Interview with Ujjwal Kanti Bhattacharya: “The thermal power sector is passing through a critical transition phase”

“The thermal power sector is passing through a critical transition phase”

NTPC, India’s largest energy conglomerate, has established itself as the dominant power major in the country, with a presence across the entire power generation value chain. The company has a large capacity base of over 69 GW, dominated by fossil fuels, and has also forayed into generating electricity via hydro, nuclear and renewable energy sources. In a recent interview with Power Line, Ujjwal Kanti Bhattacharya, director (projects), NTPC Limited, shared his views on the current state of the power sector, as well as NTPC’s key recent achievements and top priorities going forward. Excerpts…

What are your views on the current state of the thermal power sector in the country? 

The thermal power sector in India is passing through a critical transition ph­a­se. The world and the country want to move away from thermal, but they have little choice. In fact, India has no choice but to go for a graded transition. It is es­sential for the energy security and economy of the country that we continue with thermal generation for some de­ca­des till we achieve net zero in 2070. The intensity of thermal power will have to go down progressively.

For a country like India, where per cap­ita energy consumption is very low compared to the global average, ensuring energy security is an equally important aspect. Meeting the energy needs of un­derserved populations, and improving safe and sustainable energy access for the poorest and most vulnerable groups, are the primary considerations in India. This is the classic “energy trilemma”.

According to a CEA report, in 2021-22, the share of coal, lignite and gas power plants in the total installed capacity was about 59 per cent. In terms of electricity generated, about 70 per cent was generated from these plants. The total investments in coal power plants were in ex­cess of Rs 10 trillion (about $133 billion) – this is a significant investment, which needs to be handled carefully. In my opinion, the thermal power sector is still a major contributor and will remain, if not a major, at least a significant contributor to ensuring energy security and accelerating the growth of the country in the future.

Although India has announced its in­ten­tions to cut down carbon emissions th­ro­ugh its Nationally Determined Con­tri­buti­ons and the Glasgow Declaration, as well as achieve the target of net zero by 2070, the exact methods of decarbo­ni­sation and net zero are still under development.

The thermal sector is and will be the ma­jor source of power in the country in the coming few decades. The thermal se­c­tor as well as the thermal power pl­ant manufacturing sector need to be supported in order to maintain the fleet of thermal projects. The entire ecosystem – regulators, bankers and investors, insurers, ma­nufacturers and consumers – has to keep this in mind.

What have been the key achievements of NTPC Limited in the last one year or so?

