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News: The Government amended Electricity Rules, 2026 to strengthen captive power framework, improve clarity, and support industrial competitiveness and energy transition.
About Captive Generating Plant (CGP)
- A Captive Generating Plant is a power plant set up by persons or companies for generating electricity mainly for their own use.
- Objective: The objective is to provide reliable and cost-competitive electricity, reduce dependence on the grid, and support industrial growth and sustainability.
- Regulatory framework: It is governed under the Electricity Act, 2003 and the Electricity Rules, 2005, which have been amended through the Electricity (Amendment) Rules, 2026.
- Ownership criteria: Minimum 26% aggregate ownership by captive users, including group entities.
- Consumption criteria: At least 51% of generated electricity must be consumed by owners, with proportion rules for associations.
- Recent developments
- Amendments for Clarity and Flexibility: The Electricity (Amendment) Rules, 2026 clarify ownership definitions by including subsidiaries and group entities, and simplify provisions to reduce ambiguity and disputes.
- Amendments in Verification Mechanism: The Rules introduce a uniform financial year-based verification of captive status and provide for nodal agencies and a grievance redressal mechanism.
- Amendments to Improve Ease of Doing Business: The Rules provide that charges will not be imposed pending verification and align the framework with modern corporate structures and increasing use of non-fossil fuel based captive power.
