New thermal plants: A reality check

Source: The post is based on an article “New thermal plants: A reality check” published in Business Standard on 2^nd March 2023.

Syllabus: GS 3 – Infrastructure

Relevance: concerns associated with recommendation of the draft National Electricity Plan.

News: Central Electricity Authority (CEA) has been given the task to frame the National Electricity Plan (NEP). The draft recommends creation of new capacity of up to 51 GW of coal-fired plants.

What are the concerns associated with the creation of new capacity of coal-fired plants?

One of the major concerns is the environmental. The recommendation has come at a time when India is committed to a net-zero emissions by 2070.

States like Haryana, Gujarat, Tamil Nadu, are planning to set up new capacities of coal-fired plants and these new capacities are mostly located away from coal-bearing states. This ultimately adds burden of transporting coal.

Why has draft NEP recommended setting up new thermal power plants?

It is because the growth in renewables is not fast enough to cater to the rising power demand.

According to the estimates, even if the renewable energy capacity grows at four times the pace it has grown, India would need new thermal power plants.

What can be the probable alternative solution to the recommendation made by the draft NEP?

Instead of setting up new plants, it would be better to improve the performance of the existing plants and add capacity to existing stations or brownfield expansion.

The draft NEP projects about 55 percent plant load factor (PLF) by 2026-27 and 61 percent by 2031-32. However, it is feasible to achieve above 70 percent PLF by maintaining the existing plants.

Thus, it would save capital investment in the new thermal power plants and mobilize it towards establishing renewable capacities.

What can be the course of action?

There has been a sudden rise in power demand in the post-Covid period and states are facing supply challenges. Therefore, they prefer to consider the view of having their own capacity.

However, instead of infusing fresh capex, it is better to invite offers from private developers who may set up capacity outside the state and contracting power from generators who may have untied capacity, etc.

This would help in utilizing the capex for renewables and it will also help railways to utilize its freight services for other goods because it is the railways which bear the burden of transporting coal to thermal power plants.