I get asked this constantly. A company settles on open access for its renewable power, then hits the fork: third-party, or group captive. Both are open access. The difference is equity, and equity changes plenty downstream. Neither is better in the abstract, so here's an honest read of each and a checklist to decide.
Both models wheel power from a plant to your factory over the grid instead of off the DISCOM. From there they part ways.
Third Party
Third-party is the light one. You sign a PPA at a fixed price, no equity, easy to enter and easy to leave. For uncertain or fast-growing load, or if you just want clean books, it fits. But you keep paying the Cross Subsidy Surcharge and the Additional Surcharge, as applicable, so your savings run lower, often far lower in states where grid power is already cheap.
The real catch is what the lightness does to the relationship. Third-party is a race to the bottom on price. Smaller or seasonal buyers bargain hard and with today's glut of solar there's always a desperate IPP ready to shave another 20 paise, so buyers keep switching. The flip side is that the IPP has no reason to stay either; it will chase a customer who pays a little more. Both sides are always half looking elsewhere.
And picking on the last paisa is short-sighted. I've built enough of these models to know an IPP's IRR sits between 8 and 14 percent over a 20 to 25 year life, once you load in the D/E, the build cost, O&M and inflation. Your return as the customer is close to infinite next to that, so paying a credible IPP 20 or even 30 paise more barely dents your lifetime savings. What that small premium actually buys is whether the IPP can keep delivering contracted power for two decades. Choose on price alone and you can find yourself tied to someone who can't.
Group Captive
Group captive is built to remove those surcharges. You hold equity in the plant as part of a group owning at least 26 percent, and you consume at least 51 percent of what it makes each year. Treated as a part-owner drawing your own power, the surcharges fall away and the savings jump; the industry puts group captive around 30 to 50 percent off the bill, well ahead of third-party.
That waiver is a deliberate nudge. Policy wants C&I buyers in group captive because it makes you a real stakeholder in the plant, and that's the prize. You and the supplier are bound for the long term, both invested, both able to build together as your load grows. Lenders read it the same way: they treat group captive as long-term and bankable, and are wary of third-party as short-term paper. The 2026 amendment rules pushed it further, assessing the 26 and 51 percent collectively across the group, freeing anchor investors from the consumption cap, counting storage, and holding CSS and AS off while verification is pending. It's more bankable now than it has ever been.
What it asks in return is real: equity on your balance sheet, consumption steady enough to clear 51 percent every year and annual compliance, lighter than before but still there. And because you're a co-owner, the IPP's quality becomes a governance question, not just a commercial one. Ask whether they'll still be running the plant well in year ten and want a track record for an answer.
One technical point quietly decides fit. Solar generates in daylight only, and there's no banking on solar, so if you run three shifts your nights fall back on the grid. Wind behaves differently; it generates round the clock and can be banked. At Good Energies we don't stop at solar, we run wind and hybrid too, and our wind carries 100 percent banking. So we can shape supply to your actual load curve, day and night, instead of leaving you half-covered. If you're serious about round-the-clock green power, that combination matters far more than the headline tariff.
A Simple Decision-making framework
For what it's worth, here's where we stand. We prefer group captive, for the very reason the policy was built around it. The long-term binding that some buyers read as a constraint is the point. It aligns customer and supplier for years, and when both sides are invested, both show up. It isn't for everyone, and a badly matched captive is worse than a clean third-party PPA. But for steady load and a long horizon, a partner locked in beside you beats the freedom to walk.
Before you choose, run through this.
- Is your consumption steady enough to clear 51 percent, year after year?
- Will your load grow or shift enough over the next few years to change the sizing?
- Are you comfortable with equity in a power company, once you've counted what else that money could do?
- Are you choosing your IPP on price alone, or on whether it can actually deliver for 20 years?
- Do you need round-the-clock power, which points to wind or hybrid, not daytime solar on its own?
- Do you want a partner bound in beside you, or the freedom to stay light and flexible?
If your answers point to steady load, a long horizon and a partner you trust, group captive is likely your model. If they point to uncertainty or a balance sheet you'd rather keep light, third-party is the cleaner fit. Either way, the tariff is the smallest part of the decision. The IPP on the other side of it is the rest.