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Centre Amends Rules To Simplify Captive Power Plant Framework For Industries
(MENAFN- KNN India)
New Delhi, Mar 16 (KNN) The Ministry of Power has introduced amendments to rules governing captive power plants to improve industries' access to reliable and affordable electricity.
The changes have been notified through the Electricity (Amendment) Rules, 2026, which modify provisions under Rule 3 of the Electricity Rules, 2005 to provide greater clarity on the ownership structure of Captive Power Plants (CPPs).
Under the revised rules, a company's subsidiary, holding company, or other entities within the same corporate group will now be considered part of the ownership structure. This change is expected to make it easier for power projects developed by corporate groups to qualify as captive power plants.
According to the ministry, the amendments aim to enhance ease of doing business for industries by enabling companies to generate electricity for their own consumption with fewer regulatory hurdles.
Since captive power plants are often located close to industrial facilities, the government said the system helps reduce transmission losses, improve energy efficiency and enable better utilisation of the national power grid for supplying electricity to remote areas.
The revised framework also reflects the increasing shift of Indian industries towards non-fossil fuel-based energy sources for meeting their power requirements.
Under the amended provisions, captive status of power plants will be verified on the basis of the entire financial year, while in the first or last year of ownership verification may be carried out for the relevant portion of the year.
From April 1, 2026, states and Union Territories will be authorised to appoint a nodal agency to verify captive consumption cases within their jurisdiction. For inter-state transactions, verification will be handled by the National Load Despatch Centre (NLDC).
The rules also provide for the establishment of a grievance redressal committee to address disputes related to captive power status.
In addition, operational provisions for group captive projects formed through an Association of Persons (AoP) have been simplified, allowing members to adjust power allocation based on changing requirements.
The government further clarified that if captive consumers submit the required declarations, cross-subsidy surcharge and additional surcharge will not be imposed until verification is completed.
However, if a project is later found ineligible for captive status, the applicable charges will become payable along with interest under late payment surcharge rules.
The reforms are expected to encourage investment in captive power projects, reduce electricity costs for industries and support the adoption of clean energy sources in the industrial sector.
(KNN Bureau)
The changes have been notified through the Electricity (Amendment) Rules, 2026, which modify provisions under Rule 3 of the Electricity Rules, 2005 to provide greater clarity on the ownership structure of Captive Power Plants (CPPs).
Under the revised rules, a company's subsidiary, holding company, or other entities within the same corporate group will now be considered part of the ownership structure. This change is expected to make it easier for power projects developed by corporate groups to qualify as captive power plants.
According to the ministry, the amendments aim to enhance ease of doing business for industries by enabling companies to generate electricity for their own consumption with fewer regulatory hurdles.
Since captive power plants are often located close to industrial facilities, the government said the system helps reduce transmission losses, improve energy efficiency and enable better utilisation of the national power grid for supplying electricity to remote areas.
The revised framework also reflects the increasing shift of Indian industries towards non-fossil fuel-based energy sources for meeting their power requirements.
Under the amended provisions, captive status of power plants will be verified on the basis of the entire financial year, while in the first or last year of ownership verification may be carried out for the relevant portion of the year.
From April 1, 2026, states and Union Territories will be authorised to appoint a nodal agency to verify captive consumption cases within their jurisdiction. For inter-state transactions, verification will be handled by the National Load Despatch Centre (NLDC).
The rules also provide for the establishment of a grievance redressal committee to address disputes related to captive power status.
In addition, operational provisions for group captive projects formed through an Association of Persons (AoP) have been simplified, allowing members to adjust power allocation based on changing requirements.
The government further clarified that if captive consumers submit the required declarations, cross-subsidy surcharge and additional surcharge will not be imposed until verification is completed.
However, if a project is later found ineligible for captive status, the applicable charges will become payable along with interest under late payment surcharge rules.
The reforms are expected to encourage investment in captive power projects, reduce electricity costs for industries and support the adoption of clean energy sources in the industrial sector.
(KNN Bureau)
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