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Editorial

Electricity policy – Decline of thermal power

August 30, 2017 03:24 PM

Punjab News Express/Vinod Gupta
NEW DELHI : A major shift to renewable energy is likely to render part of coal based thermal plants idle as per new electricity policy

Government of India has taken a decision to add 1, 75, 000 MW renewable power to grid by 2022, which includes 1, 00, 000 MW solar power and 60, 000 MW wind power as a part of India’s effort towards the global efforts to control climate change and global warming by reducing carbon emissions. India’s present installed power capacity is 3330153 MW of which thermal power from coal comprises 1, 94, 432 MW whereas renewable energy capacity is 58, 303 MW.

National Electricity Plan envisages that no new coal power plants will be required in India over the next decade till 2027, apart from the ones already under construction. What will be the impact of existing thermal plants and their operation in the new scenario? Is this a possible end for coal based thermal plants in the country as proposed by the government but this may not happen?The recently released ‘Greening the Grid’ report , which looks at how 1, 75, 000 MW of renewable energy can be successfully integrated into the electricity for stable functioning by the 2022, with present grid while minimising renewable
energy curtailment .

As per report total emissions of CO2 will reduce by 21 per cent from 1370 million tonnes to 1, 090 million tonnes, a reduction of 21 per cent and renewable energy will meet 370 billon units /year which will be 22 per cent of annual requirement of 1680 billion units /year. The plant load factors of coal based thermal plants will drop from 63 per cent to 50 per cent with more than 19, 000 MW of capacity that will never start, and 65, 000 MW of capacity. The study has revealed that even if there is no additional renewable power added to the grid, about 10, 000 MW capacities of existing thermal stations will not run even for a single day in 2022. Moreover, with 1, 60, 000 MW renewable powers added, about 19, 600 MW thermal capacities will not run for a single day in 2022. Retiring 20 per cent of installed coal capacity (46, 000 MW) which will run at 15 per cent plant load factor does not adversely affect system flexibility.

India’s electricity demand is expected to grow four-fold from about 1.1 trillion units to 4 trillion units by 2030 with per-capita annual electricity consumption expected to increase from 1, 075 units to 2, 924 units in 2040. India’s raising energy demand and connecting millions without power will not be possible only through intermittent renewable

sources and phasing out coal power plants. A major shift to renewable energy is likely to render part of the coal based thermal plants idle and the investments in these plants being sunk, it is no longer possible to recover any returns from them although their useful life is still not over. The stranding of assets will have implications for the banking system also.These state owned thermal stations represent investment of public funds and creation of infrastructure at public expense, which cannot be summarily retired and turned into scrap. Instead of considering the option of phasing out thermal plants operating at low PLF, the alternative of setting up supercritical thermal station that further raises the efficiency of coal burned while also reducing pollution at the same location needs to be examined.

In case of private sector thermal plants covered under long time power purchase agreements how the closure of such plants be done before the expiry of agreement period without adequate compensation. With the present situation of surplus capacity the financial condition of several state power utilities is deteriorating whereby high cost power contracted under earlier PPAs has to be availed or alternately capacity surrendered and charges paid without availing energy.The policy fails to provide an adequate framework for a number of issues that have arisen and intensified over the course of India’s ongoing energy transition. The policy fails to address the rampant uncertainties, specifically on issues around renewable purchase obligations and renewable energy certificates. Government in 2015, issued revised norms of emissions for coal based thermal plants with a dead line of December 2017 The high cost for retrofitting their projects to meet the new standards is about Rs 1 crore per megawatt. With such a heavy investment made by the plant how the operator can be asked to shut down its units after few years.

The renewable energy is thriving on budgetary support and what will happen when the concessions given are withdrawn by the future government as the policy has not made any such recommendations.It may be mentioned that, ramping coal power stations to support variable renewable energy is the model used in Germany which met disastrous results both financially and related to environment. As India’s importance and role in the global energy markets continues to grow, it needs to be strategic in its energy planning keeping in mind the domestic needs.The Niti Aayog is presently finalising the national energy policy. The Draft National Energy Policy should be modify to facilitate addition of green power while at the same time giving adequate protection to state power utilities from adverse consequences of stranded thermal power station
assets.

The Aayog will have to find a solution whereby while moving towards controlling carbon emissions, a solution is found towards stranded power stations of State utilities and amendment of high cost PPAs for solar power as well as Private IPPs so that the state Discoms can get some relief from high cost power contracted earlier which is now threatening the financial viability.

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