Tamil Nadu has become one of India’s important renewable energy markets, and industrial companies across Chennai, Sriperumbudur, Oragadam, Ambattur, Hosur and other manufacturing hubs are looking more closely at solar power as a way to manage electricity costs and improve their sustainability goals.
For an industrial unit, however, the question is not simply “Should we use solar?” The more useful question is:
“Should we generate solar power at our own facility, or should we source renewable electricity through an Open Access arrangement?”
Both options can help industries increase their use of renewable energy. But the economics, infrastructure requirements, operational considerations and regulatory treatment can be quite different.
This guide explains the difference between captive/on-site solar and Open Access power and the factors Tamil Nadu industries should evaluate before making a decision.
What Is On-Site Solar Power?
On-site solar means installing a solar photovoltaic system at your industrial facility.
For example, a manufacturing company in Chennai may have a factory roof, warehouse roof, parking area or other suitable space. Solar panels can be installed there and electricity generated during daylight hours can be used by the facility.
A typical system may include:
- Solar PV modules
- Inverters
- Mounting structures
- Protection equipment
- Monitoring systems
- Electrical connections
- Metering infrastructure
- Optional battery storage
The electricity generated can reduce the amount of electricity the facility needs to purchase from the grid.
Why Industries Consider Rooftop Solar
Industrial buildings often have significant electricity consumption during working hours, which can align reasonably well with solar generation.
For a company operating machinery, compressors, HVAC systems, pumps or other equipment during daytime hours, this can make on-site solar particularly interesting.
The main advantage is straightforward:
You generate electricity close to where you consume it.
This can reduce dependence on externally purchased electricity and avoid some of the losses associated with transporting electricity over longer distances.
What Is Open Access Power?
Open Access allows eligible electricity consumers to procure power from a source other than their conventional electricity supplier, subject to applicable regulations, approvals, charges and network arrangements.
For renewable Open Access, an industrial consumer may purchase electricity generated by a renewable energy project and use the electricity through the transmission and distribution network.
Instead of putting a large solar plant on the factory roof, the company can therefore participate in a renewable power arrangement connected to the wider electricity network.
This can be useful for companies that:
- Have limited rooftop space
- Operate large manufacturing facilities
- Have high electricity consumption
- Want access to larger renewable projects
- Cannot generate enough electricity from their own premises
- Have multiple facilities or significant energy requirements
However, Open Access is not simply a matter of signing a power purchase agreement and receiving cheaper electricity. Network-related charges, regulatory requirements, scheduling, settlement and other commercial considerations need to be evaluated.
Solar vs Open Access: The Basic Difference
The easiest way to understand the distinction is to look at where the electricity is generated.
| Factor | On-Site Solar | Open Access Renewable Power |
|---|---|---|
| Generation location | Customer premises | External renewable project |
| Typical installation | Rooftop/ground-mounted | Utility-scale solar/wind/solar-wind project |
| Land requirement | Requires suitable customer property | Usually no customer land required |
| Initial investment | Usually higher upfront investment | Depends on the contractual structure |
| Electricity delivery | Directly at facility | Through the electricity network |
| Suitable for | Facilities with suitable space | Large consumers needing substantial renewable power |
| Expansion | Limited by available site | Potentially more scalable |
| Operational complexity | Relatively straightforward after installation | More contractual and regulatory considerations |
| Grid dependence | Still needed when solar output is insufficient | Network remains important for delivery |
| Long-term planning | Asset ownership and maintenance | Contract and power procurement management |
The right choice depends heavily on the individual facility.
1. Electricity Consumption Is the First Thing to Study
Before comparing solar and Open Access, an industrial company should understand its electricity consumption pattern.
Look at:
- Monthly electricity consumption
- Peak demand
- Daytime consumption
- Night-time consumption
- Seasonal variations
- Production schedules
- Weekend consumption
- Existing tariff structure
- Demand charges
- Power factor
- Future expansion plans
For example, suppose a factory consumes substantial electricity between 9 AM and 6 PM.