  • With the capacity addition of 3,151 MW in 2021-22, NTPC became a 69 GW+ Group company. NTPC crossed 2 GW of renewable energy last month.
  • The commissioning of the first unit of the Barh STPP, Stage I, without support from its Russian original equipment manufacturer, is the biggest achievement of NTPC in the recent past. The second unit is expected to be commissioned in the current financial year.
  • NTPC’s generation reached a new high with a gross generation of 360.5 BUs in the previous financial year (slightly less th­an a billion units a day) at a grow­th rate of more than 14.6 per cent. How­ever, in the first quarter of 2022-23, the NTPC Group achieved the distinction of an average generation of a billion units a day.
  • NTPC achieved a 5 per cent growth in annual plant load factor (PLF), with a 70 per cent PLF for its thermal power plants during the previous financial year compared to India’s annual PLF of 58 per cent.
  • To ensure fuel security for NTPC thermal power plants, annual coal prod­uc­tion from captive mines was inc­re­ased to 13.66 MMT in 2021-22 at a growth rate of 43 per cent from 2020-21. The trend of growth has further ac­celerated in the current year.
  • NTPC is the first energy company in In­dia to declare its Energy Compact go­als as part of the UN High-level Dia­logue on Energy, and is among the few organisations globally to declare their Energy Compact goals. NTPC is continuously working to achieve its Ener­gy Compact goals. As a part of this initiative:
  • NTPC will install over 50 GW of renewables by 2030.
  • NTPC will reduce its net energy intensity by 8.5 per cent versus 2012 levels by 2030.
  • NTPC will join at least two internati­onal alliances and groups by 2025 to fa­cilitate clean energy research and promote sustainability in the energy value chain.
  • NTPC Limited awarded a project for a standalone fuel-cell based microgrid with hydrogen production using elec­tro­lyser at NTPC Simhadri (Andhra Pradesh) in the previous financial year. This will be India’s first green hydrogen-based energy storage project.
  • During the unprecedented coal crisis in the country last year, NTPC carefu­lly monitored the situation and took corrective actions on a continuous ba­sis to maintain the energy security of the country by ensuring reliable fuel su­pplies. This was done by arranging the maximum possible coal supplies from domestic sources, ramping up co­al production from captive mines and sourcing imported coal to ensure that no station was starved of fuel.
  • NTPC is also promoting large-scale floating solar projects at reservoirs of its plants, which is a step towards sa­­v­­ing land and water. The three largest projects of this kind are Sim­hadri (25 MW), Kayamkulam (92 MW) and Ra­ma­gundam (100 MW). NTPC commissioned India’s largest floating so­l­ar PV project at Ramagundam re­ce­ntly. The project is spread over 600 ac­res of reservoir.
  • NTPC is setting up 10 tonnes per day (TPD) CO2 capture plants at Vindhya­chal, which will re­move CO2 from was­te flue gases and convert it to hydrocarbon, namely methanol. The first part of the project – capturing the CO2 – was co­mmissioned on August 15, 2022. This will ensure that we generate clean fuel while capturing carbon, ad­ding great economic value.
  • On the pollution control front, NTPC has achieved an A+ by way of commissioning flue gas desulphurisation (FGD) systems for 1,830 MW of capacity and moving to desulphurise its entire fleet of thermal power (over 62 GW) very soon. Similarly, NTPC has al­ready taken action to comply with NOx emission norms except for projects where this is technically not feasible due to the non-availability of te­chn­o­logy suitable for high ash Indian coal. Even in this area, NTPC has ta­ken a proactive step to scan the technologies available worldwide, get pilot tests conducted by global vendors independently, and provide the repor­ts to regulatory agencies for decision-making.

What  are the key steps required to expedite com­pliance with emission norms?

NTPC has taken every initiative to comply with the government’s emission nor­ms. However, other sectors, state-ow­ned generating companies and independent power producers are lagging in this as­pect. Several factors have impe­ded im­­plementation of pollution control measures in thermal power stations:

  • Generating companies seem to be concerned about recovery of additional capital expenditure through tariffs due to lack of clarity in this regard.
  • Power stations that are planning to go ahead with requisite measures for emission control are finding themselves downgraded in the merit order despatch due to increases in marginal cost. The Ministry of Power is looking into this aspect and a proper cure is expected.
  • The increase in capital cost post the retrofitting of FGD/DeNOx systems and the simultaneous reduction in PLFs due to growing penetration of re­­newable energy is leading to higher fixed charges per unit of electricity ge­ne­ration. This is another operational challenge.

A cautious and clear approach needs to be taken by the regulator to sustain the thermal power sector in the country. Policy interventions are required to suitably reward power plants that have alr­eady implemented or are in the pro­cess of implementing new emission nor­ms. These measures could include waiver of coal cess, conferring first run status on compliant power plants, ad­van­tages in merit order based on SOx credit, and increasing the penalty rate for non-compliance.

What are the biggest issues and challen­­g­es facing the power sector? How can these be resolved?

Coal is the only source of baseload power generation in India due to the dearth of domestic gas, the limited po­tential of hy­dro, and India not being a member of the Nuclear Suppliers Group. Ot­her techno­lo­gies such as hydrogen and fuel cells are still under development for use at the commercial/MW scale. Car­b­on capture and carbon sequestra­tion/utilisation tech­nologies are also at the research and development stage.

Efficient utilisation of thermal power plants is another challenge in the transition phase. The annual PLF of thermal power plants has fallen in recent years with the growth of renewable energy, whi­ch is a concern for thermal power generators. There is a lack of clarity regarding the future of thermal power in the market. So, investors are very cautious about investing in the thermal power sector.

