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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has proposed a draft procedure to verify the captive status of power-generating projects supplying to users located across multiple states, defining the ownership and consumption terms for captive power projects in the country.
The draft proposal is open for stakeholder suggestions until December 1, 2023.
Verification of consumption criteria will be based on the net electricity generated from the generating units in a generating station, i.e., gross electricity generated less auxiliary consumption, identified for captive use.
If a captive project fails to meet the requisite conditions in a financial year, the project will cease to be a captive power project, and the users will cease to be captive.
Captive Project Criteria
To be labeled a captive power project, a power facility must meet specific ownership and usage criteria. This means that at least 26% of the project&#8217;s ownership must be held by the users who will directly benefit from its electricity. Moreover, a minimum of 51% of the electricity generated annually should be set aside for use by these captive users.
In the case of power projects established by registered co-operative societies, the ownership and power consumption conditions should be met collectively by all the members of that society.
If it&#8217;s an Association of Persons (AoP), the captive users must jointly possess no less than 26% of the project&#8217;s ownership. Additionally, they should utilize at least 51% of the electricity generated annually, aligning with their ownership shares. This consumption proportion has a small allowable variation of up to ten percent.
When a generating station is owned by a company created solely for that station&#8217;s operation, the ownership and usage criteria for a &#8216;captive power project&#8217; are applied not to the entire station but to the specific units within it that have been earmarked for captive use.
Furthermore, captive users must collectively hold at least 26% of the equity related to the generating units specified as the &#8216;captive power project&#8217; within the generating station. This ensures they have a significant ownership stake in the specific facility section designated for captive use.
Captive users must make sure they consistently meet the consumption percentages mentioned. If they fail to maintain the minimum percentage of captive use in any given year, the entire electricity generated will be treated as if a power-generating company is supplying it.
In cases where the captive power project and its users are spread across multiple states, the Central Electricity Authority (CEA) will verify their captive status based on a procedure approved by the Central Government.
Verification of 26% ownership will be done based on the weighted average of shareholding when there is a change in ownership structure in the financial year under consideration.
Verifying Authority
The CEA is proposed to be the verifying authority for a captive power project&#8217;s status in one state when at least one of its captive users is located in a different state.
In the event of non-compliance or failure to provide requested clarifications by the CEA within the designated timeframe, it has the discretion to determine the project&#8217;s status based on the available data or documents submitted by the project.
Finally, CEA is responsible for verifying whether the conditions related to captive status have been met and communicating this status to relevant entities, including distribution licensees (DISCOM), State Electricity Regulatory Commissions, State Load Dispatch Centers (SLDC), captive projects, and captive users.
General Conditions
Captive users can consume electricity either directly or through an energy storage system. Additionally, the electricity consumption by a subsidiary company of a company that is a captive user and the consumption by a company&#8217;s holding subsidiary acting as a captive user will also be considered part of the captive user&#8217;s consumption.
In case of any change in ownership structure during the year under consideration, a statement with the details of the change in the ownership structure along with the relevant documentary evidence must be submitted to CEA along with the application to verify the status of the project and its captive users.
The verification of ownership and consumption for any change in the captive user during a year will be conducted for the respective periods of change. This involves assessing the proportionate generation and the energy consumed by the captive user during these specific periods.
Technical losses in the electrical network and energy storage system will be included in the energy consumption of the captive users.
The aggregate energy generated from the captive project unit will be the gross energy generated from the unit, less aggregate auxiliary consumption during the time block. The normative auxiliary consumption for similar units may be considered for captive verification status without measured data on auxiliary consumption.
The energy consumption by the captive users with open access will be considered lower than actual energy generated by the captive unit or actual energy drawn through open access limited to a maximum of scheduled open access energy during that time block.
Verification of Status
The captive project must submit an application and the necessary documentation to CEA to initiate the verification. Following this, the project and its captive users should furnish an affidavit before September 30 each year detailing their annual electricity generation, consumption by captive users, and equity shareholding for the preceding year.
Once CEA receives the application and all required documents, it will communicate the status of the project and its captive users within two months. Additionally, the Regional Load Dispatch Centers (RLDC), SLDC, and DISCOMs operating where the project and captive users are located are expected to assist CEA during the verification process.
