India’s efforts to curb emissions will open up new investment opportunities of Rs 9.4 lakh crore in the power sector over the next five years, according to a report by Edelweiss Securities. Renewable energy and installation of power plant equipment to lower emissions are expected to attract maximum investments in the power sector.
The country has set an ambitious target of installing 175 GW of renewable capacity by 2022 in a bid to meet its target of reducing emissions intensity by 33-35% by 2030 from the 2005 level, as promised by it in the 2015 Paris agreement. About 120 GW of additional renewable capacity is seen to be installed by FY24 versus 41GW over the last five years, with investment requirements soaring to Rs 8.6 lakh crore, compared with Rs 2.9 lakh crore over the last five years.
The research firm forecast that with limited growth visibility in new thermal power plants, the sector would be driven by equipment installations to comply with emission norms. Accordingly, 15 GW flue gas desulphuriser (FGD) contracts have been awarded as of end-September 2018. State-run BHEL has bagged 64% of these contracts, followed by L&T (15%), ISGEC Heavy Engineering (9%), Reliance Infra (8%) and GE Power (4%). State-run NTPC has floated tenders on FGD installation, having invited contracts to convert 42 GW of thermal power generation capacity compliant with emission norms.
According to the ministry of environment and forests’ mandate, as much as 161.4 GW power generation capacity would have to install FGD units and 64.5 GW capacity will have to be upgraded with electrostatic precipitators to reduce emissions.
The estimated capital expenditure to install the emission reducing equipment are in the range of Rs 88 lakh to Rs 128 lakh for every MW. This is expected to raise power tariffs by `0.62-0.93/unit. After the failure to meet the two-year deadline set in December, 2015 for compliance with new emission norms, power plants have been directed by the Central Pollution Control Board to meet the revised norms by 2022.