As India’s economy expands and energy consumption surges, the country finds itself at a critical crossroads — how do we ensure long-term energy security while reducing reliance on fossil fuel imports and maintaining affordability? The answer lies not just in centralized solar parks or national-level reforms, but also in an often-understated solution: local captive solar power projects.
As the Director of a solar EPC company deeply engaged in industrial and infrastructure-level solar installations, I’ve witnessed firsthand how localized solar generation can directly strengthen not just industries, but our national energy grid and economy.
What Are Captive Solar Projects?
Under the Electricity Act, 2003, a captive power project is defined as one where the consumer holds at least 26% equity in the plant and consumes more than 51% of the electricity generated. These systems are typically deployed either on-site or at off-site locations through Open Access (OA), delivering power directly to the end-user without relying on distribution companies for energy procurement.
This decentralization of power generation plays a critical role in reducing transmission losses, optimizing costs, and relieving pressure on the national grid — especially at a time when India’s power demand continues to reach new peaks year after year.
Why Local Captive Solar Makes Strategic Sense?
- Reduces Grid Dependency and Transmission Losses
According to the Ministry of Power, India’s Aggregate Technical and Commercial (AT&C) losses stood at 15.41% in FY 2021–22 — significantly higher than the global average. Captive solar projects reduce this burden by generating electricity closer to consumption centers, minimizing long-distance transmission and inefficiencies. - Delivers Predictable and Lower-Cost Power
Industrial tariffs across Indian states range from ₹7 to ₹10 per unit, often subject to annual revisions, cross-subsidy surcharges, and demand charges. Captive solar power, on the other hand, typically costs between ₹3.5 and ₹4.5 per unit, based on state regulations and project scale (source: CERC and MNRE). This cost predictability enables industries to plan capital and operational expenses more
efficiently. - Accelerates India’s Renewable Energy Goals
India aims to install 500 GW of non-fossil fuel energy capacity by 2030, with 292 GW projected from solar energy (MNRE). As of June 2025, India had installed 89 GW of solar power. Bridging the remaining gap will require contributions not just from utility-scale projects but also decentralized captive solar systems adopted by commercial and industrial sectors. - Supports Localized Economic Growth and Job Creation
Unlike utility-scale solar projects that are often concentrated in specific geographies, local captive projects create jobs across states and districts — from engineering and construction to long-term operations and maintenance. This localized deployment can boost skilled employment and encourage the development of solar supply chains in rural and semi-urban regions.
- Strengthens Industrial Competitiveness and ESG Alignment
More Indian businesses are aligning with Environmental, Social and Governance (ESG) principles and global supply chain mandates, which increasingly require clean energy sourcing. Captive solar helps industries meet compliance targets while improving their sustainability performance — without sacrificing operational efficiency.
Policy Landscape: Progress with Challenges
The Green Energy Open Access Rules (2022), which reduced the minimum eligibility load from 1 MW to 100 kW, have enabled broader participation. States like Gujarat, Rajasthan, Tamil Nadu, and Maharashtra have taken proactive steps by streamlining permissions, introducing energy banking options, and encouraging group captive models.
However, challenges persist — such as inconsistent state-level charges, delays in approval processes, and restrictive energy banking windows. Greater policy harmonization and digitization of the open access approval process will be key to unlocking large-scale adoption.
Punjab’s Growing Momentum
In a land-constrained state like Punjab, the adoption of off-site captive solar models has shown promising results. Local solar deployment for industrial clusters is enabling factories to operate more sustainably, reduce dependency on high-tariff grid power, and help balance seasonal agricultural demand with industrial load.
Punjab’s example highlights how even high-consumption, low-availability states can benefit from thoughtful solar project planning and regulatory alignment.
Conclusion: Captive Solar as a Catalyst for Sovereignty
India’s journey to energy sovereignty must be anchored in diversification, decentralization, and democratization of energy generation. Local captive solar projects tick all these boxes. They not only empower industries with affordable and clean electricity but also contribute to national priorities — be it reducing fossil fuel imports, meeting climate goals, or boosting regional economic development.
With the right mix of policy support, private sector participation, and collaborative frameworks, captive solar projects can become one of India’s most powerful tools for ensuring resilient, inclusive, and self- reliant energy growth.
The author is director at Solidus Techno Power Pvt. Ltd.
