How industries shifted to captive power generation

To start with, mostly textile mills went in for it to save on input cost 

Updated - May 13, 2022 11:23 am IST

Published - May 12, 2022 12:14 am IST

With the recent power cuts due to coal shortage making the headlines, the spotlight has turned to how some industries in Tamil Nadu has established captive power plants over the years to meet their requirements.

For instance, Ramco Cements uses a combination of thermal, wind and other sources across its plants for captive power generation, which helps it meet 100% of its power requirement. Its captive mix includes 170 MW of thermal power, 25 MW of waste heat recovery system and 170 MW of wind energy. It also has a diesel generator capable of producing 70 MW-80 MW in backup power.

A.V. Dharmakrishnan, CEO, Ramco Cements, says the company is not affected by coal shortage and has a sufficient stock. But higher coal prices have pushed up the cost of captive power generation.

“Industries are trying to source competitive cheaper power. That is the main reason for people going for other alternatives like captive power. Even the Electricity Act, 2003, envisaged this,” according to A.D. Thirumoorthy, Member, State-level Renewable Energy Committee.

To start with, mostly textile mills went for captive power. Saving on the inputs is the competitive edge in the sector. Besides cotton, the major inputs are power and labour. So, they are trying to save on both, he explains. Mr. Thirumoorthy says the textile mills invested a lot in wind energy; looking at the benefits, other industries like iron and steel went for captive generation.

Industry representatives say captive power generation enables them to meet 50%-100% of their power requirements. “Captive power generation has grown significantly over the last 25 years. Prior to that, most industries were using diesel generators. A lot of investments were made in wind energy, which was promoted through attractive tax policies by the Central government and specific policies by the State government,” says Illango, director, Tamil Nadu Electricity Consumers Association (TECA), a representative body of industrial electricity consumers in Tamil Nadu. Though incentives have been cut, industries still view wind and solar energy plants as viable options to meet their power needs, he adds.

K. Venkatachalam, chief adviser, Tamil Nadu Spinning Mills Association, says the textile industry went for wind energy for captive generation. But wind being seasonal, many players are considering the option of solar energy. Some of the big industries have earlier gone for coal power plants. However, high coal prices have forced them to keept their plants shut. They are tapping into the State grid, adding to the demand on Tangedco, he says.

Need for supportive policies

He calls for a supportive policy for renewable energy. “Of late, the Tamil Nadu Electricity Regulatory Commission is considering captive power generators as competitors to Tangedco. This has to change,” Mr. Venkatachalam argues.

Mr. Illango says one of the issues faced by the industry is the instructions to Tangedco to back down on generation of renewable energy. Most of the industry is planning to set up solar power plants for captive use, but the levy of 40% duty on the import of solar power equipment is acting as a dampener.

Mr. Thirumoorthy recalls that during the steep power cuts years ago, the State government promoted captive power generation and later discouraged it. There should be a permanent policy to enable industries to tap into the alternative sources of cheaper power and become globally competitive. In the coming years, he adds, the storage systems will become commercially viable and industries can use a mix of wind and solar energy to meet all their requirements.

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