonstrate how policy clarity, transmission availability, and industrial appetite can align to drive rapid clean energy adoption—a template other states can adapt.
Captive Renewables and India’s 2030 Targets
India’s installed capacity has expanded rapidly, with renewables (including large hydro) comprising a substantial share and solar alone rising to around 91GW by late 2024. Open access renewables are now a meaningful wedge in annual additions: in 2024, nearly a third of large-scale solar came through open access routes. While generation shares lag installed capacity due to capacity factors, the steady climb of C&I procurement directly supports India’s trajectory toward 500GW of non-fossil capacity by 2030 and improved industrial competitiveness.
Compliance Corner: Getting Group Captive Right
For legal and tariff benefits under the captive regime:
Ownership: Captive users (alone or as an association) must hold at least 26% of project equity on a continuous basis over the year.
Consumption: They must consume at least 51% of the electricity generated annually; for associations, consumption should be broadly proportional to shareholding (within tolerance limits).
Documentation: Maintain robust metering, energy accounting, and audit trails to withstand regulatory scrutiny across states and years.
Following these principles preserves surcharge exemptions and de-risks long-term power cost strategies.
What Industrial Leaders Should Do Next
Run a multi-asset RFP: Compare rooftop, near-site, and off-site group captive offers; evaluate hybrid and storage options for process-critical loads.
Structure for flexibility: Choose tenors, step-up clauses, and termination options that align with capex cycles and expansion plans.
Standardize data: Invest in metering, forecasting, and settlement systems to optimize banking and scheduling under evolving state rules.
Plan for policy change: Model tariff scenarios, curtailment risk, and shifting banking frameworks; maintain a diversified renewable portfolio across states where feasible.
The Takeaway: A Silent but Systemic Energy Transition
Captive renewables are catalyzing a quiet revolution in Indian industry. What began as opportunistic rooftop solar is now a core energy strategy—backed by legal clarity on group captive rules, surging open access installations, and a widening ecosystem of developers, financiers, and digital platforms. By decentralizing procurement and greening supply at scale, industries are enhancing energy security, lowering costs, and accelerating toward net-zero operations. The public grid still matters—but the balance of power has shifted toward the factory gate.
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