Industrial Captive Power and On-Site Generation
Industrial captive power is generation owned or contracted by the site it serves, typically behind the meter and in some cases with heat recovery. Loadside Power originates these projects: it establishes whether an on-site power case is commercially defensible, on what data and at what scale, and brings manufacturer-side engineering into the project once the fundamentals hold.
When a plant decides to make its own power
The decision to generate on site is not always driven by the price of electricity alone. It tends to follow when one of five conditions becomes true and stays true.
The grid cannot deliver what the plant needs. A new connection is delayed, capped by the utility, unavailable at the required reliability, or dependent on network upgrades with no committed date.
Production continuity is at risk. Outages, voltage problems or frequency excursions cost production hours that cannot be recovered, or force the site onto diesel.
The tariff structure punishes the load profile. Peak charges, demand charges, slab changes or subsidy removal can turn an acceptable energy cost into a material one.
A fuel advantage exists. Piped gas, LNG, CNG, field gas or biomethane is available at a price that makes on-site generation worth comparing with purchased power.
Heat and cooling demand sit next to the electrical load. Steam, hot water, drying, refrigeration or absorption cooling can be served from the same fuel stream, which turns a power project into an energy project.
What determines whether captive power is commercially defensible
On-site power economics are decided by arithmetic, not enthusiasm. Five numbers carry much of the case.
The spread between the cost of purchased electricity and the cost of fuel plus maintenance per kilowatt-hour generated
Operating hours. An asset used 2,000 hours a year behaves very differently from one used 7,500
Electrical load profile, including minimum load, peaks and what must run unconditionally
Usable thermal demand: how much heat, steam or cooling can be consumed on site, and how much is wasted when it cannot
Capital and financing structure, including what the site can fund, what it can lease and what the board will approve
Where these numbers support the case, the project can be straightforward. Where they do not, no equipment choice will rescue it.
Behind-the-meter generation, diesel displacement and CHP
Captive power projects take a handful of recurring shapes.
Baseload generation alongside a grid connection, sized to the plant's minimum load, with the grid carrying peaks and providing backup
Full on-site supply for sites where the grid cannot be relied on, including island operation with the on-site plant carrying the whole site
Diesel displacement for facilities whose continuity depends on diesel, where another fuel can carry base load or defined peak periods at materially lower cost
Expansion supply for plants whose next stage of production exceeds the existing connection or utility plant
Combined heat, power and cooling, including CHP, cogeneration and trigeneration, for sites where electricity, process heat and refrigeration occur together
The technology follows the conditions. Gas engines and CHP units are common answers, and batteries, hybrid systems and heat recovery can form part of the project where the load and fuel position support them.
Diesel displacement: when generator fuel becomes a production cost
Some plants run a material share of production on diesel generators, because the grid is unreliable, capped or not yet connected. Diesel generation can be among the most expensive ways to buy power, and diesel delivery adds supply risk of its own. The cost can be accepted as the price of continuity until something changes: a gas connection becomes possible, an LNG or CNG supply appears, the load grows, or the diesel bill becomes a number the board notices.
The question is not whether another fuel is cheaper in principle. It is whether a gas-fuelled plant can carry base load, defined peaks or the whole site; whether the existing diesel sets stay as emergency backup; and whether the replacement fuel is as secure as the delivery it replaces. In some cases the diesel sets remain in the system for emergencies while another fuel takes the running hours, which changes how the project is sized. A diesel displacement case is only as good as the reliability of what replaces it.
Fuel availability can decide whether on-site generation is viable
A site can have a strong electricity case and still not have a captive power project. Before equipment is discussed, four fuel questions need answers: is the fuel physically available at the site, in what quantity and at what pressure; on what price basis, and how stable is it; how secure is supply over the life of the asset; and what does it cost to bring the fuel to the plant.
Pipeline gas is the clearest example. When a connection becomes available or is expanded, the economics of on-site generation can change, but capacity, pressure, connection cost, tariff structure and contract terms decide in which direction. Where there is no pipeline, trucked LNG or CNG can make generation possible at a delivered cost and logistics profile that has to be tested against the load and storage requirements. Fuel produced on site, such as digester gas, follows its own screening logic.
Loadside Power does not supply fuel. It tests whether the fuel position a site actually has supports a project, and says so early when it does not.
The commercial delivery model also changes the case
The same plant can look different depending on how it is delivered. Projects can proceed as owner-funded capital expenditure, as financed equipment, through a lease or other structured arrangement, or as generation owned and operated by a third party that sells the output to the site. Each route changes who carries the capital, the operating risk and the contract term, and each can suit a different decision-maker.
Which routes are actually available depends on the applicable local regulatory and contractual framework, including rules on who may generate, sell or supply power to a site. A project that works only under a route the business cannot approve, or that local rules do not allow, is not ready, however good the engineering.
Loadside Power is not a lender, financier, utility or electricity retailer, and it does not give legal advice. It checks that a credible route exists before technical effort is committed.
How industrial on-site power projects actually start
Not with a specification. With a trigger: an expansion decision at board level, a utility letter, a diesel invoice, a fuel offer, a failed transformer, a boiler replacement study, or a production plan that current supply cannot carry.
Loadside Power works at that point, before the site has turned the problem into an equipment tender. Origination is the commercial work that determines whether a project deserves to proceed before major technical and capital resources are committed. For captive power that means checking the numbers above against the site's real fuel position, tariff and operating pattern.
What Loadside Power does and does not do
Loadside Power does not manufacture equipment, perform installation or provide field service. It is not an EPC contractor and it is not an engineering consultancy. It qualifies the commercial case, structures the information, and brings qualified manufacturer-side engineering into the project for equipment configuration, performance assessment and formal quotation when the case passes screening.
When captive power is the wrong answer
On-site generation does not suit every facility. It struggles where there is no secure or economic fuel, where the load is too small or too intermittent to keep the asset running, where there is no use for recovered heat and the spread is thin, or where the grid is cheap and reliable. A credible screen says so early, because a project that should not proceed costs the operator capital and costs everyone else the trust needed for the next proposal.
Information needed to screen a captive power case
Country, site location and industry
Present electricity source, tariff basis and reliability experience
Approximate electrical load: minimum, average and peak
Operating hours and seasonality
Available fuel: type, quantity, security of supply and indicative price
Existing generation, boilers, chillers and other utility plant
Thermal and cooling demand
Expansion plans and production projections
Decision structure and funding route
Drawings, tender documents and financial statements are not required for a first screen.
Submitting a captive power project
Operators dealing with a grid constraint, diesel dependence, an expansion or a utility plant decision can submit basic project information through the project screening form, or discuss the situation first by email. Service firms, EPCs and developers who see these conditions on customer sites can also work with Loadside Power while keeping the customer relationship. Where the opportunity is commercially credible, further technical and commercial data can then be requested.