R.K. Sharma, Chairman and Managing Director, Rajasthan Vidyut Utpadan Nigam Limited
India is the second largest coal producer and fifth largest country in terms of coal deposits. Coal still continues to be the dominant source of electricity. As on May 31, 2022, thermal power generation constituted about 52.3 per cent of the total installed capacity of the country, according to the Ministry of Power (MoP), followed by renewable energy at 28.1 per cent. Various papers by research institutions and the Central Electricity Authority (CEA) indicate that thermal power generation of about 34 per cent will remain a prime source of feeding power into the grid alongside renewable energy penetration to ensure safe and secure operation of the grid. This has also been seen in countries such as France, Germany, China and the UK where conventional source of electricity generation is being reconsidered as renewable sources alone are not adequate to sustain the growing demands of the economy. This indicates that we have to live with coal-based thermal power generation and at the same time address environmental threats caused due to it. With the rapid pace of industrialisation, we must be highly vigilant in protecting the environment, keeping in mind that we cannot afford to underestimate the imperatives of development with power playing a dominant role in this. We must strike a balance between the gains accrued due to thermal power generation and acceptable environmental impact.
Holding extreme positions either way will prove self-defeating. There has to be a trade-off between social gains and minimal acceptable environmental impact. Hence, judicious evaluation of social cost and benefit ratio is called for. While regulatory agencies are trying to improve pollution control facilities in power plants through various renovation and modernisation (R&M) schemes, this being a highly capital-intensive activity, pragmatic approach is required while formulating and disseminating the implementation of SO2 standards.
The government has focused on the reduction of emissions from coal-based thermal power plants in accordance with the Intended Nationally Determined Contributions (INDCs) submitted to the United Nations Framework Convention on Climate Change (UNFCCC). It has committed to curb emission intensity of its economy by 30-35 per cent from the 2005 level by 2030. Accordingly, the Ministry of Environment, Forest and Climate Change (MoEFCC) has issued notification no. S.O.3305(E) titled Environmental (Protection) Amendment rules, 2015,” dated 07.12.2015, with the objective of reducing emissions of particulate matter (PM), SO2, NOx and mercury by TPPs.
Due to the strict enforcement of emission regulations by pollution control boards, the installation of flue gas desulphurisation (FGD) systems has become inevitable.
While appreciating the concern for environmental protection (SO2 control), attempt has been made in this article to highlight the financial issues that power plants are facing in the implementation of FGD units and the ways to reduce this impact with the help of additional funds and environmental subsidies from the government.
Why is FGD required?
Under the Paris Agreement (COP 21), India has committed to cut greenhouse gas (GHG) emissions intensity of its gross domestic product by 33-35 per cent by 2030; increase non-fossil fuel power capacity to 40 per cent by 2030 from 28 per cent in 2015 with the help of transfer of technology and low-cost international finance; introduce new, more efficient and cleaner technologies in thermal power generation; and create an additional carbon sink of 2.5 billion to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030. The commitment has led to a significant shift in government policies especially in the power sector, which is a key contributor to greenhouse gas (GHG) emissions in the country.
Types of FGD technology
With the MoEFCC order, it has become compulsory to install FGD systems in existing and upcoming thermal power plants to curb SO2 emissions.
The following types of FGD technologies are available in the market:
- Wet limestone-based FGD system
- Semi-dry FGD system
- Sea water-based FGD system
- Dry sorbent injection system
- Efficient ammonia desulphurisation system
- Electron beam flue gas treatment system
- ReACT technology
FGD systems are very reliable and proven commercial technologies are available with a by-product of saleable gypsum production in many cases. Gypsum can be used as a nutrient source for crops; as a conditioner to improve soil physical properties, and water infiltration and storage; to remediate sodic (high sodium) soils; and to reduce nutrient and sediment movement to surface waters, among other uses.
FGD norms to be complied with by thermal power plants
Prior to the MoEFCC order, there were no norms for SO2 emission control. The expected SO2 emission in the existing units of capacity below 500 MW is in the range of 700-800 mg/Nm3 and for the units of capacity above 500 MW, it is in the range of 650-750 mg/Nm3. According to recent amendments, TPPs have to comply with the following norms specifically regarding SO2 emissions.
- Units with capacity less than 500 MW and installed till December 31, 2016 – 600 mg/Nm3
- Units with capacity equal to 500 MW and above and installed till December 31, 2016 – 200 mg/Nm3
- Units which are being installed after January 1, 2017 – 100 mg/Nm3
FGD implementation in TPPs for control of SO2 emissions
FGD has gained pace with the MoEFCC notification and CPCB directions regarding compulsory installation of FGD systems in the existing and upcoming thermal power plants to curb SO2 emissions.
Indian coal is high in ash but is low in sulphur (0.25 per cent to 0.5 per cent). This amount of sulphur in coal produces SO2 in the range of 1,500-2,000 mg/Nm3. However, coal is also imported from Indonesia, South Africa and Australia for TPPs. This imported coal is high in sulphur while being low in ash.
Commitment of Rajasthan Vidyut Utpadan Nigam for a cleaner environment
RVUN has affirmed its commitment to the environment and to deal proactively with climate change issues by the efficient and optimum use of natural resources and equipment, the adoption of latest technologies, minimising waste, maximum ash utilisation and ensuring a green belt all around the plant for maintaining ecological balance. The company has also adopted a comprehensive Corporate Environmental Policy (CEP).
