CHENNAI: Cash-strapped TANGEDCO and the State government can save a whopping Rs 35,000 crore over a five-year period by shutting down 3.1 GW of old coal plants, halting construction of new coal plants, and boosting renewable energy, says a report by the non-profit agency, Climate Risk Horizons.
The report, titled ‘TANGEDCO’s Recipe for Recovery’, says the organisation’s participation in the Ujwal DISCOM Assurance Yojana (UDAY) in 2017 has failed to revive it. The Centre recently approved a bailout package of Rs 30,230 crore for TANGEDCO; but without measures to either lower the cost of power supply or raise tariffs, energy experts fear dues will continue to accumulate.
The report identifies cost reduction and savings opportunities available through the retirement of coal power plants that are over 20 years old. Such plants are typically less efficient, more polluting, and are now legally required to meet the 2015 air and water emission norms notified by the Ministry of Environment, Forests and Climate Change.
The deadline for compliance with the norms is 2022, but so far, little progress has been made in equipping the plants with FGDs and Low NOx burners. Retiring 3.1 GW of old plants, instead of incurring the capital expenditure to retrofit them will save approximately Rs 1,670 crore. These old plants are Thoothukudi, Mettur, North Chennai and NLC II Stage I thermal power plants.
Replacing the scheduled generation from these old plants with cheaper electricity, either from renewables or through purchases from the open market, will save another Rs 1,459 crore annually, as cheaper options are now available, the report says. “These old plants are not on track to meet the 2022 deadline for compliance with the air pollution norms. Rather than incurring Rs 1,600 crore or more on retrofits, it is more economic to retire them,” says report author Ashish Fernandes of Climate Risk Horizons in a press statement.
“Given financial stresses, incurring additional debt is difficult, and these costs would have to eventually be recovered via higher tariffs. The power surplus situation in the State and country, as well as cheaper renewable energy creates a potential win-win situation for Tamil Nadu’s consumers through retiring these assets.” Tamil Nadu’s coal fleet has been running below 60 per cent Plant Load Factor for the last three financial years.
Moreover, over 3 GW of new coal plants are nearing completion and are expected to be commissioned within 12 months, considering that the situation of surplus electricity generation capacity will persist for the foreseeable future. This makes the task of retiring older plants easier, the press statement said.
