CAPTIVE POWER PLANT MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)
Captive Power Plant Market, By Fuel Type (Diesel, Gas, Renewable Energy, Others ), By Power Rating (Up to 1 MW, 1 MW – 5 MW, 5 MW – 10 MW, 10 MW – 15 MW, 15 MW – 20 MW, 20 MW – 50 MW, Above 50 MW), By End User (Industrial, Commercial, Residential, Others), By Geography (North America, Latin America, Europe, Asia Pacific, Middle East & Africa)
The captive power plant market size is expected to reach US$ 61.14 Billion by 2030, from US$ 25.99 Billion in 2023, at a CAGR of 13% during the forecast period. Captive power plants are power generation facilities used by industries to provide electricity for their own requirements. They help companies lower energy costs, increase supply reliability, and reduce carbon footprint. The key advantages include cost-effectiveness, power reliability, reduced transmission losses, and energy efficiency. The growth is driven by increasing electricity demand, rising industrialization, supportive government policies, and cost benefits.
The captive power plant market is segmented by fuel type, power rating, end user, and region. By fuel type, the market is divided into diesel, gas, renewable energy, and others. The diesel segment accounted for the largest share in 2022 due to easy availability, cost-competitiveness, and compatibility with load variations.
Captive Power Plant Market Regional Insights
North America is expected to be the largest market for captive power plant during the forecast period, accounting for over 35% of the market share in 2023. The growth of the market in North America is attributed to rising industrialization, aging power infrastructure, and increasing reliability needs.
The Asia Pacific market is expected to be the second-largest market for captive power plant, accounting for over 25% of the market share in 2023. The growth of the market is attributed to rapid industrialization, government incentives, and increasing electricity deficiency in countries like India and China.
The Middle East & Africa market is expected to be the fastest-growing market for captive power plant, with a CAGR of over 17% during the forecast period. The growth of the market in the Middle East & Africa is attributed to growing investments in the oil and gas and construction sectors.
Figure 1. Global Captive Power Plant Market Share (%), by Region, 2023
Rising electricity consumption: The growing electricity consumption across industrial, commercial, and residential sectors is a key factor driving the growth of the captive power plant market. Population growth, rapid urbanization, industrial expansion, and improving access to electricity in emerging economies have led to a significant rise in power demand. Captive power plants allow industries and companies to meet their large and growing power requirements in a reliable and cost-effective manner. The increase in electricity usage creates substantial opportunities for new captive power capacities. For instance, According to data by World Bank, between 2020-2022, India's annual electricity consumption grew by over 5% year-on-year. This is mainly attributed to increasing electricity demand from manufacturing, transportation and construction sectors.
Need for uninterrupted power: Industries and businesses require a continuous supply of electricity to ensure smooth operations and avoid losses. Power outages can disrupt manufacturing processes and lead to reduced industrial output. Grid supply in many developing countries is unreliable and marred by frequent blackouts. Captive power provides industries with the ability to generate reliable backup power during outages and voltage fluctuations in grid electricity. The need for uninterrupted power supply to maintain industrial production and operations will continue to favor captive plant installations. For instance, according to International Energy Agency data, commercial and industrial users accounted for over 60% of the global electricity demand in 2021, pointing to the vast captive power potential.
Access to cheaper and cleaner energy: Captive plants allow companies to source power at a cheaper cost than grid electricity by avoiding additional charges like transmission losses, wheeling, and electricity duty. Captive plants also give industries access to cleaner energy by utilizing renewable sources like solar, wind, and biofuels. Switching to captive renewables helps industries reduce their carbon footprints. Government incentives for clean energy-based captive models further encourage their adoption. Access to cheaper and greener energy from captive sources boosts market growth.
Support from government policies: Favorable regulations and incentives from governments are promoting the expansion of captive capacities. Policies like open access, licensing exemptions, tax rebates, capital subsidies, and electricity duty benefits are attracting private investments in industrial and commercial captive projects. For instance, countries like Thailand, Turkey, and Saudi Arabia have introduced policy measures to accelerate growth in captive power. Government support through enabling policies will continue to propel market growth.
Captive Power Plant Market Opportunities
Integration with renewable energy: The declining costs of renewable energy sources like solar, wind, and biomass, along with technological improvements, provide huge scope for integration with captive plants. Captive renewable plants combined with storage systems allow industries to reduce dependence on grid electricity and diesel generator. Policies are also encouraging industries to meet a portion of their captive needs through renewable sources. The integration of lower-cost renewables with captive capacities will gain traction. For Instances, As per the IEA's 2022 report, renewables such as solar and wind have emerged as the cheapest sources of new power generation in most countries. The share of renewables in global electricity generation has more than doubled in the last two decades.
Adoption of emerging technologies: Captive plants are increasingly incorporating advanced technologies like blockchain-enabled microgrids, Internet of Things (IoT), and artificial intelligence to enhance performance, efficiency, and remote monitoring capabilities. Battery storage systems are also being combined with captive solar plants to store excess power. Adoption of emerging technologies provides captive plants with the flexibility to optimize operations and power output based on consumption patterns. For instance, according to the United Nations Environment Programme, energy storage deployments across all applications grew by over 25% annually between 2015 and 2020. Technologies such as lithium-ion batteries, pumped hydro, and hydrogen fuel cells are expected to play a much bigger role in making renewable energy more dispatchable and reliable as a baseload source.
