Third-party PPA or group captive? In Gujarat, the business model decides whether open access saves money
On FY 2026-27 charges, the same solar plant costs a Gujarat factory more than grid power under a third-party PPA, and saves ₹1.58 to ₹2.13 per unit as group captive. Here is why, and what each model asks of the buyer.
Most conversations about open-access renewable power start with the plant's tariff. In Gujarat this year, the more important question is the business model. It decides whether the buyer pays ₹2.32 per unit of cross-subsidy and additional surcharge, and that is more than the gap between solar and grid power.
The same plant, three ways
Take a factory supplied at 11 kV by DGVCL. It has 3,000 kVA contract demand, uses 6 lakh units a month and pays an energy-linked grid tariff of ₹6.75 per unit. It wants 40% of its consumption from open-access solar, which needs a plant of about 1.8 MW.
| 11 kV factory | Third-party PPA | Group captive | Own plant |
|---|---|---|---|
| Landed cost (₹/unit) | 7.49 | 5.17 | 4.85 |
| Saving vs grid (₹/unit) | −0.74 | 1.58 | 1.90 |
| Saving, year 1 | −₹21.2 lakh | ₹45.6 lakh | ₹1.47 crore* |
| Upfront | ₹21.7 lakh | ₹80.0 lakh | ₹7.52 crore |
| Simple payback | — | 1.8 years | 5.1 years |
For a larger buyer at 66 kV (10,000 kVA, 20 lakh units a month), the pattern holds and the numbers grow:
| 66 kV factory | Third-party PPA | Group captive | Own plant |
|---|---|---|---|
| Landed cost (₹/unit) | 6.94 | 4.62 | 4.32 |
| Saving vs grid (₹/unit) | −0.19 | 2.13 | 2.43 |
| Saving, year 1 | −₹18.2 lakh | ₹2.05 crore | ₹5.19 crore* |
| Upfront | ₹61.2 lakh | ₹2.43 crore | ₹23.4 crore |
* For an owned plant, the year-1 figure is the cash saving before recovering the investment. On a 25-year basis the project returns about 20% (11 kV) to 23% (66 kV) a year.
Why the gap is so large
Every model pays for the power, the losses, GETCO's transmission charge, wheeling below 66 kV and banking. Only third-party buyers also pay the two surcharges that compensate the distribution company for the customer it loses:
- Cross-subsidy surcharge: ₹1.33/unit for HT consumers in FY 2026-27.
- Additional surcharge: ₹0.99/unit from 1 October 2026.
Captive users are exempt from cross-subsidy surcharge under the Electricity Act, 2003. They are not charged additional surcharge either. Our engine applies this treatment; confirm it for your own structure with legal advice. Remove ₹2.32 per unit from the stack and a loss becomes a substantial saving.
When a third-party PPA can still work
On these charges, a solar PPA breaks even with a ₹6.75 grid tariff only if the plant tariff is at or below about ₹2.84 per unit at 11 kV, or ₹3.32 at 66 kV. A PPA also makes more sense where:
- the grid tariff is higher, for example time-of-day peak-heavy consumption, or commercial categories with higher energy charges;
- the buyer cannot take equity, or cannot commit to the captive rules for the life of the plant;
- the state's surcharges are lower. They vary widely, as our charges tracker shows.
What group captive asks of the buyer
- Equity: captive users must hold at least 26% of the generating company. With a typical 70:30 debt-to-equity structure, that is about 8% of the project cost. Here that is ₹58 lakh of the ₹80 lakh upfront; the rest is payment security and open-access setup.
- Consumption: captive users together must consume at least 51% of the plant's output, broadly in proportion to their holding.
- Annual verification: captive status is checked every year. If the conditions are not met, the surcharges can become payable for that year. The developer's structuring and monitoring matter as much as the tariff.
The takeaway
Comparing open-access offers on plant tariff alone is misleading. Compare them on landed cost at your meter, under each business model you could realistically adopt, using the charges in force on the date power will flow. That is what our savings calculator does in two minutes. Our advisory team then checks it against your bills and real developer offers.
Method: ClimeQuant engine on Gujarat FY 2026-27 charges as on 13 Oct 2026 (see the full cited stack). Solar at 20% capacity utilisation, ₹3.50/unit PPA tariff, ₹4.10 crore/MW plant cost, 15% of energy banked, 10% discount rate, 25-year life. Indicative only; not legal, tariff or investment advice.