Introduction to the Group Captive Mechanism in India. Setting up a renewable energy project, especially solar and wind, under this mechanism is considered to be one of the most attractive options that would give a higher return on investment.

1. Group Captive Mechanism
In June 2005, the Ministry of Power prescribed rules that provided the regulatory framework
for a developer, such as the Company, to promote and set up a Group Captive Power Plant
(GCPP). A consumer of group captive power is able to enjoy the benefits of reliable power at
prices that are agreed directly with the producer.
Given that these modern GCPPs are more efficient than many of the plants producing
electricity in India, the prices charged by them are lower than those charged by the State
Electricity Boards (SEBs).
The regulations governing GCCPs stipulate that:
 at least 26 per cent of the voting equity capital of the power plant must be held by the
captive users;
 at least 51 per cent of the annual power output of the plant must be consumed by the
captive users;
 up to 49 per cent of annual power output may be sold to SEBs, power trading
companies or licensees;
 the tariff charged by the operator is determined by the operator and the captive users
of the plant;
 the state regulator is not involved in determining the price at which the power is sold;
 the SEB must provide access to the grid;
 GCPPs are exempt from paying any surcharge or other charges except the actual
transmission charges;
 Grid access and transmission charges and losses are overseen by the state regulator.
The continued shortage of power, combined with the deteriorating quality of power supply
from SEBs, has compelled more industrial consumers to seek captive power generation to
meet their power requirements.