Businesses today prefer to sustainably power their operations, but have limited on-site space for solar panels. Besides, a few companies are not even interested in investing huge capital in solar panels, and hence, they look for alternative sustainable power solutions. Businesses transitioning towards green energy are facilitated mainly through two progressive models, the Group Captive and the Third Party Sale. These models are gaining immense popularity in the commercial and industrial sectors and are accounting for a significant portion of India’s energy consumption. Both models have distinct economics, risk profiles, and operational implications, but ultimately help businesses reduce their carbon footprint, adopt energy cost-saving measures, and embrace sustainability in their operations. To procure green energy for operations, businesses can look for the best solar power plant installation company in India.
Group Captive allows a similar group of companies to jointly invest in solar power plants. A company investing in this renewable energy model must own at least 26% equity and must consume at least 51% of the power generated through the solar power plant. The Group Captive model leads to significant cost advantages, reduces reliance on utilities, and also protects businesses from cross-subsidy and additional surcharges. This further provides businesses with long-term savings and better control over energy management. Perhaps this model requires better coordination, capital planning, and even handling regulatory approvals.
Third-Party Sale model requires no upfront investment from businesses, as they procure green power from an independent solar plant owner, who operates the plant and sells power to the business through Power Purchase Agreements. The business has to pay for the electricity generated by the solar plant without investing any capital in the plant and without handling operations or maintenance of the power plant. This model, though, offers flexibility and quick entry but includes charges like Cross-Subsidy and Additional Surcharges that affect the overall costs.
In the Group Captive model, businesses jointly own and consume power from a renewable energy plant, whereas in the Third-Party Sale model, a solar power plant company sells green power to businesses through a Power Purchase Agreement. The key differences between the two models are ownership and control; group captive offering more control, ownership, and cost savings, whereas third-party sales have no upfront investment but moderate savings.
While selecting the best solar model, businesses considered several factors to pick the one that best suited their company. From financial considerations, energy requirements, site assessment outcomes, equipment quality, to the reputation of the solar panel company, businesses consider various factors. However, businesses try to create a balance between the cost and return on investment and try to find a solution that is a lucrative investment and a trusted source of clean energy that aligns with their sustainability commitments.
Finally, it can be said that there is no universal best model, as the best model will depend upon the specific business and its green power needs. Group Captive solar panel model provides the strongest long-term economics and maximum control, but businesses require capital, coordination, and governance. The Third-Party Sale model provides businesses speed, simplicity, and low capital investment, at the cost of some savings and ownership benefits. Businesses seriously looking to switch to solar panels should conduct a feasibility study to check their capital availability, power load, and should also request indicative captive project cost estimates and PPAs from reputed solar power plant installation companies in India. The comparative data will help them make a concrete choice and pick the best model that best suits their business.