4 Historical Years - KEY FINDINGS & RECOMMENDATIONS
• The total capital expenditure required to install SO2, NOx and PM pollution control technology is estimated to be INR 86,135 crore (USD 12 billion), or INR 73,176 crore (USD 10 billion) if plants to be retired by 2027 are excluded.
• This will add between INR 0.32 per kWh to INR 0.72 per kWh for coal power plants (or around 9 to 21 per cent to average generation tariffs) depending on the size of the unit and other factors. On account of remaining useful life and more stringent requirements, the average 500 MW units face the steepest tariff increases. In most cases, more than 80 per cent of the tariff increase will be in the form of a fixed cost. The variable component in all cases adds less than INR 0.1 per kWh.
• Distribution companies need to be able to pass on these higher costs to end consumers. Electricity subsidies should be targeted only to the poorest, while other consumers will need to pay tariffs that reflect the cost of supply, including technologies or levies (such as the coal cess) that mitigate externalities.
• Incentives, penalties and seasonal shutdowns should also be used to control air pollution.
• Technical guidance aside, an independent assessment of retrofit costs at a plant level, by empanelled agencies would expedite the ability of private sector power plants to submit tariff increase petitions to the regulators. The back and forth between the Electricity Regulatory Commission (ERC) and Central Electricity Authority (CEA) and the resulting lack of clarity on cost increases is a key impediment to compliance. In the interest of public health we recommend that the exercise be funded by Government of India (GoI) to expedite the process.
• Most experts are of the view that the deadline will still see many plants not complying with the new standards. To avoid this situation, the Ministry of Power (MoP) must take a stricter position which precludes all non-compliant plants from generating, unless they exhibit a clear retirement or phase-out plan or have made material progress in awarding tenders and beginning the construction process.
• Finally, plants that do implement the technology need to be monitored to ensure that standards are being met. There is a financial burden of pollution-control technologies (PCTs) on end-consumers and transparency is key in ensuring that higher tariffs do indeed result in health benefits. The availability of data from the continuous emission monitoring system (CEMS) devices installed in the emission stacks of plants, to the electricity regulator and the broader public must be a first priority.
