April 2021

In one of the key recent developments, the environment ministry has pushed the deadline for complying with the emission norms for thermal power plants (TPPs). Earlier, TPPs were required to meet the emission norms by December 2022, and now the ministry has provided an extension of one to three years for different categories of plants. Along with the revised timeline, the ministry has for the first time notified a penalty mechanism, wherein an environmental compensation in the range of Rs 0.05-Rs 0.20 per kWh will be levied on power plants for non-compliant operations beyond the timeline.

So far, there have been delays in compliance with the tightened emission norms for TPPs notified in 2015, with flue gas desulphurisation (FGD) systems commissioned in only six thermal power units aggregating 2,160 MW of capacity, as of February 2021. Meanwhile, bids were awarded for 86 per cent of the planned FGD capacity for centrally owned units, as against 27 per cent and 8 per cent for privately owned and state-owned capacities. Based on the current implementation progress, most of the TPPs would have missed the deadline of December 2022 for complying with the emission norms.

This relaxation of timelines will provide a relief to the TPPs facing implementation delays owing to the Covid-19 pandemic, equipment import restrictions, minimum local component condition under Aatmanirbhar Bharat, liquidity crunch, and credit refusals.

The uncertainty regarding the cost recovery of FGD equipment is a key challenge for developers. To overcome this, it is crucial for the regulators and policymakers to formulate a transparent and well-defined compensation mechanism to ensure that FGD costs are duly recovered in tariff. Such a mechanism is likely to be finalised soon by the central regulator. This will also ease the concerns of lenders that have been reluctant to lend to the thermal power segment and facilitate credit supply to developers to undertake FGD works. In addition, there is a need to ramp up the domestic manufacturing capacity for emission control equipment including FGD systems in order to reduce imports and ensure self-reliance, especially amid geopolitical tensions and pandemic-induced disruptions in the global supply chain. If these challenges are addressed, any further slippages on FGD implementation timelines are likely to be reduced.

Power Line’s Special Section on FGD provides an overview of the emerging trends and developments in the FGD space.

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