The Ministry of Power has proposed an amendment to Rule 3 of the Electricity Rules, 2005 such that:

• there is relaxation of the proportionate consumption limit in group captive options especially in case of association of persons.
• there is clarity on the use of storage in captive systems, especially related to energy accounting for captive status compliance.

Under the proposed rule, the eligible captive consumption benefit is estimated based as 110% of the proportion of shares of the captive consumer. Unlike the 90% to 110% variation allowed presently, with the proposed amendment, all consumption up to the eligible captive consumption benefit is counted for captive benefit. This reduces financial impact due to uncertainties in demand for small captive users and also restricts captive benefit only to the investment of the user. 

We support the proposed amendments as they have the potential to catalyse long-term investments in captive power systems and encourage innovative business models through energy storage integration and increased MSME participation in captive generation as the risk of losing captive status for serious, long term investors is less under the proposed framework. Our comments are related to implementation challenges associated with the proposed amendment particularly related to clear and standard procedures related to change in shareholding in a group captive arrangement and clarity on considering power from ESS irrespective of source of the supply.