The economy of India in general and of some states such as Jharkhand, Madhya Pradesh, Chhattisgarh and Odisha in par­ticular, is critically dependent on coal mining. Coal mining and coal-based power plants generate a large quantum of direct and indirect investments and employment – hundreds of billions of dollars and a massive amount of manpower across various skillsets. Foreign banks and reinsurers must not shy away from coal, at least till the country achieves net zero.

India has announced a massive capacity addition programme for renewable en­ergy, and is aiming for a reduction in the emission intensity of its GDP. But the im­port dependency of the country’s solar power sector on modules and silicon fe­ed­stock is the biggest hurdle in achieving India’s ambitious target of capacity addition in the renewable power sector.

The decarbonisation of the energy sector is a complex and multifaceted issue, as the existing energy production and consumption systems are among the largest human enterprises in the world, and large technological, social and eco­no­mic assemblages are built around the­se systems. Some of these challenges and some possible solutions are:

  • Technical challenges: Integration of thermal power with renewables, wh­i­­c­h have flexible generation sche­du­les and large seasonal and diurnal variations; flexibilisation of thermal plants; improving the energy efficiency and reliability of thermal power plants du­ring part-load operations; investme­nts in technology required for en­ergy storage, etc.
  • Financial challenges: Huge investments in coal mines, thermal power plants and systems to satisfy the new emission norms; the risks of creating of stranded/stressed assets due to un­certainty in the financial and political environment; discrepancy in the re­cep­tion of benefits from the energy transition, etc. Insurance is also em­erging as an issue.
  • Social challenges: Supporting communities and individuals who might be affected directly and indirectly by de­carbonisation; research and development of new, indigenous technologies to suit the requirements of the cl­ean en­ergy transition, while also having strong potential to address the social challenges of providing jobs; in­vest­me­nts in multidimensional factors such as education and human capital.

Further, the use of carbon capture and utilisation (CCU)/carbon capture, usage and storage technology and the development of a downstream chemical in­dustry based on CO2 captured from th­­ermal power plants appear to be quite promising steps in mitigating the chall­enges. They  also provide huge employment opportunities.

What is your outlook for the power sector in the near to medium term? 

The long-term outlook for the power sector is bright. However, in the near and medium terms, it has to pass through a number of transitions, some of which may not be comfortable. The sector has to brace for these. We have to think of innovative solutions and ways to handle the transitions. Some of the innovations may be disruptive to existing systems, and we have to plan for that too.

What are the key priority areas for NTPC over the next one to two years? 

NTPC, with over 69 GW of capacity (17.3 per cent of the total installed capacity of India) and 360.5 BUs of generation (24.3 per cent of the total generation in India), has a huge responsibility. NTPC has to walk a tightrope between supporting the energy security and the net zero en­dea­vours of the government. Some of the key priority areas for NTPC over the next few years are:

  • Accelerated renewable energy capa­city addition ;
  • Addition of around 5 GW of thermal capacity through ongoing projects and selective award (brownfield only) of high efficiency, low-emission thermal units (with carbon capture and bio­mass co-firing) to sustain the grid;
  • Renovation and modernisation of old and underperforming coal-fired stations with possible upgradation/up­ra­ting to reduce the carbon footprint;
  • Expansion of operational coal mines and commencement of coal production from new coal mines;
  • Various decarbonisation measures su­ch as biomass co-firing and CCU;
  • Development of energy storage systems such as pumped storage, battery storage and gravity storage;
  • Foraying into nuclear power generation and identification of at least 2,000 MW of nuclear projects for de­ve­lopment;
  • Completion of a 1,320 MW project in Bangladesh;
  • Implementation of project management consultancy assignments for over 6 GW of solar projects under the In­ternational Solar Alliance platform;
  • Development of wind and solar pro­je­­cts in Sri Lanka through joint ven­tu­­r­es with the government and host agencies.