The shift towards self-reliance in energy is gaining momentum in India. One significant stride in this direction is the adoption of captive power generation. These power plants, especially prevalent in industrial hubs like Surat, are not just a symbol of energy independence but also a testament to innovation and sustainability.
Captive power plants (CPPs) represent a paradigm shift in India's approach to energy generation. By allowing industries to produce their own electricity, CPPs provide a reliable and cost-effective alternative to grid power, especially in areas with less supply.
The Growth Trend: The captive power generation market in India is experiencing significant growth, with projections showing an increase by 31.05 GW from 2021 to 2026. This expansion, at a CAGR of 6.63%, indicates a strong move towards self-reliance in power generation by industries.
The financial logic behind adopting CPPs is compelling. In areas like Surat, high industrial power costs drive the adoption of captive power solutions.
● Cost-Effectiveness:By generating their own power, industries can substantially reduce their energy expenses. This is particularly relevant in regions with high industrial power tariffs, such as Gujarat, where the cost-effectiveness of CPPs is a significant advantage.
● Sale of Excess Power:CPPs not only provide energy security but also offer the potential for revenue generation. Industries can sell surplus power to open-access trading markets, turning an operational necessity into a financial asset
The technological landscape of Captive Power Plants in India is evolving rapidly, incorporating cutting-edge innovations for enhanced efficiency and environmental sustainability
● Smart Grids and IoT: The integration of smart grid technologies and the Internet of Things (IoT) is enhancing the operational efficiency of CPPs. These technologies enable real-time monitoring and management, optimizing energy production and reducing downtime.
● Energy Storage Solutions: The adoption of energy storage solutions, such as battery storage systems, is increasingly prevalent. These systems provide stability to the power supply and enhance the utilization of renewable energy sources, especially in areas with intermittent power generation like solar or wind.
The regulatory framework in India is progressively adapting to foster the growth of renewable energy in CPPs.
● Transmission Charge Waivers: The Central Electricity Regulatory Commission has amended regulations to exempt certain renewable energy projects, including solar, wind, and hybrid systems, from transmission losses and charges, promoting the adoption of renewable energy in CPPs.
● Renewable Generation Obligations (RGOs): The Ministry of Power has introduced RGOs, requiring generating companies to establish or procure renewable energy equivalent to a minimum of 40% of their capacity, particularly for coal or lignite-based thermal generating stations.
In recent years, there has been a notable shift towards renewable energy in captive power plants (CPPs), with an increase in renewable-based CPPs from 3% to 8%. This shift is largely driven by industries aiming to meet their Renewable Purchase Obligations (RPOs) and fulfill baseload/backup power requirements. Solar power, particularly rooftop solar, wind, and biomass, is increasingly being adopted. For instance, companies like Inox Air Products and Bharti Airtel have invested in significant solar power capacities for their operations
The interest in developing hybrid renewable power and round-the-clock captive capacity is growing. Hybrid power, combining solar and wind energy, helps mitigate off-peak issues and offers benefits like reduced generation variability and better utilization of transmission infrastructure. For example, ReNew Power commissioned a 17.6 MW wind-solar hybrid project in Gujarat to meet the energy requirements of Grasim Industries.
Group captive models are gaining popularity among industrial consumers. These are CPPs set up collectively by multiple consumers who have 26% equity in the project and consume 51% of the power produced. This model is increasingly preferred due to the waiver of cross-subsidy surcharge and other benefits, as seen in cases like Vedanta Limited's plans to procure 691 MW of renewable energy through group captive routes.
The captive power segment has seen several policy and regulatory developments. Key among these is the amendment under the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2022, allowing captive consumers to access green energy through open access without limitations. Additionally, there's an obligation for distribution utilities, captive power producers, and open access consumers to purchase a minimum percentage of their annual power consumption from energy storage, with strict penalties for non-compliance.
Captive power projects face several challenges, including high open access charges, delays in getting open access approval, constraints in banking of surplus power, and misinterpretations of captive rules leading to levies like cross-subsidy surcharge. Addressing these challenges is crucial for the smooth operation and growth of CPPs. For instance, in Uttar Pradesh, the approval process for long-term open access (LTOA) is subject to various requirements and may take a considerable amount of time.
KP Energy Limited, a frontrunner in Gujarat's renewable energy sector, exemplifies the transformative journey of captive power plants in Surat. The company's strategic focus on renewable energy aligns seamlessly with the national trend of adopting sustainable energy solutions in captive power generation. By harnessing wind and solar power, KP Energy Limited not only demonstrates its commitment to environmental stewardship but also reflects the broader shift in the industry towards renewable energy.
The company's success in deploying renewable energy-based CPPs, particularly in the wind-solar hybrid segment, resonates with the current trend of diversifying energy sources. This approach, mirrored in the growing preference for hybrid and round-the-clock power solutions, positions KP Energy as a leader in innovative energy solutions. The company's initiatives in setting up renewable CPPs not only cater to their energy needs but also contribute to the reduction of carbon emissions, underscoring their role in promoting sustainable industrial growth.
Q1. What distinguishes a captive power plant from a traditional power plant?
A captive power plant is a structure constructed by a single business or sector of the economy to produce electricity for internal use. Captive power plants are devoted to meeting particular industrial or commercial demands.
Q2. What are the main benefits for industrial organizations of setting up a captive power plant?
A. The captive power plants provide better control over energy costs, decreased transmission and distribution losses, and enhanced dependability. They offer a steady and dependable power supply for businesses.
Q3. Which industries most frequently choose to use captive power plants?
A. Captive power plants are frequently selected by industries with large and steady energy requirements, such as manufacturing, heavy engineering, and process industries.