Captive power generation plant set up by any person OR by any co-operative society OR association of persons or by industry OR group of industries to generate electricity primarily for his own use & sell excess power to state electricity board is known as captive power generation.
Advantages of captive power generation:
i) Transmission losses reduce as generation is nearby load centre. ii) Reliability of supply increases. iii) Low tariff than Supply Company. iv) Surplus energy can be sale easily to other consumers. v) Power quality is good. (Free from harmonics) vi) Reduces the load on the grid, thus reduces the need for grid up gradiation. vii) CPP reduces economic loading on government to built a new power project. viii) In some industry like textile and paper manufacturing industry steam is require in manufacturing processes. Same steam can be used for generation of electricity. Thus increase efficiency of industry.