A rooftop solar system could potentially match a meaningful portion of that daytime demand.
But if the factory operates continuously across multiple shifts, including substantial night-time production, the company may need a broader renewable procurement strategy.
This is where Open Access can become worth evaluating alongside on-site generation.
2. Rooftop Space Can Change the Decision
For Chennai and other industrial areas, available roof space is an important consideration.
A factory may have a large roof, but that does not automatically mean it can install a large solar plant.
Engineers need to consider:
- Roof structural strength
- Available shadow-free area
- Roof orientation
- Roof condition
- Maintenance access
- Fire-safety requirements
- Electrical infrastructure
- Future building expansion
- Nearby obstructions
A facility with substantial usable roof space may find on-site solar attractive.
Another factory may have high electricity consumption but very limited roof area. In that situation, installing solar only on the premises may not provide enough generation to meaningfully offset its total electricity requirement.
3. Large Industries Should Look Beyond Rooftop Potential
One common mistake is to calculate solar capacity based only on available roof space.
The better approach is to start with electricity consumption and then determine how much renewable energy the business wants to procure.
For example:
A small manufacturing facility might be able to cover a significant percentage of its daytime electricity consumption with rooftop solar.
A large automotive, engineering, textile, chemical or electronics manufacturing facility may consume far more electricity than its roof can support.
Such a company could investigate a combination of:
On-site solar + Open Access renewable power + grid electricity
This hybrid approach can sometimes provide greater flexibility than relying on only one source.
4. Compare the Complete Cost, Not Just the Solar Tariff
Cost comparisons between solar and Open Access need to go beyond the headline electricity price.
For on-site solar, the analysis may include:
- Solar equipment
- Installation
- Financing cost
- Operations and maintenance
- Inverter replacement
- Insurance
- Cleaning
- Roof-related work
- Depreciation and tax considerations
- Electricity savings
- Applicable grid charges
For Open Access, the calculation may need to consider:
- Energy purchase price
- Transmission-related charges
- Wheeling charges
- Applicable surcharges
- Banking or settlement provisions
- Scheduling and deviation-related costs
- Metering
- Contractual charges
- Regulatory changes
The exact treatment depends on the applicable rules and the structure of the project.
Therefore, a simple comparison such as “solar costs ₹X while Open Access costs ₹Y” can be misleading.
Industries should compare the effective delivered cost of electricity.
5. Solar Gives the Company an Owned Energy Asset
One major difference between on-site solar and Open Access is ownership.
When an industrial company invests in its own solar plant, it owns or controls an electricity-generating asset, depending on the project structure.
That means the company is responsible for:
- Investment
- Maintenance
- Performance monitoring
- Repairs
- Asset management
But it also receives the economic benefits associated with the asset.
For businesses with a long-term operating horizon, this can be an important consideration.
6. Open Access Can Provide Greater Scale
Open Access can become attractive when an industrial consumer’s electricity requirement is substantially larger than what can reasonably be generated on-site.
Consider a factory consuming several million units of electricity annually.
Its available rooftop area may support only a fraction of its renewable electricity requirement.
Rather than limiting renewable procurement to the rooftop, the company can investigate sourcing electricity from larger renewable projects through an appropriate Open Access structure.
This can make renewable power procurement more scalable.
7. What About Reliability?
Industrial facilities cannot usually depend on solar generation alone.
Solar generation changes throughout the day and is affected by:
- Cloud cover
- Rain
- Seasonal conditions
- Sunrise and sunset
- System availability
A manufacturing facility therefore generally continues to require grid connectivity or another source of electricity.
Open Access also does not eliminate the importance of the electricity network.
For critical industrial operations, companies should therefore think about renewable energy as part of an overall power strategy, rather than assuming solar alone will meet every operational requirement.
8. Battery Storage Can Change the Equation
Battery Energy Storage Systems are becoming increasingly relevant to industrial energy planning.