RVUN continues to take adequate measures to control pollution and ensure atmospheric emissions within the prescribed limits of the Environment (Protection) Act, 1986 at all its coal/lignite-based thermal power stations. The company is committed to implement the revised emission norms notified by the MoEF&CC, by installing FGD units to curb SO2 emissions. After assessing the feasibility, changes/modifications are required to be carried out. Accordingly, a detailed project report is prepared with cost estimate for supply, erection, commissioning, schedule of engineering, procurement, etc., for the implementation of revised emission standards in existing and under-construction power plants.
Based on feasibility studies, wet limestone-based technology has been envisaged as the best option for control of SO2 emissions in RVUN thermal power plants. Although dry sorbent injection technology seemed cheapest for the KSTPS Kota, owing to older plant with space restrictions, based on life cycle cost analysis, provenness and potential impact on ESP, AHP and process by-products, limited suppliers and lack of performance feedback from operating plants, partial wet FGD with common absorber was adopted.
In spite of the financial crunch being faced, the commitment and policies of RVUN remain strong in terms of contributing to cleaner power generation. Adhering to the policies, RVUN has recently placed orders for FGD installations in their TPPs located at SSCTPS Suratgarh (Units 7 and 8 – 2×660 MW), CSCTPP Chhabra (Units 5 and 6 – 2×660 MW), KaTPP Jhalawar (Units 1 and 2 – 2×600 MW) and KSTPS Kota (Unit 5 – 1×210 MW, Units 6 and 7 – 2×195 MW) and design engineering activities are already under way.
Cost economics – Gross underestimation of required costs for TPPs
The capital cost of FGD systems is additional for all new or existing TPPs. As per the CEA circular dated February 21, 2019, the cost of installing an FGD system in a TPP entails an expenditure of Rs 3 million-Rs 4.5 million per MW depending upon the size of units. The indicative cost estimate is the “base cost” with new chimney and without GGH. It does not include taxes and duties, and the opportunity cost for interconnection. The base cost may further vary depending upon the number of units, range of SO2 removal, chimney layout and choice of corrosion protective lining in the chimney.
In view of directives issued by the government regarding import restrictions in July 2020, there was a substantial hike in the price of FGD systems. The CEA, vide its letter dated February 24, 2021, acknowledged that the increase in the project cost of an FGD system is due to a sudden hike in demand for FGD equipment, raw material cost inflation, limited local supplier base, shortage of indigenous manufacturing capacity and import restrictions. Utilities are facing difficulty in awarding the contract thus delaying FGD installation. All the above factors contribute in making it a “critical buy” item, hence, alternative engineering substitutes and alternative supply base increase are the solution for cost control which requires time extension. Also, cost impact due to Covid has added additional surcharges ranging up to 30 per cent as overheads.
As per latest trends, prices quoted by bidders for FGD equipment are escalating exorbitantly and are sometimes rigged. The price deviations observed are staggering and call for an analysis by the CEA, to understand the current market conditions and the impact of Covid on suppliers. As per information provided by the CEA to the MoP, the project cost for wet limestone-based FGD technology was Rs 3.9 million per MW initially but it has now reached nearly Rs 11.4 million per MW, which is 2.9 times the initial cost.
- Waiver of FGD for old power plants: The older thermal power stations were designed as per the technology available and environmental awareness at the time when they were constructed. There is space constraint for installation of FGD systems as retrofit in the existing old plants. In the case of greenfield projects this is not a burden. However, in the case of old plants, the layout is already in place and the available space is not adequate to install new FGD units. Hence, while formulating the environmental pollution control standards for these stations, a revised approach is needed considering factors such as age of plant, technical feasibility, quality of coal available in the country and the cost involved in carrying out such replacement/ modification work.
- Increase in generation cost: As power plants are suffering bad loans, securing additional investments is a big challenge. Therefore, relaxation is required in the existing heavy environmental compensation of the order of Re 0.10 to Re 0.20 per unit of electricity generation. The imposition of these charges shall lead to escalation of power cost, which shall be finally passed on to consumers. To curtail the cost, the value of compensation cess, as made applicable in the GST regime, should be passed on to the respective as it was originally replaced from the clean energy cess to reduce the effect of hazardous cases.
- Additional auxiliary power requirement: An additional auxiliary power consumption of 1.5 to 2 per cent is expected on account of FGD installation.
- Substantial and dedicated funds for air pollution control are required from the government if implementation is required by end 2022. If sufficient funds are not provided, the existing financial crisis in power plants is doomed to worsen.
- Imported coal high in sulphur content: Lack of time to develop indigenous manufacturing facilities will lead to import of equipment. This will create market for foreign companies and lead to huge increase in investment cost. Also, the coal imported from Indonesia, South Africa and Australia will be high in sulphur and this will add to the woes of enforcement authorities.
- Extension of time is required as supply base is limited and price surcharges are high due to consistent Covid impact. The current timeline for implementation is tough especially for retrofit jobs. An overall project period of 30-36 months is required for this kind of implementation. During retrofit of FGDs, shutdown of the unit for about one to two months is envisaged. This will lead to an additional revenue loss for TPPs.
- By-product environmental impact needs to be assessed: Depending on the type of FGD, there will be an additional requirement of raw material such as water and limestone. Further, the mobilisation of limestone for FGD in power plants creates its own environmental footprint, which needs to be studied and compared to the benefits of installation of FGD systems.