Orient Cement to Buy Solar Under Group Captive Model from AMPSolar’s Open Access Project

The transaction is expected to cost ₹40.5 million


Orient Cement, a subsidiary of Indian conglomerate CK Birla Group, announced that it would acquire a 26% stake in AMPSolar Systems Private Limited for ₹40.5 million (~$549,244) to set up a 13.5 MW solar project for captive power generation.

Orient says it plans to meet its green energy requirements, optimize energy costs, and comply with regulatory requirements for captive power consumption as per the electricity laws. It has entered into a share purchase, subscription, and shareholders agreements with AMPSolar Technology Private Limited and AMPSolar Systems Private Limited on December 3, 2020.

The transaction will be done through a share capital subscription in a combination of equity shares and compulsory convertible debentures. The acquisition is expected to be completed in six months.

In 2019, global pharmaceutical major Cipla Limited acquired a 26% stake in AMPSolar for ₹129 million (~$1.85 million) to access solar under group captive model. AMPSolar also brought in Bharti Airtel Limited into its group captive solar project deal. The cost of acquisition was ₹84 million (~$1.2 million) which included subscription of 84,000 (26%) equity shares of ₹10 (~$0.141) each in tranches and subscription of 83,160 (26%) of CCDs of ₹1,000 (~$14.1) each.

Large businesses in India are going green to meet a major part of their energy consumption and comply with the renewable purchase obligations. As most states have made it extremely difficult to procure solar energy through open access by adding a slew of additional charges on consumers, group captive has become a more attractive model.

Unlike an individual captive or third-party sale power project, group captive is an arrangement through which a developer sets up a power project for the collective use of multiple industrial or commercial consumers who have 26% equity in the project and must consume 51% of the power produced.

Mercom’s report Open Access Solar Market in India – Key States throws light on the group captive model in greater detail.

AMP Energy – the owner or AMPSolar Systems – develops, owns, and operates renewable energy infrastructure to supply solar and other renewable-based power to commercial, industrial, and utility customers.

Recently, Bengaluru-based biopharmaceutical company Biocon Limited said it would acquire a 26% equity stake in Hinduja Renewables Two Private Limited (HRTPL), which is currently undertaking a 36 MW open access solar project in Raichur, Karnataka. With this transaction, Biocon will be procuring solar through open access under the group captive model.

Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.