Captive power generation is the process of generating electricity for self-use and captive consumption within the premises of an industrial facility or any other establishment. More and more companies and organizations are now setting up autoproducers to fulfill their internal electricity requirements and supplement the supply received from state grids. Let's understand some key aspects of captive power generation in India. Reasons for Rising Interest in Captive Power Plant There are multiple factors that have driven the growth of Captive Power Plant in India: Reliability Issues with State Grids One of the major reasons why industries want to set up their own power plants is the unreliable power supply and interrupted grid power from state electricity boards. Frequent outages and voltage fluctuations can hamper industrial production. Captive plants provide uninterrupted power required by industries. Economics of Operation For energy-intensive industries, captive power generation helps reduce the cost of electricity substantially. Captive Power Plant can produce power much more economically in-house compared to procuring from grids against high tariffs. Fuel costs are also lower when purchased directly from suppliers. Control over Tariffs Captive plants allow industries to avoid steep tariff hikes by state regulators. Industrial power tariffs keep rising every year but costs remain fixed for plants that are owned and operated by industries themselves. This offers long-term tariff stability and protection from regulatory risks. Environmental Compliance Many industries set up captive power units to meet renewable purchase obligations and comply with environmental norms on carbon emissions. Waste heat-based captive plants help industries achieve cleaner production. Types of Autoproducers Based on the type of fuel used, captive plants can be broadly classified as: Thermal Plants These use fossil fuels like coal, natural gas, furnace oil to fire boilers that produce steam. The steam spins turbines to generate electricity. Thermal captive plants account for the bulk of captive capacity in India due to fuel availability. Waste heat recovery-based plants also fall under this category. Diesel Generators Though costly, diesel gensets continue to be popular for emergency or backup captive power needs in the absence of grid or plant breakdowns. Their flexibility of operation is the key advantage. Renewable Energy Plants Industries are increasingly setting up renewable energy-based captive power facilities utilizing green sources like solar, wind, biomass and small hydel. This helps offset emissions as well as meet non-fossil obligations. Importance of Captive Power for Core Industries The significance of captive plants is immense for India's energy-intensive core sectors. Here are some examples: Steel Industry Being one of the most power-hungry sectors, steel producers have established significant captive power capacities over the years. Captive power accounts for around 30% of the total power requirement of the steel industry. Cement Industry Cement units require consistent power for operations like clinkerization that involve high temperatures. Captive plants contribute about 35-40% of the power needs of the Rs. 1-lakh crore Indian cement industry. Aluminium Industry Aluminium smelting is an electricity guzzling process. Major aluminium producersGenerate around 60-70% of their power needs in-house through large captive coal-based plants. Fertilizer Industry Being dependent on an uninterrupted power supply for manufacturing urea and other nitrogenous fertilizers, fertilizer plants have augmented grid power with 450+ MW of renewable-based captive capacity. Refineries Oil refineries have set up sizeable captive capacities near crude oil import terminals as well as at plant sites utilizing a variety of fuel sources like natural gas, fuel oil. Challenges and the Road Ahead While captive power generation has seen giant strides in India, a few challenges remain: High Initial Costs Setting up thermal or renewable plants requires massive capital which is a deterrent, especially for SMEs. Lowplant load factors also hit economics. Fuel Supply Constraints Sourcing fuel like domestic coal on a long-term basis continues to be difficult. Dependence on imported coal raises input costs. Space Constraints Availability of adequate land for medium-large sized plants is another major issue, especially in cities.This pushes industries to look at alternatives like rooftop solar. Policy and Regulatory Hurdles Frequent policy changes, delays in approvals, and land acquisition issues mar expansion plans. Stricter emission norms will necessitate technology upgradation in existing plants.
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About Author-
Alice Mutum is a seasoned senior content editor at Coherent Market Insights, leveraging extensive expertise gained from her previous role as a content writer. With seven years in content development, Alice masterfully employs SEO best practices and cutting-edge digital marketing strategies to craft high-ranking, impactful content. As an editor, she meticulously ensures flawless grammar and punctuation, precise data accuracy, and perfect alignment with audience needs in every research report. Alice's dedication to excellence and her strategic approach to content make her an invaluable asset in the world of market insights.
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