#ENVIRONMENT ■ Revisit the idea of ‘aging out’ India’s coal p | UPSC Current Affairs Daily
#ENVIRONMENT
■ Revisit the idea of ‘aging out’ India’s coal plants
In Union Budget 2020-21, the Finance Minister said that the shutting down of old coal power plants, which are major contributors to emissions, will aid the achievement of India’s Nationally Determined Contributions.
When it comes to climate change costs, coal-fired electricity generation is the largest single source of CO2 emissions.
Some research studies have shown that there are the economic as well as the environmental benefits of shutting down coal plants older than 25 years.
● Advantages of shutting down:
The availability of under-utilized newer (more efficient) coal-based capacity means that shutting down older inefficient plants would lead to improved efficiencies, reduced coal usage, and hence, cost savings.
It would be uneconomical for old plants to install pollution control equipment required to meet the emission standards.
Significance of older plants:
Many older thermal plants generate electricity at a lower cost.
For instance, plants such as Rihand, Singrauli (both Uttar Pradesh), and Vidhyanchal (Madhya Pradesh), are all over 30 years old and have very low generation costs of around ₹1.7/kWh, which is lower than the national average.
This may be due to locational advantage rather than efficiency, as older plants are likely to be located closer to the coal source, reducing coal transport costs.
The total savings in generation cost from shutting down plants older than 25 years would be less than ₹5,000 crores annually, which is just 2% of the total power generation cost.
Savings in coal consumption by replacing generation from plants older than 25 years with newer coal plants are also likely to be only in the 1%-2% range.
There are some old plants that may continue to be economically viable even if they install pollution control equipment as their current fixed costs (which would increase with pollution control equipment installation) are very low.
About half the coal capacity older than 25 years has already issued tenders for pollution control equipment installation.
● Risks with retirement:
To support the growing intermittent renewable generation in the sector, there is an increasing need for capacity that can provide flexibility, balancing, and ancillary services.
Old thermal capacity, with lower fixed costs, is a prime candidate to play this role.
Early retirement of coal-based capacity, without detailed analyses, could result in real or perceived electricity shortage in some States, leading to calls for investments in coal-based base-load capacity by State-owned entities.
About 65 gigawatts (GW) of thermal capacity is already in the pipeline, of which about 35 GW is in various stages of construction.
This is likely in excess of what the country needs, and a further add to it, driven by State political economy considerations , will lead to stranded assets and locked-in resources.
Using age as the only lever to drive these decisions is too blunt an instrument, and can prove counter-productive
● Way forward:
Since plants older than 25 years make up around 20% of the total installed thermal capacity in the country and play a significant role in the country’s power supply, decisions regarding their retirement merit finer scrutiny.
A more disaggregated and nuanced analysis, considering the various technical, economic and operating characteristics of individual plants and units, while also accounting for aspects such as intermittency of renewables, growing demand, and need to meet emission norms, would be appropriate to make retirement-related decisions.
SOURCE - THE HINDU
