Government amends Electricity Rules to strengthen captive power framework

The Union government on March 14, 2026 amended the Electricity Rules, 2005 to remove ambiguities related to captive power generation and strengthen industrial energy security during the transition to sustainable fuels. The changes were notified through the Electricity (Amendment) Rules, 2026, modifying Rule 3 related to Captive Generating Plants (CGPs).

• Captive power generation refers to a system in which industrial consumers generate electricity for their own use instead of relying entirely on the public grid. Such arrangements help industries ensure reliable and cost-effective power supply.

Key Provisions of the Electricity (Amendment) Rules, 2026

• Ownership Requirement: A captive power plant must have at least 26% ownership by captive users.
• Consumption Requirement: Captive users must consume at least 51% of the annual electricity generated.
• Annual Verification: The captive status will now be verified for the entire financial year to ensure clarity and uniform implementation.
• Nodal Agency: States and Union Territories will designate a nodal agency from April 1 to verify captive status.
• Inter-State Projects: Verification responsibility for inter-state captive power projects will lie with the National Load Despatch Centre.
• Group Captive Flexibility: The rules allow greater flexibility for multiple entities jointly operating group captive power projects.
• Clarified Ownership Structure: The definition of ownership now includes subsidiaries, holding companies, and other subsidiaries of the holding company, acknowledging modern corporate structures where power assets are often developed through group entities or special purpose vehicles (SPVs).

Sources: PIB