Centre Uses Section 11 of the Electricity Act: Captive Coal Plants Told to Run at Full Capacity and Sell Surplus Power
On 25 September 2026, the Union Ministry of Power used its emergency power under Section 11 of the Electricity Act, 2003 to issue directions to captive coal-based power plants (plants that industries run mainly for their own use).
The order covers 112 captive plants of 50 MW or more, run by companies in steel, aluminium, cement, oil refining, fertilisers, paper and chemicals.
From 1 October to 31 December 2026, these plants must run at their maximum available capacity. After meeting their own needs, they must offer surplus electricity on power exchanges, following market rules.
They must also keep enough coal stock so that generation is not interrupted.
Each plant must send a weekly report to the Central Electricity Authority (CEA) on generation, own use, sales on exchanges, available capacity and coal stocks.
The aim is to use every available source of electricity, increase supply in the market and meet peak demand in the last quarter of the year, at a time when coal stocks at many power plants are low.
Electricity Act, 2003: India's Power Sector Law
The Electricity Act, 2003 is the main law that governs India's electricity sector (except nuclear power, which has its own law). It covers how electricity is generated, carried over long distances (transmission), delivered to homes and factories (distribution), bought and sold (trading) and used. It set up independent regulators, opened the sector to competition and aimed to bring electricity to every part of the country.
The Ministry of Power used Section 11 of this Act to order 112 captive coal plants to run at full capacity and sell their surplus on power exchanges. Under Section 11(2), any loss these plants suffer can be offset by the regulator.
Captive Power Plants: Electricity Made by Industries for Themselves
A captive power plant is a power station that a company or a group of users sets up mainly to meet its own electricity needs. For example, a large aluminium or steel factory may build its own coal power plant next to the factory. The electricity is "captive" because it is produced mostly for the owner's own use, not for sale to the public.
The Section 11 direction covers 112 captive coal plants of 50 MW and above. These plants usually make power only for their own factories and often run below full capacity. The government now wants them to run at maximum capacity and sell whatever they do not use on power exchanges, adding supply during the demand peak.
Power Exchanges in India: How Electricity Is Traded
A power exchange is an electronic marketplace where electricity is bought and sold, much like a stock exchange for shares. Sellers (power plants, traders, discoms with extra power) put in offers, buyers (discoms, industries) put in bids, and the exchange finds a single price at which supply meets demand. Power bought on an exchange is delivered through the grid, usually for the next day or even within the same day.
The Section 11 order requires captive coal plants to sell their surplus electricity on power exchanges, under the market rules. This brings extra supply into the Day-Ahead and Real-Time Markets during the peak months, which can help discoms buy power and ease prices.
- Order date: 25 September 2026, issued by the Union Ministry of Power
- Legal basis: Section 11 of the Electricity Act, 2003
- Plants covered: 112 captive coal-based plants of 50 MW and above
- Period: 1 October to 31 December 2026
- Requirements: run at maximum available capacity, keep adequate coal stock, offer surplus power on power exchanges
- Weekly reports to the Central Electricity Authority on generation, own use, sales, capacity and coal stock
- Earlier Section 11 uses: imported-coal plants in 2022 and 2023, and later extensions
- Captive plant tests: 26% ownership and 51% own consumption (Rule 3, Electricity Rules, 2005)