Overview
What is Group Captive Investment?
Invest up to 74% equity in a solar SPV where industrial consumers hold minimum 26%. Consumer consumes 51%+ of their proportionate share, qualifying the project as "captive" — exempt from CSS and AS.
Investor (You)
74% max equity • Provide capital, earn returns
- 18-22% ROE
- 40% depreciation (on 74%)
- Dividend income
- Asset ownership
Consumer
26% min equity • Consume power, captive status
- 30-50% cost savings
- CSS/AS exemption
- I-RECs for sustainability
- 40% depreciation (on 26%)
Value Proposition
Why Group Captive?
Higher Equity Returns
CSS exemption creates larger spread between solar cost and grid tariff, boosting returns.
18-22%
Stable Counterparty
Consumer has 26% equity at stake. Aligned incentives reduce payment risk.
Aligned
Accelerated Depreciation
Claim 40% depreciation on 74% equity in Year 1. Significant tax shield.
40%
Long-Term Contracts
20-25 year PPA with captive consumer. Stable, predictable cash flows.
20-25 yrs
Premium Tariffs
Tariffs 10-15% higher than utility projects. CSS exemption shared with consumer.
+10-15%
Diversification
Different risk profile vs utility/commercial. Portfolio diversification.
Diversified
Structure
Deal Parameters
| Investor Equity | 74% maximum |
| Consumer Equity | 26% minimum |
| Consumer Consumption | ≥51% of share |
| PPA Tenure | 20-25 years |
| Typical Project Size | 10-100 MW |
| D:E Ratio | 70:30 |
| Cost of Debt | 10-11% |
Counterparty
Target Consumer Segments
| Segment | Examples | Typical Load |
|---|---|---|
| Manufacturing | Steel, cement, auto, chemicals | 5-50 MW |
| IT/Data Centers | Tech parks, data centers | 10-100 MW |
| Textiles | Spinning, processing units | 2-20 MW |
| Pharma | API units, formulations | 2-15 MW |
Risk Management
Aligned Incentives = Lower Risk
| Risk | Mitigant |
|---|---|
| Consumer Default | Consumer has 26% equity at stake, aligned incentives |
| Consumption Shortfall | Minimum offtake obligations, deemed generation |
| Captive Status Loss | Monitoring system, annual compliance checks |
| Consumer Exit | Exit provisions in SHA, replacement consumer mechanism |
| Credit Risk | Upfront credit assessment, BG/LC provisions |
Illustrative
Sample 25 MWp Project
| Project Capacity | 25 MWp |
| Total Capex | ₹112.5 Cr |
| Investor Equity (74%) | ₹25 Cr |
| Consumer Equity (26%) | ₹8.8 Cr |
| Debt (70%) | ₹78.7 Cr |
| PPA Tariff Year 1 | ₹4.50/kWh |
| Escalation | 2% p.a. |
| Project IRR | 15.2% |
| Investor Equity IRR | 20.5% |
| DSCR Average | 1.35x |
Process
Investment Journey
Consumer Identification
Ongoing
Credit-worthy industrial consumer with stable load
Structuring
4-6 weeks
SPV formation, SHA, equity split agreement
Due Diligence
4-6 weeks
Consumer credit, project feasibility, legal DD
Investment Approval
1-2 weeks
IC presentation, terms finalization
Financial Close
4-8 weeks
Debt arrangement, equity drawdown
Execution & COD
6-10 months
EPC, commissioning, OA approval
Liquidity
Exit Pathways
| Timing | Exit Route | Mechanism |
|---|---|---|
| Post-COD | Sale to another investor | SHA transfer provisions |
| 3-5 years | Consumer buyout | Call option provisions |
| Anytime | Replace with new investor | Bring eligible investor |