Renovar. EnergyGroup Captive Solar Proposal
Powering Precot with
10.3 MW of captive solar
A 25-year group captive solar structure delivering ₹144.77 Cr in gross energy savings, a 29.8% investment IRR, and a 5-year payback — hedging Precot against rising grid tariffs.
The Opportunity for Precot
Energy-intensive operations
Spinning and dyeing units run continuously on heavy motor loads — grid power is among the largest operating cost lines for a cotton mill.
Rising KSEB tariffs
Grid tariffs escalate ~5% annually. Over 25 years, the year-1 tariff of ₹6.30/unit climbs past ₹20/unit, widening the savings gap every year.
Tariff certainty
A group captive solar contract locks a predictable solar tariff (₹4.50/unit, +2.5%/yr) — insulating margins from utility volatility and regulatory surprises.
Sustainability mandate
Global retail and brand partners increasingly demand renewable energy in the supply chain. Captive solar makes Precot cotton products measurably greener.
The Group Captive Solution
A group captive model lets Precot own a share of a dedicated solar plant and consume its energy at a contracted tariff — without building or operating the plant itself. It is the cleanest way for an energy-intensive manufacturer to lock long-term renewable savings with minimal capex and no operational burden.
Usolar builds & operates the solar plant
A 10.3 MW solar asset is developed, financed and operated by Usolar at an off-site location within the same state discom area.
Precot invests in captive equity + deposit
Precot contributes ₹4.12 Cr captive equity and ₹3.34 Cr refundable security deposit — meeting the 26% group captive ownership rule.
Energy wheeled to Precot
Generated units are wheeled through the grid to Precot meters. Precot pays a solar tariff instead of the full grid tariff.
Savings flow every year for 25 years
The spread between the grid tariff and the locked solar tariff is the gross saving — compounding as grid tariffs rise.
Investment Structure
The security deposit is refundable in Year 25 and is factored into the Year 25 cash flow. No debt is applied — the structure is fully equity-funded on the client side.
Plant at a glance
Model Inputs & Assumptions
All 25-year cash-flow figures in this proposal are derived from the inputs below. Tariffs and charges follow Kerala SLDC / KSEB group captive norms.
INPUT — GROUP CAPTIVE SOLAR MODEL
Prepared by RenovarINVESTMENT & FINANCING INPUTS
How the Savings Work — Year 1
Year-1 economics
Across 1,38,04,884 usable units
The gap widens every year: grid tariffs rise 5% annually while the solar tariff rises only 2.5%, so savings compound — reaching ₹12,43,71,911 in Year 25 alone.
Grid vs Solar Tariff — 25-Year Outlook
Cost per unit (₹/unit)
Grid +5%/yr · Solar +2.5%/yr- Grid tariff (KSEB)
- Solar tariff (captive)
Cumulative savings recover the full ₹7.46 Cr initial investment. Every year after is net upside.
Grid rises 223% while solar rises only 79% — the widening spread is the savings engine.
Tariff milestones
| Year | Grid ₹/unit | Solar ₹/unit | Saving ₹/unit | Yearly savings | Status |
|---|---|---|---|---|---|
| 1 | 6.30 | 5.39 | 0.91 | ₹1.25 Cr | Recovering |
| 5 | 7.66 | 5.94 | 1.72 | ₹2.30 Cr | Breakeven |
| 10 | 9.77 | 6.71 | 3.07 | ₹3.97 Cr | Net savings |
| 15 | 12.47 | 7.57 | 4.90 | ₹6.13 Cr | Net savings |
| 20 | 15.92 | 8.55 | 7.37 | ₹8.90 Cr | Net savings |
| 25 | 20.32 | 9.65 | 10.66 | ₹12.44 Cr | Net savings |
| 25-year total savings | ₹144.77 Cr | ||||
25-Year Savings & Cash Flow
Cumulative net savings (₹ Cr)
Starts at −₹7.46 Cr (investment), crosses zero at Year 5 (breakeven), then accumulates net profit.
Annual KSEB cost vs group captive cost (₹ Cr)
The gap between the two bars is each year's saving. KSEB rises 5%/yr; solar rises only 2.5%/yr — so the gap widens every year.
