Under the group captive scheme a developer sets up a power plant for collective use of many industrial consumers who should have 26 percent equity in the plant and must consume 51 percent of the power produced.

While industrial consumer segment is charged higher tariff than the domestic or agriculture consumers, the group captive scheme allows, the consumers pay only the wheeling and banking charges and use the low cost power for their captive usage.

The group captive scheme in solar projects provides additional advantage, as the consumers can use the electricity generated through solar plant and also are eligible to sale the REC certificates in the open market. This makes a solar project more attractive as the net cash flow includes the revenue from the RECs as well and avoids the expensive electricity purchases from the state utilities.

Cheaper price:

This is the most important factor and the reason why it all works. Industrial tariffs tend to be higher than residential and it effects the profit maximization condition. This way, industries will get cheaper rate.

Cross subsidy:

By section 42 of the Electricity Act, 2003 the consumers of captive power scheme are exempt from paying cross subsidy charges.

RPO Obligation:

HT consumers 6% Renewable power purchase obligation can be complied.

Green obligation:

As a responsible corporate citizen the 100% renewable power usage can be attributed to reduction of CO2 emission.