Captive power plants held by a group of consumers may be forced to undergo major restructuring as the government proposes to ask them to correct their equity and shareholding structure. The power ministry is likely to issue stringent guidelines for such plants in a month and has temporarily suspended conversion of independent power plants to group captive power projects. Group captive power plants — based on coal, solar and wind — are operational in large numbers in the states of Karnataka, Haryana, Rajasthan, Maharashtra and Tamil Nadu. The concept has been evolved by industries to avoid the cross-subsidy charges levied on inter-state electricity sale and is seen as a threat to state discoms. An amendment to the policy on group captive power plants is in the final stages of preparation and is likely to be issued in a month. As per the Electricity Act 2003, group captive power plant, unlike individual captive power plants, is a structure where a developer sets up a power plant for collective use of many industrial consumers who should have 26 per cent equity in the plant and must consume 51 per cent of the electricity produced. The plants are entitled to non- use of transmission system without any additional surcharge. Today the policy on group captive projects is subject to a lot of subjectivity. A bit of harmonization between states and regulatory authorities is necessary. There is a need to relook at the entire competition and level-playing space to industries.

(Economic Times)