Pvt power producers struggle to meet emission deadline

Photo: Wikipedia
The Union environment ministry’s move to cut down on thermal power emissions to meet global standards is now facing multiple uncertainties over its implementation. Private thermal power producers are struggling to meet the new deadline, as regulatory approvals for the project cost and equipment sourcing remain a challenge.

In December 2015, the environment ministry issued revised guidelines for existing and new coal-based thermal power plants in the country for sulphur dioxide and nitrogen oxide emissions. The tighter norms require thermal-power plants to refit certain equipment. However, companies and analysts say the process is proving to be challenging. Coal-fired plants are required to meet these guidelines by December 2017.

Private companies so far have not started the refitting process. “We are still discussing the practicality of it, and if there is a technical solution possible,” said Sanjay Sagar, chief executive officer and joint managing director, JSW Energy Ltd. JSW Energy operates 3,140 megawatt (Mw)of thermal power capacity in the country.

JSW Energy is not an exception. Private power producers have hit a regulatory hurdle over the revised cost of the project and subsequent increase in tariff. The estimated cost for the required refitting is in the range of Rs 80 lakh to Rs 1.25 crore for each Mw of power.

“Refitting cannot be started, there is a preparation time. All the private companies have started the process (preparation process); five of them have filed the petitions for tariffs, too. The government is yet to give any guidance for the approval of cost to the regulatory commissions,” said Ashok Khurana, director general, the association of power producers. Khurana added banks might not be willing to lend unless there is clarity on the revised tariffs. “There is no clarity on whether power purchase agreements  can allow for the revision in tariff for these capital costs,” he added.

In addition to regulatory hurdles, companies and analysts add, the proposal also faces other challenges in terms of unavailability of required equipment and grid disturbance.

“It is impossible to meet the deadline, but the government is still in discussions with the companies. If implemented, it will be a big financial hit for the companies. Vendors for certain equipment are not available in India, the government will need to amend or ease the norms,” said an analyst with a domestic brokerage firm.

Sagar from JSW Energy agrees there is a lack of suppliers and the deadline may need to be revised. As of August 2016, India’s coal-based thermal power installed capacity stood at 186 gigawatt (Gw). One Gw is equal to 1,000 Mw of power. India’s total installed power capacity is 305 Gw.

In addition to the lack of enough vendor companies, refitting also threatens disturbing the grid if a pre-decided schedule is not followed. “If 10-15 plants start doing it together, that much load will together go away from the grid. One has to do it in a more phased manner.”

A lot of thought process needs to go in,” Sagar said. The power grid in the country operates on a pre-decided schedule of balanced demand and supply of power. Any significant anomaly in the supply or demand can impact the grid adversely.

POWER PANGS
  • In Dec 2015, the environment ministry issued revised guidelines for existing and new coal-based thermal power plants for sulphur dioxide and nitrogen oxide emissions

     
  • The tighter norms require thermal-power plants to refit certain equipment

     
  • Coal-fired plants are required to meet these guidelines by December 2017

     
  • The estimated cost for the required refitting is in the range of Rs 80 lakh to Rs 1.25 crore for each Mw of power

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel