Independent power producers want the government to address infrastructural and logistical issues related to making power plants compliant with environmental norms. They also urged the Central Electricity Regulatory Commission (CERC) to clarify prima-facie that the new installations in this regard to come under ‘Change in Law’, which would allow the additional expenses to be passed on to consumers without affecting returns. The Central Pollution Control Board in December 2017 directed power plants to ensure compliance within 2022. According to a Lok Sabha response by power minister RK Singh, power plants’ requirement to meet prescribed environmental norms is expected to raise electricity prices by between Rs 0.62 and Rs 0.93 a unit. Private power players informed representatives of the Central Electricity Authority (CEA) that unaddressed issues varied from the availability of limestones, disposal of waste to prescribed chimney heights.
“Is the ministry of mines and minerals ready with their plans of production of 90% – 95% pure limestone over and above the requirements of the cement industry?,” power producers said. About 15 million tonnes of limestone per annum is required by 2022 for 162 GW coal power stations to make them environment-compliant. To minimise power tariffs of the end-cosumer, the ‘merit order dispatch’ (MOD) system mandates that power plants with lower generating costs get to sell electricity before others. Some companies pointed out that since implementing new environment norms would raise generation costs, the early movers would fall lower in MOD, jeopardising offtake. Private players requested that such plants should be given preference in MOD. They also suggested that buyers from plants may get the benefits of purchasing renewable power.
The industry representatives pointed out that financially distressed power plants would find it difficult to incur the expenditure to install environment compliance equipment. More than 26 GW of coal-based power plants have been classified as stressed assets due to the lack of PPAs. Among these, 15.6 GW are operational, and are exposed to volume and tariff risks in the short-term market. Motilal Oswal estimated that about 17 GW of power plants will have to be decommissioned as they would not meet the emission norms within the 2022 deadline.