A battery can potentially help businesses:
- Store surplus solar electricity
- Shift energy consumption
- Manage certain peak-demand requirements
- Improve renewable energy utilization
- Support specific backup or operational strategies
However, batteries add capital cost and operational considerations.
The economics should therefore be calculated based on the facility’s actual load profile rather than assuming that adding storage automatically improves the business case.
9. Regulatory Rules Matter in Tamil Nadu
This is one of the most important points for industrial consumers.
Electricity regulation is not static.
Tamil Nadu industries considering Open Access should review the applicable rules, charges, approvals, banking provisions, metering requirements and other conditions at the time the project is developed.
The same applies to on-site solar, particularly where the project involves grid connectivity, export of electricity, captive generation or other arrangements.
Because regulations and charges can change, businesses should use current regulatory information and professional technical and financial modelling before committing capital.
10. A Hybrid Strategy May Make Sense
The choice does not always have to be:
Solar OR Open Access
For some industrial companies, the more practical approach may be:
Solar + Open Access + Grid Power
For example:
On-site solar
Used to generate electricity directly at the factory during suitable hours.
Open Access renewable power
Used to cover a larger share of the company’s renewable electricity requirement.
Grid electricity
Used when renewable generation or contracted renewable power does not fully match the facility’s demand.
This approach can provide a more diversified electricity strategy.
Solar vs Open Access: Which Factors Should Chennai Industries Compare?
Before making a decision, industrial management teams should prepare a comparison based on their actual facility.
1. Annual electricity consumption
How many units does the facility consume every year?
2. Load profile
When is electricity actually being consumed?
3. Available rooftop or land area
How much solar capacity can realistically be installed?
4. Future electricity demand
Will production expand over the next 5 to 10 years?
5. Capital availability
Does the company want to invest in an energy asset or prefer a procurement-based model?
6. Contracting preferences
Would the company prefer owning generation capacity or purchasing renewable electricity through a longer-term arrangement?
7. Regulatory exposure
How might applicable charges and regulations affect the economics?
8. Operational requirements
Does the facility operate one shift, two shifts or continuously?
9. Sustainability targets
Does the company have renewable energy or carbon-reduction targets?
10. Financing
What is the expected financing cost and investment return?
These factors provide a much more useful comparison than simply looking at the advertised cost per unit.
Example: A Chennai Manufacturing Unit
Imagine a manufacturing company in the Chennai industrial belt with significant daytime electricity consumption.
The company has a large warehouse roof but its total electricity requirement is much higher than the roof can accommodate.
The management could evaluate three scenarios.
Scenario A: Rooftop Solar Only
The company installs as much practical rooftop solar as the facility can support.
Potential benefit: Direct generation at the facility.
Limitation: Renewable generation is constrained by available site area and solar production hours.
Scenario B: Open Access Only
The company sources renewable electricity through an Open Access arrangement.
Potential benefit: Access to larger renewable generation capacity without using the company’s entire site.
Consideration: Network charges, contractual terms, regulatory requirements and settlement mechanisms need to be included in the financial model.
Scenario C: Hybrid
The company installs rooftop solar and also evaluates renewable Open Access procurement.
Potential benefit: On-site generation can work alongside larger-scale renewable procurement.
For a large electricity consumer, this third scenario may be worth modelling because it avoids treating the decision as an either-or question.
How Kinetiq Energy Can Help Industries Evaluate Solar
For Tamil Nadu businesses, the important question is not simply how many solar panels can fit on a roof.
The real question is:
How can renewable energy be integrated into the company’s electricity strategy in a financially and operationally sensible way?
Kinetiq Energy can help businesses evaluate solar requirements based on factors such as:
- Electricity consumption
- Available installation area
- Solar generation potential
- System capacity
- Energy savings
- Project economics
- Commercial requirements
- Industrial operating patterns
For companies considering a larger renewable energy strategy, it is also useful to compare on-site solar with other procurement options instead of making a decision based on installation cost alone.
You can explore renewable energy and solar solutions through Kinetiq Energy at kinetiqenergy.com.