Captive Power is power that is generated and used locally: i.e. generation at the end-user edge of the grid rather than in centralised power plants. Rather than including residential-scale systems however, the term is used to describe larger-scale generators, for example a large industrial facility generating power primarily for its own use. The motivation for facilities to generate their own power can be to avoid the costs of buying through the grid or to overcome lack of reliability of power supply through an available grid connection. It’s not uncommon for captive power generators to generate surplus electricity which can also be used to generate revenue by selling into the grid too.
From a power system / energy mix perspective, if more and more end-users start generating and using their own power, this will reduce the supply requirements for dedicated, grid-connected central power generating (and grid T&D) capacity.