A captive power plant also called auto producer or embedded generation is a power generation facility used and managed by an industrial or commercial energy user for their own energy consumption. Captive power plants can operate off-grid or they can be connected to the electric grid to exchange excess generation.
A captive power plant is a facility that is dedicated to providing a localised source of power to an energy user. These are typically industrial facilities or large offices. The plants may operate in grid parallel mode with the ability to export surplus power to the local electricity distribution network. Alternatively they may have the ability to operate in island mode; i.e. independently of the local electricity distribution system.
· Security of power supply through self-generation
· Reduced costs through high fuel efficiency, particularly when in CHP configuration
· Improved environmental performance resulting from fuel efficiency
Though the power generation industry is well established in most countries, limitations of providing good-quality power, round the clock to the industrial users, force industries to establish captive power plants. Generally, factories are established near the sourcing point of raw materials or mines; not always there is a power plant in the vicinity. If the distance is more then, the cost of transmission has to be borne by the user, along with added expenses due to the technical loss during transmission.
Global captive power generation market is expected to grow due to the mushrooming power demand in emerging markets of China, India, and Middle East along with the presence of cross subsidized charge to the per unit power generation cost. Increasing population, industrialization, and urbanization is expected to augment captive power generation market growth. The advantages of captive power generation include reduced distribution and transmission losses, and higher thermal efficiency. Increasing demand for uninterrupted and reliable power is expected to have a positive impact on captive power generation market over the next seven years.
These factors have made the captive power plant a popular choice for the industry developers. Since the industrial sector is one of the largest power consuming markets, this sector is likely to contribute to the growth of the captive power generation market over the next five years. Moreover, it is expected to hold a dominating market position during 2018-2023.