FGD implementation waiver to help coal plants save up to Rs 24,000 crore in annual tariffs

New Delhi, July 18 (IANS) Centre’s recent move to relax the requirement for mandatory installation of flue gas desulphurisation (FGD) systems at most coal-based thermal power plants will help them save Rs 19,000 crore to Rs 24,000 crore in annual tariff expenses, equivalent to Rs 0.17 per unit to Rs 0.22 per unit of tariff, according to a report on Friday.

FGD for Category C plants with 145 GW capacity is a positive for thermal independent power producers (IPPs). Considering a capital expenditure of Rs 0.6-0.8 crore per MW, this would reduce the capex burden by Rs 87,000-Rs 1,16,000 crore, according to the report by CareEdge Ratings.

“The exemption of Category C projects from implementation of FGD is a positive for thermal power producers since such projects comprise 80 per cent of the capacity for which FGD is yet to be implemented. This would also ease the burden of the impending tariff hike to compensate for the FGD capital expenditure,” said Sabyasachi Majumdar, Senior Director, CareEdge Ratings.

Last week, the Ministry of Environment, Forest and Climate Change relaxed the requirement for mandatory installation of FGD systems at most coal-based thermal power plants, marking a move towards differentiated compliance based on proximity to urban populations and the sulphur content of the coal used.

The new framework, finalised after extensive deliberations and multiple independent studies, will restrict FGD mandates only to plants located within 10 kilometres of cities with a population exceeding one million.

Coal-based power generation remains the backbone of India’s power generation sector, accounting for approximately 75 per cent of the total generation in FY2025, despite having a share of only 47 per cent of the total installed capacity.

This is primarily due to the higher Plant Load Factor (PLF) of coal-based plants compared to renewable and hydroelectric sources.

According to the report, notwithstanding the focus on renewable capacity addition in the future and lower coal-based capacity addition, the share of coal-based plants in generation is expected to remain significant, at around 60 per cent by FY2030.

Furthermore, given that absolute energy consumption is going to increase, the overall offtake of thermal power will remain significant at around 1,233 billion units in FY2030, the report projected.

The recent amendment by the Ministry exempting Category C plants eases the burden on thermal power producers while balancing the environmental aspect by retaining FGD requirement for Category A and B projects, said Shailendra Singh Baghel, Associate Director, CareEdge Ratings.

–IANS

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