- Government amends electricity rules to clarify captive power generation for industries
- Amendments aim to reduce transmission losses and improve grid efficiency and resilience
- New rules simplify compliance and clarify ownership in group captive power projects
The government on Saturday announced amendments in the electricity norms for bringing more clarity for captive power generation, especially for industries, in line with India's energy transition goals.
Generating power closer to the point of consumption will help reduce transmission losses, improve system efficiency and strengthen grid resilience, the Ministry of Power said in a statement.
The Ministry said that the amendments have been finalised after extensive stakeholder consultations.
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The Electricity (Amendment) Rules, 2026, have been notified to remove interpretational ambiguities, improve ease of doing business for industry, and align the captive generation framework with India's energy transition and industrial growth objectives.
The ministry said that with the amendments, the government has simplified a number of provisions in the rules for ease of compliance.
By clarifying ownership provisions, simplifying rules for group captive arrangements, and establishing a clear verification mechanism, the amendments aim to reduce regulatory ambiguity and disputes, the ministry said.
A new provision has been added to avoid imposition of charges on the captive consumers by the Distribution licensees pending verification of the captive status.
The amendment clarifies the definition of the ownership to include subsidiaries, holding companies and other subsidiaries of the holding company of the entity that establishes the captive generating plant.
This clarification recognises modern corporate structures where power assets are often developed through group entities or special purpose vehicles.
The amendment ensures that legitimate captive investments by corporate groups are not denied captive status merely due to organisational structuring.
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As per the new norms, Cross-Subsidy Surcharge (CSS) and Additional Surcharge (AS) will not be levied if the captive users submit the prescribed declaration in accordance with the procedures issued by the NLDC (for inter-state cases) or the State nodal agency (for intra-state cases).
However, if a plant fails to qualify as a captive generating plant upon verification, the applicable CSS and AS will become payable, along with carrying costs. The carrying cost will be calculated at the base rate of the Late Payment Surcharge under the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022.
The new rules allow the process of verification of captive status to be undertaken for the entire financial year.
The amendments provide greater flexibility in the operation of group captive projects established through an Association of Persons (AoP).
Captive users will be able to draw power based on their operational requirements, subject to overall compliance with the statutory ownership and consumption conditions.
Indian industries are increasingly adopting non-fossil fuel-based energy to meet sustainability commitments and reduce costs.
In this context, enabling a clear, predictable and implementable framework for captive power generation was critical for enhancing industrial competitiveness and supporting India's long-term economic growth.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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