Power bills to rise on green norms

POWER COM­PA­NIES STARE AT RS 2.5 LAKH CRORE IN­VEST­MENT TO MEET COP GUIDE­LINES, WHICH WOULD INFLATE ELEC­TRIC­ITY TAR­IFFS

Resource Digest - - CONTENTS -

Brace for some power tar­iff hikes this year as com­pa­nies gen­er­at­ing elec­tric­ity from coal might start rais­ing a whoop­ing Rs 2.5 lakh crore from con­sumers be­gin­ning this year to com­pen­sate for the in­vest­ments they are re­quired to make to meet pol­lu­tion emis­sion norms.

Power plants are re­quired to in­vest this amount, cal­cu­lated at a con­ser­va­tive es­ti­mate, for not gen­er­at­ing any new ca­pac­ity but to ful­fill the global Cop 21 (2015 Paris Cli­mate Con­fer­ence) norms.

As per the pro­vi­sions of power pur­chase agree­ments, such in­vest­ments can be re­cov­ered from con­sumers us­ing the ‘Change in Law' pro­vi­sions, doc­u­ments sub­mit­ted by the power sec­tor to the gov­ern­ment showed.

The cur­rent dead­line is end of 2017, which may get ex­tended as the power sec­tor feels that meet­ing the dead­line is im­pos­si­ble.

The process of ad­her­ing to the norms, how­ever, would cre­ate wind­fall gains to the power and pol­lu­tion con­trol equip­ment mak­ers. The fig­ure of Rs 2.5 lakh crore is con­ser­va­tive as the in­dus­try fears that the de­mand would be so much that it would cre­ate scarcity and push up equip­ment prices, fur­ther es­ca­lat­ing the bur­den on the ther­mal power in­dus­try.

“Our mem­bers are com­mit­ted to ad­here to norms as we all are con­scious of ad­verse im­pli­ca­tions on the en­vi­ron­ment. How­ever, look­ing at costs of around Rs 1.25 crore for ev­ery megawatt and its im­pact on op­er­a­tional costs, we have re­quested the gov­ern­ment and CERC for reg­u­la­tory guid­ance. That is awaited, many mem­bers have al­ready filled pe­ti­tion be­fore the reg­u­la­tor,” Ashok Khu­rana, di­rec­tor gen­eral, As­so­ci­a­tion of Power Pro­duc­ers, said.

In De­cem­ber 2015, Min­istry of En­vi­ron­ment, For­est and Cli­mate Change had is­sued new guide­lines for emis­sion lev­els cov­er­ing sul­phur diox­ide, ox­ides of ni­tro­gen, mer­cury, par­tic­u­late mat­ter and wa­ter con­sump­tion, ap­pli­ca­ble to coal-based power plants. These norms are to be im­ple­mented within two years of no­ti­fi­ca­tion, by De­cem­ber 2017.

At present, the coun­try has about 173 gi­gawatt of in­stalled coal-based ca­pac­ity and an­other 75 gw un­der con­struc­tion which would be im­pacted by the new norms, Khu­rana said.

Apart from the chal­lenges in im­ple­ment­ing this mam­moth scale of op­er­a­tions across the in­dus­try, the power sec­tor fears there could be scarcity of equip­ment, push­ing up prices.

“If all this goes with­out any plan­ning we could face grid prob­lem. As a way out, the sec­tor can go for re­gion-wise upgra­da­tion so that the grid is not im­pacted. The equip­ment is also needed to be available in such quan­tity. Many of the re­quired tech­nolo­gies have lim­ited sup­pli­ers or only available with in­ter­na­tional ven­dors. This may lead to fur­ther cost in­fla­tion due to the sup­ply-de­mand mis­match,” he said.

“In or­der to com­ply with the Cop 21 norms, the coun­try will need to ren­o­vate, mod­ernise or re­place its ex­ist­ing coal-fired plants. This is crit­i­cal since many of the ex­ist­ing plants are reach­ing end of their life cy­cle,” Siemens said.

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