Context
The Centre has invoked Section 11 of the Electricity Act, 2003, directing around 112 coal-based Captive Power Plants (CPPs) to maximise generation from 1 October to 31 December 2026, following an unusual 269 GW peak electricity demand in September 2026, close to the year’s record of 270 GW.
About Captive Power Plants
- Captive Power Plants (CPPs) are electricity-generating units established by industrial enterprises or groups of industries primarily to meet their own electricity requirements.
- Their primary purpose is captive consumption, but surplus power can be supplied to the grid through power exchanges.
- Current Coverage: The directions apply to coal-based CPPs with an installed capacity of 50 MW or more.
Reasons for High Power Demand
- Persistent Heat: Higher temperatures have increased cooling demand.
- Deficient Rainfall: Below-normal rainfall has increased dependence on electric irrigation pumps.
- Lower Hydropower Output: Rainfall deficiency has reduced hydropower generation, increasing reliance on thermal power.
- El Niño Conditions: Associated weather patterns may have prolonged heat and rainfall irregularities.
Section 11: Key Directions and Other Measures
- Maximum Generation: Covered CPPs must operate at their maximum available capacity.
- Surplus Power: After meeting captive consumption, surplus electricity must be sold through power exchanges.
- Coal Stocks: Plants must maintain adequate coal reserves for uninterrupted generation.
- Monitoring: CPPs must submit weekly data on generation, captive consumption, surplus sales, available capacity and coal stocks to the Central Electricity Authority (CEA).
- Extraordinary Circumstances: Section 11 empowers the government to direct generating companies to operate in such circumstances to maintain adequate power supply.
- CGPL Extension: The emergency provisions for Coastal Gujarat Power Ltd (CGPL), Tata Power’s 4-GW imported coal-based plant, have been extended until 31 December 2026.
- Tariff Determination: For high-cost plants operating under Section 11, a CEA Chairman-led committee determines the procurement tariff after considering costs such as fuel expenses.
Significance
- Energy Security: Mobilises additional generation capacity to meet high electricity demand.
- Grid Reliability: Surplus CPP power can strengthen grid supply and reduce shortage risks.
- Capacity Utilisation: Ensures better use of existing generating assets.
- Economic Activity: Supports industrial operations and irrigation during periods of high demand.
Challenges
- High Generation Cost: Imported-coal and gas-based plants may produce electricity at a higher cost than domestic-coal plants.
- Fuel Supply Risks: Maintaining continuous generation requires adequate coal stocks and reliable fuel supply.
- Demand Uncertainty: Changing weather conditions make electricity demand difficult to forecast accurately.
- Tariff Burden: Higher procurement costs may create pressure on consumer electricity tariffs.
Way Forward
- Demand Forecasting: Use weather and consumption data for more accurate demand estimates.
- Fuel Security: Maintain adequate fuel reserves and flexible generation capacity.
- Clean Energy & Storage: Expand renewable energy and energy storage to manage demand fluctuations.
- Grid Flexibility: Strengthen grid infrastructure and power markets for efficient use of surplus electricity.
FAQs
Q1. What is a Captive Power Plant (CPP)?
Ans: A CPP is a generating unit established by an industry primarily for its own electricity needs.
Q2. Which CPPs are covered by the latest directions?
Ans: The directions cover coal-based CPPs with an installed capacity of 50 MW or more.
Q3. Why are CPPs important during periods of high electricity demand?
Ans: They can generate additional power and supply surplus electricity to the grid when required.


