Captive Solar Power Plants Becoming popular with Indian Companies

I had earlier written a blog post Captive Solar Power Plant – Is it Good for My Company? that received quite a few queries and comments, with some of them saying it is a bit too early for Indian companies for think of captive solar as the business case might not be strong enough.

I would say that there is indeed some truth in that – at the same time, the business case is becoming stronger for some select industrial and commercial sectors.

In the last 2 years, at Solar Mango we have seen significant interest from these select industry segments small developers and corporates to put up captive solar power plants. The reason is not difficult to see – price of grid power is increasing alarmingly, while the cost of solar power has been decreasing at a fast pace. *By captive, we mean not just rooftop, but in most cases, offsite, grid connected, MW scale solar power plants supplying power to the developer for captive use.

Even we at Solar Mango had estimated that the rate of decrease of the cost of solar would decrease after 2014 – that is, solar power will not see such dramatic decreases in costs as it had seen between 2010 and 2014.

But we were proved wrong, as the cost of generation of solar power is breaking one record after another on its way down. Even if you assume that the tariffs as low as Rs 4.34/kWh being quoted in some parts of the country are exceptions, our estimations with even conservative cost numbers suggest that the levelised cost for solar power is around Rs 5.5/kWh for small MW power plants without trackers and without taking into account financial incentives such as accelerated depreciation. If some of these incentives are considered and if trackers are introduced into the picture, the cost of solar power is below Rs 5/kWh for even power plants in the range 1-5 MW.

At this cost, it can be said that solar power has reached grid parity – that is, the cost of solar power is the same or lower than that of grid power.

You can now see why so many companies are suddenly interested in having their own solar power plant for captive consumption – they now have the opportunity to procure power at a cheaper price than grid power, and more important, they can now lock in the cost of power for 25 years.

With this in the background, I was least surprised to read the news that Infosys would be commissioning solar power plants for 55 MW on its India campuses by end of 2016.

In 2015, Infosys became the first Indian company to join RE100, which is a group of the world’s most influential companies aiming to go 100% renewable. Now, this is another reason why some of the large companies in India could wish to go solar – their commitment to climate change efforts.

Overall, at Solar Mango we expect 2016 to be an important year for captive solar power plants in India – in this year, we expect captive solar power installations in the country to reach an inflection point in their growth. We expect annual captive solar power plant installations in the country to double or even treble its size in 2016. The coming years could see much higher growth rates for this sector as the government starts recognizing the importance of this segment and starts providing a more conducive environment for its growth.



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11 thoughts on “Captive Solar Power Plants Becoming popular with Indian Companies

  1. S Padmanabhan

    Best option for captives is inside the fence -inside the plant- captives connected to one of the smaller substations at 11kv with in the plant. If no land is available inside, one can look at off site. I have several investors willing to do this on tariff based BOO on long term PPA under group captives.I am willing to work with Solar Mango in bringing these ideas to fruition.

    While I also strongly support offsite plants , in my personal view, with the congestion is transmission lines of Transco and discoms and as the solar volumes increase in MWs,pressure on peak power will be huge.Like incase of wind, the discoms will have no option than to back down solar as they cannot shut down thermal plants.Grid management s a big challenge for discoms so long as corridors are not open and plenty. But then it is also a fact that TNEB/GoTN has not put adequate pressure on Govt of India to integrate the southern grid with all India for its own reasons. It is 68 years since 1948 and yet South is not electrically fully integrated with all India.Sad and shameful situation.

    1. Narasimhan Santhanam Post author

      Dear Padmanabhan

      Many thanks indeed for providing your valuable insights

      I fully agree with you that onsite solar power plants are optimal compared to offsite, but we are dealing wiith a rigid constraint in most industrial and commercial installations – they simply do not have enough space, and their rooftops alone can barely supply them with 20% of their needs

      Yes, unknown devils exist in the offsite model, but I do not see an alternative if a company wishes to put up a captive but does not have the land within premises

      Many thanks once again for taking time to provide your insights, all the best!

  2. Rajeev Shukla


    Can I have my own captive solar power plant for our company outside our company premises as we do not have enough space on our company rooftop and premises?

    Thank you

    1. Narasimhan Santhanam Post author

      Dear Rajeev Yes, you can have a captive power plant outside your premises. In this case, you will have to wheel the power using your state electricity grid – for which some charges apply.

    1. Abhishek Pandey

      Dear Chetan,

      I believe it is cheaper to have captive wind than solar currently. Wind captive will cost around Rs 5/kWh but solar captive can come up to Rs 6/kWh in Tamil Nadu. But then again, unlike solar, wind turbines can be erected only at sites with good wind potential. So, I guess that would be a challenge.

  3. Sanjay

    Dear sir
    We need information regarding govt of Maharashtra solar energy generate at own promises and utilise it,,
    Also need info solar product at affordable price to consumer
    In these case I can start small business or consulting the same
    Mail I’d
    Sanjay,, Nanded

  4. Biswanath Sen

    We are leading solar EPC Vendor and developer in India, going to install a solar power plant in Shirohi , Rajasthan, if you are interested to purchase solar power from us with very low tariff rate than your existing DISCOM (power supply provider / from your captive thermal plant). There is no upfront investment from your side. Through RESCO PPA model zero investment your can purchase power from us with 15 to 20 years PPA agreement

  5. Biswanath Sen

    Are you a corporate with a high demand for electricity? Or looking to reduce your electricity bills? We provide the solution you seek.

    Open Access / Resco model is for the industrial and commercial clients who want electricity directly from the generator at an optimum price. The customer pays for the electricity supplied to it directly from the generator under a long-term Power Purchase Agreement (PPA).
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    • A long-term Power Purchase Agreement (PPA) is signed between the power consumer (off-taker) and solar power project owned by Developer.
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