A Captive Generating Plant or a captive group solution is a power plant set up taken up by any person, business, cooperative society or an association of persons or companies for the purpose of generating electricity primarily for their own use. A power generation plant is considered to be captive only if more than 51% of its generated electricity is used by the owner(s) for their own consumption and the minimum aggregate ownership of the group captive solutions in India should be at least 26%. So, if in case there are multiple owners of a group captive power plant, it is important for them to satisfy the above requirement of a minimum of 51% energy consumption from the captive & the collective ownership of at least 26%.
Let’s see why you should go for a group captive power plant solution and what its benefits are.
Why Group Captive Solutions?
Electricity is considered as one of the major inputs for any industry as they require a consistent & reliable supply of electricity. For some businesses or industries, the quality of electricity (in terms of voltage, harmonics, and other technical parameters) is quite important. Further, reliable & quality supply of electricity at reasonable costs is another important factor for industries. But the downside is sometimes; these requirements cannot be completely fulfilled by the state utilities. In such cases, going for a group captive power solution is more feasible. A group captive power solution reduces the dependability on the grid. And it reduces the cost of electricity which is an input to production processes & surplus electricity can also be sold to the grid, which brings in multiple benefits. A group captive power plant not only benefits the owners but also benefits the electricity utilities by supplying extra power when there is a deficit in the power supply.
Benefits of Captive Generation
For energy-intensive industries, group captive solutions in India provide a cheaper option than power from the traditional ones as they usually charge additional surcharges and cross-subsidies from industries. A captive generation has been enabled by the Electricity Act of 2003. Section 9(2) in this act gives the right to open access to the captive generator, and the Sections 38, 39 & 42 says that open access cross-subsidies and surcharge are not applicable to the group captive power plant projects. Thus, opting for group captive solutions can help in saving a huge amount for the industries or businesses for which power is a major cost input.
Group captive power solution is also beneficial for the grid, especially in the power deficit scenario. The government has encouraged captive power generation for addressing the situation of a power deficit that has considerably reduced.
Group captive power solutions can also be used when there’s no power supply from the distribution utilities. Hence, in the case of load shedding, backup diesel generators can be used for supplying the captive power.
For captive power generators that are based on the renewable sources, other benefits such as Renewable Energy Certificates, discounted wheeling & banking charges, net metering and carbon credits under the CDM Mechanism are also available.
The Bottom Line
While group captive power generation certainly has benefits, there are certain factors such as fuel, technology, nature of load and cost that requires careful consideration and need to be assessed for evaluation and selection of power procurement option so as to benefit from them. However, group captive power generation can also play a supplementary role in supplying power to the grid& in alleviating power shortages in the country.