Off-grid captive power demand: Rapid electrification programs being undertaken in remote and rural areas of developing countries are opening up opportunities for off-grid captive power installations. Captive renewable energy solutions can provide cost-effective electricity access in areas unconnected to the main grid. Government tenders for decentralized renewable power also encourage private investments in off-grid captive projects. The off-grid captive segment is poised for strong growth.
Rising captive capacities in emerging economies: Developing nations such as India, Indonesia, Brazil, Vietnam, Turkey, and across Africa face issues of power deficits and an unreliable grid supply. This serves to encourage investments in captive generation capacities by industrial, commercial, and institutional consumers. Weak grid infrastructure coupled with growth in power demand in emerging economies provides significant potential for new captive plant installations and upgrades of existing facilities.
Captive Power Plant Market Trends
Increasing adoption of gas-based and hybrid plants: Stringent emissions regulations are driving industries to switch from diesel-run captive plants to cleaner gas-based and hybrid alternatives using renewables, bioenergy and natural gas. Gas engines offer higher efficiency and lower emissions compared to diesel generator. Hybrid plants integrated with solar, wind, biomass provide greater flexibility and energy cost savings. Greener captive plant technologies are witnessing rising uptake. For instance, the Indian government shows that natural gas currently contributes only 6.2% of the total energy mix. However, considering its various advantages, the government has planned to increase the share of natural gas in the overall energy basket to 15% by 2030.
Growing deployment of combined heat and power systems: The utilization of combined heat and power (CHP) systems is increasing in captive plants to enhance operational efficiency through waste heat recovery and its reuse for heating applications. Heat recovered from exhaust and flue gases is used to generate steam and hot water, enabling significant energy savings. CHP systems help captive plants achieve primary energy savings of around 80% compared to grid electricity.
Use of energy storage systems: Captive plants are integrating battery energy storage systems to optimize costs and provide emergency backup during outages. Energy storage helps shave peak demand charges, store excess solar power, and improve reliability. For instance, Alphastruxure offers turnkey hybrid captive power solutions combined with energy storage. The adoption of storage technologies with captive capacities is rising. AlphaStruxure is a leading Energy as a Service (EaaS) provider that designs, builds, owns, operates, and maintains tailored energy infrastructure, including microgrids.
Growing captive solar photovoltaic installations: Captive solar power is gaining increasing traction among commercial and industrial consumers owing to declining solar PV costs, low Operations and Maintenance requirements, and government incentives. Switching to captive solar enables industries to reduce daytime grid power consumption. For example, companies like Dalmia Cement, Raymond Ltd., and Infosys have set up large captive solar capacities. Captive solar adoption will continue to rise.
Captive Power Plant Market Report Coverage
Report Coverage
Details
Base Year:
2022
Market Size in 2023:
US$ 25.99 Bn
Historical Data for:
2018 to 2021
Forecast Period:
2023 - 2030
Forecast Period 2023 to 2030 CAGR:
13%
2030 Value Projection:
US$ 61.14 Bn
Geographies covered:
North America: U.S. and Canada
Latin America: Brazil, Argentina, Mexico, and Rest of Latin America
Europe: Germany, U.K., Spain, France, Italy, Russia, and Rest of Europe
Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, and Rest of Asia Pacific
Middle East & Africa: GCC Countries, Israel, South Africa, North Africa, and Central Africa and Rest of Middle East
Segments covered:
By Fuel Type: Diesel, Gas, Renewable Energy, Others
By Power Rating: Up to 1 MW, 1 MW – 5 MW, 5 MW – 10 MW, 10 MW – 15 MW, 15 MW – 20 MW, 20 MW – 50 MW, Above 50 MW
By End User: Industrial, Commercial, Residential, Others
Companies covered:
Wärtsilä, AES Corporation, Dalkia, Vegawatt Power Pvt Ltd, Ducon Technologies, General Electric, Thermax, Cethar Limited, Clarke Energy, Siemens, Doosan Heavy Industries & Construction, MAN Energy Solutions, Yanmar Co., Ltd., Kawasaki Heavy Industries Ltd., Mitsubishi Heavy Industries Ltd., Meidensha Corporation, Kirloskar Oil Engines Ltd., Greaves Cotton Limited, Cummins Inc., Caterpillar Inc.
High initial capital investment requirements: The huge capital investment required to set up captive plant infrastructure poses a key barrier, especially for smaller industrial units with limited financial capabilities. The costs include generators, fuel supply and storage facilities, distribution networks, and other auxiliary equipment. Long payback periods act as a deterrent. Wider use of captive plants is impeded by the significant initial expenditure requirements. For example, according to the World Bank, the average initial investment cost of setting up a 1 MW gas cogeneration plant in India is around Rs. 8-10 million. These high capital costs present significant financial challenges to small and medium-sized businesses.