- KSEB cost (+5%/yr)
- Group captive cost (solar +2.5%/yr)
Returns, IRR & Payback
*IRR is pre-tax and excludes depreciation benefits. The security deposit (₹3.34 Cr) is refunded in Year 25 and included in that year cash flow. All figures are illustrative, based on client-provided grid tariff rates and standard group captive assumptions.
Power Adjustment & Energy Banking
Solar generation from the group captive plant is injected into the Kerala grid and accounted against the captive consumer's electricity consumption. The flow below shows how each unit travels from generation to final settlement.
Key distinctions
Energy produced by the 10.3 MW solar plant at the meter.
Energy fed into the Kerala grid and measured at the injection point.
Injected energy after the 5% grid support charge — available for adjustment.
Energy used by the captive consumer within the applicable billing period.
Surplus net energy carried forward to a later billing period.
The 5% Grid Support Charge
Of the energy injected into the Kerala grid, 5% is accounted as the Grid Support Charge. The balance 95% is the net energy available for adjustment against consumption. This is a grid-usage charge — not the banking charge.
Worked example
Do not confuse the two 5% charges
The Grid Support Charge is applied once at the point of injection. The Banking Charge is a separate 5% applied only on surplus energy carried across a billing period.
Same-Time-Period Adjustment
Where net renewable energy injected during a particular time period is consumed during the same time period and within the same billing period, the treatment is more favourable. Under the applicable Kerala regulation, energy fully consumed in the same time period is exempt from transmission / wheeling charges and applicable losses — it is adjusted unit-for-unit against consumption.
Example
No banking needed
The consumer does not need to bank energy that can be consumed and adjusted within the applicable same time period — it is settled directly, avoiding banking charges entirely.
Charge exemption
Energy fully consumed in the same time period is exempt from transmission / wheeling charges and applicable losses, making this the most efficient use of captive solar.
Cross-Time-Period Adjustment
Kerala's framework provides specific adjustment factors where energy generated in one time block is used to offset consumption in another. These are regulatory adjustment mechanisms — not additional generation. They change how much consumption a given injection can offset.
Illustrative adjustment factors
| Energy Injection Period | Consumption Period | Illustrative Adjustment |
|---|---|---|
| Same time period | Same time period | 100% |
| Non-peak | Peak | 80% |
| Peak | Peak | 100% |
| Peak | Other time blocks | 120% treatment (as applicable) |
| Other non-peak | Other non-peak | 100% |
Subject to the prevailing Kerala regulations. Factors are accounting mechanisms, not generation.
Commercial meaning
Injecting 1,000 kWh during a non-peak period and using it to offset peak-hour consumption:
1,000 kWh injected does not always equal 1,000 kWh of peak-hour offset.
What 'Banking' Actually Means
Banking occurs when eligible renewable energy remaining after the applicable energy adjustment within a billing period is carried forward for use in a subsequent billing period, subject to the applicable Kerala regulations and banking charges.
Solar energy is generated
Energy is injected into the grid
Applicable grid support adjustment is applied
Energy is first accounted against eligible consumption
If surplus remains, it becomes banked energy (subject to eligibility)
Banked energy is carried forward to a subsequent billing period
When used, the applicable adjustment / settlement rules apply
At end of settlement, remaining banked energy is settled per prevailing regulations
The 5% Banking Charge
The applicable banking mechanism provides for a 5% banking charge on surplus energy banked beyond the relevant billing period, where applicable. It is charged only once on energy that is actually banked — not on energy adjusted within the same billing period.
Visual callout
Worked example
The banking charge is applied once to surplus energy that is actually banked. Energy adjusted within the same billing period is not subject to it.
Full Worked Example
A simple billing-period illustration using round numbers to show how grid support, consumption adjustment and banking interact.
One billing period
becomes the starting banked balance available for subsequent adjustment, subject to the applicable regulations and time-block / settlement rules.
This example uses round numbers to explain the mechanics. It is not a project billing calculation and does not reflect the actual 10.3 MW plant's generation or Precot's consumption profile.
Why Renovar
Renovar Energy designs, builds and operates renewable energy assets for industrial consumers across South India. We specialise in group captive and open-access solar structures that help manufacturers like Precot convert volatile grid costs into predictable, long-term savings.
Let's power Precot's next chapter
Reach out to our team to take this proposal forward.
Prepared by Renovar Energy for Precot · Confidential · 2026 · Illustrative figures based on the 25-year pre-tax group captive model