The demand for captive power facilities has seen a rise after the passage of the Electricity Bill 2003.

Manufacturers of captive power sets like Thermax, Bharat Heavy Electricals Ltd and Alstom have received several queries from customers who want to set up big generation facilities that will give them the option of supplying excess power to the grid.

Several are also planning to jointly set up units to exploit economies of scale.

Most of the proposals for captive projects received by the manufacturers are for sets with capacities between 8 mega watt and 50 mega watt.

Prakash Kulkarni, managing director of Thermax Ltd, said the company was  at present in talks with around 10 clients.

The company was looking to set up captive power facilities adding up to a total of 160-166 mega watt capacity, he added.

"Many of the customers are also exploring the possibility of having surplus capacity so that a part of it can be offloaded to the grid," he said.

According to industry estimates, the market for captive projects is expected to grow to an estimated 1,000 mega watt over the next five years or so.

The Electricity Bill, passed by Parliament in the recently concluded Budget session, lays down liberal norms for the setting up of captive power projects.

Moreover, under the new Bill, a licence from the state electricity board is no longer necessary for setting up a captive power facility.

Also, promoters of captive power projects have been allowed to supply excess power to the grid.

Bhel executives said the market for captive power sets was showing immense potential as a large number of queries had started coming in from industry after the passage of the new legislation.

Industry sources said because of the unpredictability of hydrocarbon fuel prices more and more players in India's captive power market were shifting from conventional liquid fuels to solid fuels.

Also, most power plants were now being built on an engineering, procurement and construction basis, they said.

The emphasis here was on fast track completion as delays and cost overruns push up the cost of power, making projects unviable, the sources said.

In 1998, Thermax had constructed a 27.5-mega watt plant for Arvind Mills and a 36-mega watt plant for Shree Cement on an engineering, procurement and construction basis.