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Regulatory Approvals
Captive power approvals under the Electricity Act 2003 — structuring single-entity and group captive arrangements, CEIG clearance, wheeling and banking agreements, and nodal agency verification under the Electricity Amendment Rules 2026.
Overview
A captive generating plant (CGP) under Section 9 of the Electricity Act 2003 allows an industrial unit to generate and consume its own electricity, bypassing DISCOM retail tariffs for that proportion of consumption. Eligibility requires satisfying two thresholds under Rule 3 of the Electricity Rules 2005: the captive users must collectively hold at least 26% ownership of the plant and consume at least 51% of its annual generation. The Electricity Amendment Rules 2026, effective 1 April 2026, significantly simplified group captive structures — the 26% and 51% thresholds can now be satisfied collectively across all members of an association, without per-member proportionality matching. This makes group captive and SPV models far more practical for industrial parks and multi-unit consumers.
Why Daakshyaani
From 1 April 2026, the 26% equity and 51% consumption thresholds can be satisfied collectively across all group captive members — per-member proportionality matching is removed. Corporate groups can also aggregate consumption across subsidiaries and holding companies. We structure arrangements that take full advantage of the new rules.
Not every generation setup qualifies as captive. Before filing, we model the equity ownership structure and consumption pattern against the Rule 3 thresholds — identifying gaps and restructuring the arrangement if needed. A rejected or non-compliant captive application wastes months.
AP captive approvals go through APERC and the designated state nodal agency; Telangana through TGERC and TSSLDC. We have filed and obtained captive approvals from both regulators and know the documentation requirements at each.
Captive power wheeled through the DISCOM network attracts wheeling charges, cross-subsidy surcharge, and banking charges, all set by the current APERC/TGERC tariff order and revised periodically. We pull the current rates and model the actual landed cost of captive power against the DISCOM retail tariff before clients commit to investment.
Captive generating plants above 500kVA require CEIG approval before commissioning. As licensed electrical contractors in both states, we manage the CEIG process as part of the captive approval scope — not as a separate engagement.
Captive status must be demonstrated annually — equity ratios and consumption percentages must be maintained. Loss of captive status triggers retrospective surcharge liability. We track and report compliance proactively, and flag issues before they become regulatory problems.
Blog
To qualify as a captive generating plant under the Electricity Act, 2003, the consumer (or a group of consumers) must hold at least 26% equity in the generating company and consume at least 51% of the electricity generated. Both conditions apply together — holding equity without meeting the consumption threshold, or vice versa, does not qualify a plant for captive status.
Wheeling is the use of the DISCOM's distribution network to transport captive-generated power from the plant to the consumption point, and it carries its own charges. Banking allows a captive generator to "deposit" surplus generation (for example, excess solar during the day) with the DISCOM and draw an equivalent amount back later — useful where generation and consumption patterns don't line up hour to hour, though banking terms and permitted periods vary by state regulation.
Captive status applications in Andhra Pradesh are filed with and approved by APERC (Andhra Pradesh Electricity Regulatory Commission); in Telangana, the equivalent authority is TGERC. Each commission issues its own tariff orders and compliance requirements, so a captive structure that satisfies APERC does not automatically carry over unchanged to a project across the state line in Telangana.
Source: APERCIndustries
Section 9 of the Electricity Act 2003 and Rule 3 of the Electricity Rules 2005 define it — captive users must hold at least 26% ownership in the generating company and consume at least 51% of the annual generation.
Yes — the Electricity Amendment Rules 2026, effective 1 April 2026, allow the 26%/51% thresholds to be met collectively across all members of an association, removing the earlier requirement to match ownership and consumption proportionally per member.
Yes, captive generating plants above 500kVA require CEIG clearance in addition to captive status approval from APERC/TGERC.
It triggers retrospective surcharge liability, which is why we build in annual compliance monitoring — tracking ownership and consumption ratios so status isn't lost silently.
