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Group Captive Power Purchase in India

Although introduced in 2005, this purchase seems to be catching the trend off late in India. Understand this group captive power purchase in depth with pros and cons below. This Group Captive policy is a boon for the industrial consumer. Industrial consumer segment is growing at a fast pace, which doesn't want to depend on state utilities for its power needs because they are expensive and unreliable. The concept is group captive power plants gave an alternative route to the industries.

What is a Group Captive Power Purchase?

A group captive purchase is where someone develops a power plant for collective usage of many commercial and industrial consumers. The group of consumers should have at least 26% of the equity in the power plant and has to consume at least 51% of the power produced. The term "captive power purchase" was introduced in the Electricity Rule, 1995.

Group captive power purchase can be seen in section 5.5.25 and 5.5.26 of National Electricity Policy which outlines the creation of captive power plants by a group of people.

What are the advantages of Group Captive Purchase?

  • Cheaper price: This is the most important factor and the reason why it all works. Where the Consumer gets power at a cost much less than EB tariff.
  • Power Cuts: In case of a power cut, industrial consumers face heavy productivity losses leading to financial losses. Group captive purchase, circumvents this frustrating problem entirely.
  • State utility: The consumers in the group captive Purchase no longer need to worry about bureaucratic utilities.

How will the Group Captive Power Purchase work?

Group captive power plant, unlike an individual captive power plant, is a unique structure where a developer sets up a power plant for collective use of many industrial consumers who should have 26 per cent equity in the plant and must consume 51 per cent of the power produced.

Imagine Company A along with company B and company C decide to bring down their electricity costs. Collectively they make a power plant with 26% equity and decide to use about 51% of energy produced. Then they decide to sell the remaining 49% power to Company X, Y and Z. This makes the whole group part of the group captive power purchase.