Verification of Documents 
If a power project is a company incorporated under the Companies Act:
<ul>
<li>Certificate issued by the chartered accountant or by the company secretary that includes information about the total equity, authorized, issued, subscribed, and paid-up equity share capital of the generators, as well as details regarding the holding of equity share capital with voting rights of the project and that of the captive users.</li>
<li>Certified copy of the Memorandum of Association and Articles of Association, including any subsequent amendments, should be provided. This copy should also include a certification confirming that these documents contain provisions for engaging in electricity generation.</li>
<li>Excerpt from the most recent annual return that displays the shareholding details submitted by the generators and captive users to the registrar of companies should be done within one month of filing to facilitate cross-verification.</li>
<li>Certificate regarding holding of equity share capital with voting rights in the captive project by the captive user duly certified by the chartered accountant or the company secretary.</li>
<li>A copy of the board resolution authorizing the signatory of the captive project and captive users. This authorized signatory must be the managing director, the whole-time director, or the company secretary.</li>
</ul>
Any change in the authorized signatory and revocation for approval for electricity generation by the board by way of amendment to the Memorandum of Association and Articles of Association must be intimated by the captive project within 30 days from the date of such change to the DISCOM and CEA.
If a co-operative society owns the generating project:
<ul>
<li>Certificate by the chartered accountant showing a detailed breakup of the issued, subscribed, and paid-up equity share capital of the captive project and the details of holding of equity share capital with voting rights by the captive users.</li>
<li>Certificate of incorporation by the registrar of the co-operative society.</li>
<li>Relevant extract of the latest annual report of the captive project showing share capital details.</li>
<li>A copy of the resolution passed by the general body authorizing the chairperson or managing director of the co-operative society as the authorized signatory with the attested signature of such signatory.</li>
</ul>
Any revocation of sanction for carrying on electricity generation by the society must be informed within 30 days from the date of such change to the DISCOM and CEA.
If an AoP owns the project, they are expected to provide a copy of the business agreement specifying the shareholding of individuals as members of the AoP. This copy should be certified by a chartered accountant and submitted by the authorized signatory of the AoP, along with a certified copy of the nomination of this signatory.
If the project is owned by a special purpose vehicle (SPV), they should submit the same documents as the others depending on whether the SPV is a company of an AoP.
Shareholder Defaults
If a shareholder fails to meet the electricity consumption criteria, and the remaining captive users collectively meet the ownership requirement of at least 26%, the shareholder in default must no longer be considered a captive user and will lose the associated benefits.
However, the other captive users who meet the criteria of not less than 26% ownership and consumption of not less than 51% of the total electricity generated (with a permissible variation of up to 10%) per their individual shareholdings will maintain their captive status.
When a shareholder defaults in fulfilling the consumption criteria and other captive users together do not comply with ownership criteria of not less than 26%, the captive project will lose its captive status, and all captive users must forgo the concessions available to a captive user.
Metering
Each unit of a captive project should have a separate interface meter with a real-time communication facility with RLDC and/or SLDC.
In September, in amendments to the Electricity Rules, 2005, the Ministry of Power <a href="https://www.mercomindia.com/ministry-electricity-rules-allows-multiple-users-group-captive" target="_blank" rel="noopener">reverted</a> to the previous regulation, allowing collective captive users to hold the minimum ownership of 26% in a group captive open access project.
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Ministry Proposes Procedure to Verify Captive Status of Power Projects

The implementation of several energy efficiency programs in India has led to electricity savings to the tune of 113.16 Billion Units (BUs) in 2018-19, which was 9.39% of the net electricity consumption (1,204 BUs), according to the Bureau of Energy Efficiency’s (<a href="https://www.beeindia.gov.in/" target="_blank" rel="noopener noreferrer">BEE</a>) recently released report.
BEE conducts an annual study comparing the actual energy consumption in a particular year with the estimated energy consumption in a case where the current energy efficiency measures had not been undertaken. The overall objective of this study is to assess the impact of all the energy programs in India in terms of total energy saved and reduction in the amount of carbon emissions in 2018-19. This assignment has taken energy efficiency estimation based on the impact of the programs implemented since FY 2015-16.
