Old power plant uplift to get $180-m WB loan

Written by Economy Bureau | Mumbai | Updated: Jun 20 2009, 06:42am hrs
World Bank has approved a $180 million loan to India for the renovation and modernisation of old, inefficient and polluting coal-fired power plants.

The project, which is expected to lower carbon emissions and boost power production at these plants, is co-financed with a $45.4 million grant from the Global Environment Facility (GEF). The loan from IBRD has a 30 year maturity including a 5-year grace period.

The project would rehabilitate and modernise around 200-220 mw capacity at each of the three coal-fired power plants at Bandel in West Bengal, Koradi in Maharashtra, and Panipat in Haryana. It has been designated the first phase of Indias National Renovation and Modernisation Programme which, over the next decade, aims to rehabilitate old and inefficient power plants with a cumulative capacity of 27,000 mw, or almost one-fifth of Indias installed power capacity of 1,45,000 mw.

This would be the first step in a decade-long Indias plan to augment power supply by rehabilitating of old coal-fired plants even as the country moves to more climate-friendly options for energy generation in the long term. The planned modernisation will bring these units to energy efficiency levels comparable to similar units in OECD countries.

According to the World Bank release, the coal-fired generation rehabilitation project will pilot a new approach to renovation and modernisation that moves beyond simple life-extension to making the rehabilitated plants more energy efficient and environmentally sustainable. This means the renovated plants will use less fuel and emit fewer greenhouse gases for every unit of electricity produced.

Currently some 80% of the electricity in India comes from these plants, one-third of which are old, inefficient, and emit harmful gases into the atmosphere. World Banks assistance is crucial when the country last year faced a 16.6% shortfall during peak hours consumption and a 9.9% gap for energy generation.

... More than 400 million people do not have electricity in India, said Roberto Zagha, World Bank Country Director for India. This is the same as switching off power for the combined populations of the US, UK and France. Making coal more efficient and less polluting is an important step for India even as the government develops longer term solutions for addressing its climate change concerns.

Modernisation of these plants can improve their efficiency by about 10 to 15%, said Mikul Bhatia, World Bank Energy Specialist and project team leader. The Bank-supported project alone will help us to reduce its direct greenhouse emissions by almost half-a-million tonne of CO2 equivalent each year. If scaled up effectively to the remaining units needed rehabilitation, India could be looking at emissions cuts anywhere between 10 to 13 million tonne of CO2 equivalent each year.