← Business Models: Industry Specific (Industrials & Materials) (all topics)
Backward integration - captive power (chlor-alkali)
What it is
Chlor-alkali electrolysis is among the most power-intensive processes in chemicals, with electricity typically 50-60% of cash cost. Producers therefore build captive thermal or renewable generation rather than buying from the grid
Membrane-cell technology has cut power intensity below 2,000 kWh per tonne of caustic
Impact on industries
- The single largest controllable cost lever - a captive-powered producer and a grid-supplied one have structurally different ECU margins at identical prices
- Renewable captive capacity cuts cost and carbon simultaneously, which matters as product carbon footprint rules spread to chemicals
- Captive generation is capital-heavy and locks in a technology and fuel choice for decades
- Same structure as captive power in ferro alloys - the cost advantage and, where coal-based, the carbon liability are the same asset