Government of India Issues Draft Revisions to Captive Power Project Rules.

Oct 2025 : The Ministry of Power has proposed to revise Rule 3 of the Electricity Rules, 2005, setting out the requirements for qualifying a power project as a captive project. The draft retains the key thresholds for ownership and consumption but introduces clarifications and additions regarding energy storage, indirect ownership through corporate.

A project will qualify as a captive power project only if captive users collectively hold at least 26% ownership in the generating unit. This ownership refers to proprietary interest and control, or equity share capital with voting rights. It may be held directly or through a holding company, its subsidiaries, or any other subsidiary of the holding company.

In the case of special purpose vehicles, if only certain generating units are identified as captive, the 26% equity ownership applies proportionately to those units. A special purpose vehicle must be a legal entity that owns, operates, and maintains a generating station, with no other business or activity.

Captive users must consume at least 51% of the electricity generated by the captive project on a financial-year basis.

Consumption may be either directly or through an energy storage system. Electricity consumed by a subsidiary or holding company of a captive user will also be counted as captive consumption. For registered co-operative societies, the 26% ownership and 51% consumption requirements must be collectively satisfied by all members.

For an association of persons, both ownership and consumption conditions are applied collectively. A member’s captive consumption must not exceed 110% of their proportionate entitlement. Where a captive power project and its users are located in more than one state, the captive status will be

verified by the Central Electricity Authority in accordance with procedures approved by the central government. If the conditions of ownership or consumption are not met in any financial year, the entire electricity generated will be treated as if supplied by a generating company.

Verification by Central Electricity Authority –

The Central Electricity Authority (CEA) and the Ministry of Power have released the captive status verification procedure for captive power projects (CGP) and their users located in more than one state.

The procedure applies to all power projects and consumers aiming for CGP and ‘associated captive users’ status by submitting the receipts.

The verifying authority may seek clarifications on the submitted information. The applicant must inform the regional load dispatch centre (RLDC), state load dispatch centre (SLDC), and distribution licensees within fifteen days of the application submission.

• Single captive users must consume at least 51% of the net electricity generated annually.

• Group captive users, except cooperative societies, must at least 51% of the annual net electricity generated.

• Group captive users registered as a cooperative society must collectively consume at least 51% of the annual net electricity generated.

• Special purpose vehicles can own, operate, and maintain a generating station. However, they cannot consume the CGP generated electricity.

• Captive users’ consumption must include the technical losses in the electrical network and energy storage system (ESS).

• Manufacturing industry applicants with CGPs must submit the generation and in-house energy consumption figures monthly to the distribution licensee to authenticate the actual consumption and CGP generation data.

Consumption will be verified by the generating unit’s interface meter based on the net electricity generated and metered/recorded at its metering point. The CGPs or generating units identified for captive use must have a separate interface meter with a real-time communication facility with the SLDCs/RLDCs.

The meter must ve equipped with a real-time communication capability with the RLDC, SLDC, or distribution companies, as specified in the metering regulations.

If the CGP is an integral part of a manufacturing unit located within its premises, the unit must have a separate interface meter with a real-time communication facility. CGPs connected at the same pooling sub-station having a single interface must apply separately to the verifying authority for captive status verification. The verification authority can check the total generation and metered data of the CGP units at the end of the pooling station.

Recently, CEA approved the Uniform Protection Protocol to ensure grid stability, reliability, and security and safely integrate 450 GW of renewable energy by 2030 and 2,100 GW by 2047.

Team Maverick