THOOTHUKUDI: Udangudi super critical thermal power plant, which is under construction, is likely to cause more financial burden on the State, says a study titled 'White Elephant: new coal investments threaten Tamil Nadu's financial recovery' carried out by Climate Risk Horizons, a private research organisation.
The study reveals that the project will incur a fixed cost payment of nearly Rs 5,000 crore annually upon commencing production, totalling to approximately Rs 29,000 crore between 2024 and 2030. However, substituting power supply from these thermal plants with a mix of renewable energy and battery storage will save at least Rs 15,000 to Rs 20,000 crore on power purchase between 2024 and 2030, the study said.
Tamil Nadu has been a pioneer in the country on the renewable energy front with the highest installed renewable energy capacity jumping from 9,629 MW in 2015 to 17,009 MW in 2021.
The works of Udangudi thermal power plant with two units having 660 MW capacity have been in full swing for the past couple of years. The project was widely objected to as the coal jetty and its conveyor structures, being built 8 miles off shore of Kallamozhi village, became a barrier for the fishermen. Besides, the location of the project is said to be in a large waterbody. Meanwhile, the Uppur thermal project of capacity 1600 MW (2x800) in Ramanathapuram was also added to Udangudi, following a stay order by National Green Tribunal (NGT).
The total cost of the Udangudi stage 1 (2x660 MW) and stage 2 (2x800 MW) has been estimated to be Rs 28,627 crore, including an equity of Rs 8588 crore. So far, the State has, altogether, spent over Rs 6155 crore on both the projects as of July 2021.
Both the projects were proposed 10 years ago when the State was battling with acute power deficiency. Back then, coal was the cheapest source of power generation. However, the energy sector has undergone a significant change over the past five years with the advancement of renewable energy and the renewable energy combined with storage providing cheaper electricity.
The study shows the fixed costs payable for these units will be in the range of Rs 4700 crore annually for the first 5 to 7 years after commissioning the projects, irrespective of utilization levels. The fixed projection cost includes Return of Equity, interest on loan, depreciation, operation and maintenance and others. "It is nearly Rs 28700 crore for a period between 2024 and 2030," the study projected.
The study adds that the power tariff of renewable energy with the battery storage will cost `5.85 per kWh in 2024 which will further decline to Rs 4.4/kWh in 2027, while the cost of the power generated from coal-fired thermal power plant will cost Rs 8.2/kWh and Rs 8.5/kWh respectively in 2024 and 2027.
The gap between the cost of power production from the thermal power plant and the renewable energy plus battery storage will widen further given the price of coal, rail freight charges and regulatory oversight, the study says.
"The disadvantages of renewable energy - intermittency and lacking dispatchability, are now being addressed with the falling battery prices and the renewable energy plus storage battery has become cost competitive," said Prabakaran Veeraarasu, a researcher associated with Poovulagin Nanbargal.
Even though renewable energy accounts for 23 per cent of the State's total generation, it is not taken into account while estimating energy availability, he added.
The State government had been aggressive on expanding its coal based thermal power plants in the past decade with the capacity of 5040 MW which is one-third of the existing generation capacity.
Writing off the incurred expenditure of Rs 6,155 crore as a one-time regulatory asset would be preferable to cut down further expenditure, so that the ballooning loss to the TANGEDCO and the State finances shall be avoided, the study recommends.
It may be noted that the electricity sector has been the prime contributor to the fiscal deficit of the State, with the TANGEDCO's total debt was Rs 1.34 lakh crore, according to white paper released by the newly formed DMK government.