Union Power Minister R.K.Singh released the report through a video conference.
The report states that the total energy savings achieved in 2018-19 stood at 23.73 Mtoe (million tons of oil equivalent), which is 2.69% of the total primary energy supply, which was estimated to be 879.23 Mtoe during 2018-19. This includes both supply and demand-side sectors of the economy.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19125" src="https://mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png" alt="Summary of Energy Savings" width="1466" height="1481" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png 1466w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-297x300.png 297w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-1014x1024.png 1014w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-768x776.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-650x657.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-624x630.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-45x45.png 45w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-600x606.png 600w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-100x100.png 100w" sizes="(max-width: 1466px) 100vw, 1466px" /></a>
Singh said, “We have pledged in Conference of the Parties (COP-21) that we will bring down energy intensity of the economy by 33% to 35% compared to 2005 levels by 2030. Now, with our energy efficiency initiatives, we have already reduced the energy intensity of our economy by 20% compared to 2005 levels, which is a very good performance indeed.”
The COP refers to those countries that have signed the 1992 United Nations Framework Convention on Climate Change. India was the 62nd country to ratify the Paris Agreement during the COP-21 conference held in Paris in 2016.
The minister also pointed out that energy efficiency has a dual benefit as it not only saves money but also saves the environment. He said that there is a huge capacity for bringing
efficiency, especially in Micro Small and Medium Enterprise (MSME) and housing sectors, that have now been taken up.
Overall, the study concluded that various energy efficiency measures have translated into monetary savings of ₹891.2 billion (~$~$11.9 billion) against the savings in 2017-18, which stood at ₹536.2 billion (~$7.1 billion).
The industrial sector contributed to 49.17% of the total energy savings, while the domestic sector accounted for 33.34% of the total savings achieved during FY 18-19.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19126" src="https://mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png" alt="" width="1470" height="713" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png 1470w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-300x146.png 300w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-1024x497.png 1024w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-768x373.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-650x315.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-624x303.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-600x291.png 600w" sizes="(max-width: 1470px) 100vw, 1470px" /></a>
“These efforts have also contributed to reducing 151.74 million tons of CO2 emissions, whereas last year this number was 108 MTCO2,” states the report.
Governments across the world, including India, are gradually shifting towards renewable energy integration into the grid and systems approach on engendering energy efficiency practices in various sectors.
The report also mentioned that the United Nations Industrial Development Organization, in collaboration with BEE, is executing a global environment facility funded national project to promote energy efficiency and renewable energy in selected MSME clusters in India.
The BEE report also mentioned that similar programs are spanning across major energy-consuming sectors in India, such as industry, commercial, residential, transport, agriculture, and municipal.
Energy consumption across all the sectors of the economy has increased in the past few years. With the growing economy &amp; rapid urbanization, it is expected to increase further in the coming years.
In January 2020, the Ministry of Power announced the release of its ‘State Energy Efficiency Index 2019’ report, which keeps tabs on the progress made by the Indian states and union territories regarding energy efficiency (EE) initiatives. The report covers energy efficiency initiates in 36 states and union territories (UT) based on 97 indicators. The index was developed by the Bureau of Energy Efficiency (BEE) and the Alliance for an Energy-Efficient Economy (AEEE). The index is created to help states and UTs contribute towards national goals on energy security and climate action by driving energy efficiency policies and program implementation at a state and local level, according to the MoP. The latest report showed that most initiatives taken by states and UTs were policy or regulation based. Read the details of the report <a href="https://mercomindia.com/haryana-karnataka-kerala-top-states-energy-efficiency/" target="_blank" rel="noopener noreferrer">here</a>.
In August last year, Mercom had <a href="https://mercomindia.com/bee-aeee-state-energy-efficiency-index/" target="_blank" rel="noopener noreferrer">reported</a> that about the State Energy Efficiency Preparedness Index that aimed to assess state policies and programs aimed at improving energy efficiency across various sectors. Based on 63 indicators, the ‘Front Runner’ states in the inaugural edition of the Index were Andhra Pradesh, Kerala, Maharashtra, Punjab, and Rajasthan.