Counterbalance: Invest in technologies that improve the efficiency of power plants, thus reducing operational costs over time. Explore cost-sharing arrangements or partnerships to defray initial investments.
Constraints in use of renewable energy: The adoption of renewable captive models faces challenges such as space constraints, grid integration issues, biomass supply risks, and a lack of storage. For example, rooftop solar installations are limited by the roof area available. Variable renewable power also requires sophisticated grid integration. These factors constrain rapid renewable energy adoption for captive use.
Rising open access installations: Open access allows industrial and commercial consumers to directly purchase cheaper power from IPPs and renewable companies instead of generating captive power. Open access provides procurement flexibility, mitigates investment risks and helps avoid costs of building and maintaining captive plants. The growth of open access capacities deters fresh investments in captive generation. For instance, according to data by Central Electricity Regulatory Commission (CERC), the volume of electricity traded in power exchanges in India increased by 29% in 2021 to 121 BU (billion units) as compared to 94 BU in 2020. The availability of cheaper power from the open market is inducing industries to shift from captive power sources to open access.
Analyst View
The global captive power plant market is expected to grow steadily, driven by increasing industrialization and demand for uninterrupted power supply from various end-use industries. The metals and mining sector will continue to dominate the market owing to huge power requirements for extraction and processing. Asia Pacific region, led by China and India, will remain the top market over the forecast period due to strong manufacturing growth and infrastructure development activities in the region. Some of the key opportunities for market participants include a growing focus on renewable energy integration and adoption of smart grid technologies to improve efficiencies. However, tightening environmental regulations regarding carbon emissions from diesel generators may restrain market growth to some extent. Overall, industries will keep investing in setting up captive units to mitigate power outage risks and stabilize production costs. New players may face challenges in acquiring the necessary permissions and land for project setup. Integrating energy storage solutions with renewable energy-based plants will be a game changer in the industry. Adoption of supercritical technologies is also surging to increase plant efficiencies. The market is expected to witness higher investments towards development of waste-heat recovery systems equipped captive units across thermal power plants. Rising multi-resource projects in regions with abundant coal and renewable energy sources will further support industry expansion.
Recent Developments
New product launches
In March 2022, Cummins launched a 2.5 MW gas-powered captive power plant focused on industrial and commercial consumers in India. It provides reliable and cost-effective power. Cummins Inc. is an American multinational corporation that designs, manufactures, and distributes engines, filtration, and power generation products.
In January 2021, Clarke Energy commissioned a 6.5 MW captive power plant for JSW Cement in India using efficient gas engines. Clarke Energy is part of the Kohler Company and is a multinational specialist in the sale, engineering, installation and maintenance of power plants that use gas engines.
In November 2020, Siemens Energy commissioned a 40 MW waste heat recovery-based captive power plant for steel manufacturer ArcelorMittal. Siemens Energy AG is an energy company formed through the spin-off of the former Gas and Power division of Siemens, and it includes full ownership of Siemens Gamesa. Siemens Energy AG is an energy company formed through the spin-off of the former Gas and Power division of Siemens, and it includes full ownership of Siemens Gamesa. Christian Bruch is the CEO, and the former CEO of Siemens AG, Joe Kaeser, is the chairman of the supervisory board.
Acquisition and partnerships
In September 2022, Wärtsilä partnered with Axpo India to develop captive solar hybrid power plants providing carbon-neutral energy. Wärtsilä Oyj Abp, trading internationally as Wärtsilä Corporation, is a Finnish company which manufactures and services power sources and other equipment in the marine and energy markets.
In June 2021, CLAAS India acquired a majority stake in VegaWatt Power to expand its renewable energy offerings for captive consumers. CLAAS is an agricultural machinery manufacturer based in Harsewinkel, Germany, in the federal state of North Rhine Westphalia. Founded in 1913 by August Claas, CLAAS is a family business and one of the market and technology leaders in harvesting technology.
In April 2020, Yanmar acquired a 45% equity stake in Himoinsa to extend its captive and rental power business globally. Yanmar Co., Ltd. is a Japanese diesel engine, heavy machinery and agricultural machinery manufacturer founded in Osaka, Japan in 1912.
Figure 2. Global Captive Power Plant Market Share (%), by Fuel Type, 2023
Definition: Captive power plants refer to power generation facilities established by industrial or commercial power consumers to meet their own electricity requirements. Captive power plants enable industries and companies to have access to reliable, uninterrupted power supply to avoid losses associated with irregular grid supply. They provide better control over electricity costs by insulating companies from grid tariff hikes. Captive plants are also environment-friendly, as industries can use waste heat or gas for power generation. The captive power plant market covers products, solution, and services for setting up captive power capacities across various industrial sectors worldwide.
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About Author
Sakshi Suryawanshi is a Research Consultant with 6 years of extensive experience in market research and consulting. She is proficient in market estimation, competitive analysis, and patent analysis. Sakshi excels in identifying market trends and evaluating competitive landscapes to provide actionable insights that drive strategic decision-making. Her expertise helps businesses navigate complex market dynamics and achieve their objectives effectively.
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