The Hindu Business Line : CAPTIVE NO LONGER

For long, captive power plants were just that. Held captive by policies, a large number of them lay idle. Industries had to obtain government approval for putting up captive power plants. Surplus power could be sold only to the grid, that too at an unattractive rate. The Electricity Act, 2003 changed all that. Captive power plants no longer require government approval; a group of users can get together, invest in such an unit and use the electricity themselves. Once open access and third party sale become a reality, in-house power plants will no longer be captive to the company that put it up — it can sell the electricity directly to any consumer. Even though that is still a distant dream, it is encouraging to see some initial movement in that direction.

With the country likely to fall short of electricity again this summer, the Power Ministry is looking at buying the surplus from captive units, and why not? After discussions with captive power generators, the Central Electricity Authority last year identified at least 1,100 MW of surplus captive power that could be bought by the grid. It feels that the captive capacity available for purchase by the grid could be even higher provided technical hitches are removed and other issues, including price, sorted out. In this connection, a novel suggestion by the Confederation of Indian Industry and its follow-up by a State regulatory commission need closer look. In view of the load-shedding proposed for Pune, the CII proposes that 30 companies would run their captive plants, provided the State utility compensated them for the difference between the cost of generating high-cost liquid-fired sets and the grid power. This, the CII says, would ensure that there is no load shedding in Pune during peak hours. The State Regulatory Commission, after public consultation, asked the Maharashtra State Electricity Distribution Co Ltd to act on this proposal as a majority of the consumers had welcomed the initiative.

The total captive power capacity in the country is estimated at about 22,000 MW, or slightly more than one-fifth the total installed capacity. Another 2,000 MW of captive capacity will be added this year. The need for reliable and quality power still continues to drive the growth in captive capacity, with the opportunities thrown up by the Electricity Act making it more attractive. Power planners need to realise that there is an economic cost to not supplying electricity of the required quality and quantity. Load shedding, as a means to suppress demand should not be an option for state electricity boards. The weighted average cost of power should be looked into while seeking solutions for meeting peak demand.