India’s Energy Efficiency Initiatives Help Save Over ₹891 Billion in 2018-19: BEE Report

The Ministry of Power has issued a proposal incorporating new modifications to the revised proposal for amendments to the Electricity Act 2003.
<a href="https://mercomindia.com/power-ministry-proposes-electricity-act-amendment/" target="_blank" rel="noopener">In September 2018</a>, the Ministry of Power had issued revised proposal for amendments to the Electricity Act 2003, in which it had included ample provisions for renewable energy generation and distribution. The new modifications are related to simplification of tariff categories and rationalization of retail tariff.
Through these modifications, the Ministry of power proposes incorporating tariff categories on sanctioned load and consumption basis.
In the proposal, the government has introduced many novel features like adoption of a uniform tariff structure across all states and consumer categories. It has also recommended imposition of penalty for exceeding the approved load in any given month.
The new proposal is open for comments up to November 5, 2018.
Key Points Proposed
<ul>
<li>Tariff structure must do away with the concept of different tariff for different customer categories.</li>
<li>The price of electricity consumed must be based on load used and energy consumed.</li>
<li>The principle to be adopted in new tariff structure will be based on slabs in sanctioned load and units consumed.</li>
<li>A maximum of five load categories will be created; 0-2 kW, &gt;2 kW-5 kW, &gt;5 kW-10 kW, &gt;10 kW-25 kW and &gt;25 kW.</li>
<li>For load bracket of 0-2 kW energy consumption slab of 0-200 units will be considered, for &gt;2 kW-5 kW, energy consumption slab of 201-400 units; for &gt;5 kW-10 kW, energy consumption slab of 401-800 units; for &gt;10 kW-25 kW, energy consumption slab of 801-1200 units and for &gt;25 kW energy consumption slab of &gt;1200 units will be considered.</li>
<li>As consumption pattern is different in different states, the slab and bracket range for load and energy consumption will be decided by state electricity regulatory commission (SERC).</li>
<li>Subsidy and cross-subsidy will be handled through different slabs in load and energy consumed. Consumers of lower slabs and brackets will be subsidized by consumers of higher slabs and brackets.</li>
<li>A systematic method must be adopted to automatically revise load if the average load in previous year exceeds the approved load. This will prevent customers from declaring less load.</li>
<li>A penalty has been proposed to be imposed for exceeding the approved load in any given month.</li>
<li>States will have option of adopting kW and kWh or kV and kVAh based tariff. For above 10 kW load level, the Ministry is of the opinion that it would be preferable to have kVA and kVAh as the units.</li>
<li>SERCs can create special tariff category for electric vehicle (EV) charging stations.</li>
</ul>
The Ministry of Power believes that tariff structures across states in India have become very complex and there is a need to simplify, harmonize and rationalize the tariff structure across states. The question of tariff for EV charging stations has been taken care of in the proposed new modifications, this is expected to usher in EV adoption across India.
<a href="https://mercomindia.com/ministry-of-power-amendment-tariff-policy/" target="_blank" rel="noopener">Prior to this</a>, Ministry of Power had issued <a href="https://powermin.nic.in/sites/default/files/webform/notices/Proposed_amendments_in_Tariff_Policy.pdf" target="_blank" rel="noopener">draft</a> amendments to Tariff Policy 2016 keeping in view the changes and dynamic nature of the power sector.
When contacted, an official with the Ministry of Power said, “We are focused on removing the complexities of Electricity Act and Tariff Policy. It is paramount for 24*7 power to all, by ensuring smart governance and providing access to affordable electricity for all households.”
“Power demand is now going to amplify due to the efforts for electrification. Not all users even in a city utilize the same amount of energy, the consumption levels are varied, and we have tried to make our policy simple by focusing it around consumption of individual consumers. Earlier, consumers were widely classified into domestic, industrial, institutional, agricultural and commercial, due to this the benefit of low cost of power could not be provided to the one’s in need. Now we will be able to do so,” added the official.

Ministry of Power Proposes Adoption of Uniform Tariff Structure for All States

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