CAPTIVE (open Access)
The Captive (Open Access) model for off-site solar or wind energy allows corporate buyers to fully own a renewable energy power generation asset located at a remote site. The electricity generated is exclusively used by the corporate buyer for their own consumption, making it an ideal solution for large corporations seeking energy independence and significant cost savings. This model is particularly suitable for businesses with high energy needs and sustainability goals, allowing them to take full control of their energy production.
Key Features of the Captive (Open Access) Model:
1. Full Ownership of Power Generating Asset:
The corporate buyer owns 100% of the off-site solar or wind energy generation system.
Ownership gives the buyer complete control over energy production, maintenance, and management of the asset.
2. Off-site Solar/Wind Installation:
The solar or wind project is typically located off-site, often in areas where conditions are optimal for energy generation (such as sunny or windy regions).
The energy is transmitted from the off-site power plant to the buyer's facility through the open access grid.
3. Open Access:
The term "open access" refers to the use of the local or national power grid to transmit the generated renewable energy from the off-site plant to the corporate buyer’s location.
Buyers pay wheeling and transmission charges to use the grid infrastructure, but this cost is often lower than the cost of traditional grid electricity.
4. Energy for Own Consumption:
The energy generated by the off-site solar or wind plant is used entirely by the corporate buyer for their own consumption, reducing dependence on grid electricity.
This model is ideal for large businesses or manufacturing facilities with high energy demands and a focus on long-term cost reductions.
5. Cost Savings and Tariff Benefits:
Corporates typically benefit from significantly lower electricity costs when compared to traditional grid power, especially as solar and wind energy costs continue to decline.
While there are upfront costs for setting up the power plant, the savings over time due to reduced electricity bills and exemptions from certain regulatory charges make it a highly economical model.
6. Exemptions and Regulatory Benefits:
In many regions, captive power projects are exempt from cross-subsidy surcharges and other levies, leading to lower costs.
Corporates also benefit from Renewable Energy Certificates (RECs), which help meet regulatory obligations for renewable energy consumption and can be traded for financial benefits.
7. Sustainability and Renewable Energy Targets:
By owning a renewable energy asset, corporations can meet their sustainability goals and commitments to reducing carbon emissions.
It helps corporates comply with renewable purchase obligations (RPO) and positions them as leaders in sustainability.
8. Long-term Power Purchase Agreements (PPA):
Although the buyer owns the asset, they typically enter into a long-term PPA to ensure a steady supply of renewable energy from the off-site plant to their facility.
The PPA defines the terms of energy usage, transmission charges, and other operational factors.
Benefits of the Captive (Open Access) Model:
Complete Ownership:
The corporate buyer fully owns the asset, allowing them to reap all the financial and operational benefits of renewable energy generation.
Cost Efficiency:
The cost per unit of electricity is typically much lower than traditional grid electricity, especially over the long term. This can result in significant operational savings for businesses with high energy consumption.
Exemption from Regulatory Charges:
The captive model often provides exemptions from cross-subsidy surcharges and other levies, reducing the overall cost of electricity
Energy Independence:
The model allows corporates to become energy-independent, reducing reliance on fluctuating grid power tariffs and ensuring a stable energy supply.
Environmental Benefits:
Corporations can meet sustainability goals, reduce carbon footprints, and position themselves as eco-conscious companies by using 100% renewable energy.
Compliance with Renewable Energy Regulations:
Ownership of renewable energy assets helps businesses comply with local renewable energy mandates and obligations.
Challenges to Consider:
High Initial Capital Investment: Since the corporate buyer owns the asset, they need to invest in the entire project upfront, which can be capital-intensive.
Wheeling and Transmission Costs: While wheeling and transmission costs are lower than traditional grid tariffs, they still need to be factored into the overall energy cost.
Best Suited For:
Large Corporations with substantial energy consumption, such as manufacturing plants, data centers, and large commercial facilities.
Businesses with Sustainability Goals that aim to reduce carbon emissions and fulfill renewable energy commitments.
Industries Looking for Long-term Energy Stability by controlling their energy supply and reducing exposure to grid price volatility.
In conclusion, the Captive (Open Access) model is an excellent choice for corporations looking to own and control their renewable energy generation assets. It offers significant cost savings, energy independence, and sustainability benefits while aligning with long-term business objectives.
