Revised pollution norms and its impact on Power Pricing

The MoEF has notified revised emission norms (under the power conferred by section 6 and section 25 of Environment (Protection) Act, 1986) for TPPs with the objective of minimizing pollution, especially from coal-based power generation plants. The revised standards seek to reduce the emission of Particulate Matter, Sulphur Dioxide, Oxides of Nitrogen, Mercury and water consumption.

The MoEF has directed the existing TPPs to follow the revised standards by December 2017 and new projects starting their operations from January 2017 are required to comply with these norms from the commissioned date itself.

TPPs installed till Dec 31, 2003 (a) TPPs installed between Jan 1, 2004 and Dec 31, 2016 (b) TPPs* to be installed from January 1, 2017 (c)
Sulphur Dioxide 600 mg/Nm3 (for units < 500 MW) 600 mg/Nm3 (for units<500 MW) 100 mg/Nm3
200 mg/Nm3 (for units >= 500 MW) 200 mg/Nm3 (for units>500 MW)
Oxides of Nitrogen 600 mg/Nm3 300 mg/Nm3 100 mg/Nm3
Mercury 0.03 mg/Nm3 (for units >= 500 MW) 0.03 mg/Nm3 0.03 mg/Nm3
Particulate Matter 100 mg/Nm3 50 mg/Nm3 30 mg/Nm3
Water Consumption 3.5 m3 /MWh 3.5 m3 /MWh 2.5 m3 /MWh

The ministry has notified separate standards based on the installed date of the plant and has categorized the plants as (a) plants commissioned till December 31, 2003, (b) plants commissioned between January 1, 2004 and up to December 31, 2016, and (c) plants commissioned after December 31, 2016. The revised standards are more stringent for plants commissioned later than 2003 as compared to the projects commissioned up to 2003. However, the norms are most stringent for plants to be commissioned from 2017 onwards.

Technologies required to comply with the norms and standards.

Technology up gradation or new technologies are required to meet the emission standards.

Emissions Technology required
Reduction in SOx emissions Flue gas desulphurisers
Reduction in NOx emissions (SCR/SNCR) Selective non catalytic/ catalytic reduction
Particulate matter reduction Up gradation of Electrostatic precipitators

Capital investment required to comply with the emission standards

Technology required Rs. Crore Per MW
Flue gas desulphurisers 0.50-0.60
Selective non catalytic/ catalytic reduction 0.10-0.25
Up gradation of Electrostatic precipitators 0.10-0.15

 

Impact on power pricing due to revised pollution norms

As the capex varies from Rs. 0.7 crore/MW to Rs. 1.0 crore/MW to comply with the new environmental norms , the cost of generation for a coal based power plant is estimated to increase by 13 paise to 22 paise per unit. The power generating companies are likely to be able to pass on the higher cost of generation to the consumers, primarily state owned distribution utilities under the “change in law” mechanism in the PPA. Approval of such cost increase under change in law by the concerned regulatory commission (CERC / SERC) and subsequent implementation by the consumers is important.

Estimated Capex in Rs.Crore/MW Impact on Generation cost of a coal based Power plant in Rs/unit
0.6 0.13
0.7 0.15
0.8 0.17
0.9 0.20
1 0.22

Increasing trends on coal cess and additional capex to comply with the new emission standards are the cost competitive  challenges to be faced by the coal based generation sector in times to come.

Additional debt funding for CAPEX for the project in commissioned stage and apprehensions of recovery of additional investment to mitigate emissions from the consumers are some of the bottle-neck for the implementation of revised standards.

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