Energy ministries highlighted why coal-based thermal power plants are necessary for India to continue growing. (HT File Photo)
As the contribution of renewable energy (RE) in electricity supply increases, proportionally fewer coal plants may be needed. The ones that remain will have to operate more flexibly to accommodate the varying nature of RE. Most coal plants were not designed to operate this way. In addition, there are regulations to clean up coal power by retrofitting equipment for pollution control. The problem is that all three aspects — retirement of older plants, pollution control equipment, and making plants more flexible — are being planned in isolation. By thinking at a systemic level, we can address all three aspects at a lower cost, with better public health outcomes.
At a national level, there is excess generating capacity. This has provided the rationale for several studies recommending early retirement of older coal plants, mostly using a plant age of 25 years as the threshold. These studies suggest replacing the energy from these older plants by RE or energy from newer, and presumably more efficient, coal plants that have not been able to run to full capacity. The ministry of environment, forest and climate change (MoEFCC)’s emissions norms require emissions control systems (ECS) for oxides of sulphur (SOx), nitrogen (NOx) and other pollutants. While there are fewer details on regulations or rules for making coal plants more flexible, many utilities are working on doing so.
There are several problems with this approach. First, these three issues are being looked at in isolation and second, simple binary rules are being recommended to address each. On the issue of excess capacity, the extent varies across the country. Most studies examine only aggregate utilisation of coal plants, their Plant Load Factor (PLF), which misses the value of output at peak times. This is key for a high-RE future. It is also not clear how long this excess capacity will last; decisions to either add or retire generation capacity should be based on long-term considerations. One advantage of older plants is that they are fully depreciated and thus have much lower fixed costs than newer plants. The issue of retirement of older plants is intertwined with the need for flexibility because older plants, which are of sub-critical technology design, are more suitable for flexible operations. In addition, if a distribution company that has no excess capacity has to run some plants at low PLF, then it is economically better for it to retain older plants with low fixed costs in its portfolio rather than contract for supply from a newer plant.
The issues of pollution control and requirements for flexibility are also inter-related. We will confine ourselves to control of emissions of SOx because this is the pollutant which is currently most contentious. Flue Gas Desulphurization (FGD) is the most commonly-used technology to control SOx. Operating a plant with FGD in flexible mode makes the operation of FGD more challenging, likely requiring augmentation of the control and instrumentation systems, and possibly hardware changes, increasing costs and complexity.
The current emissions control approach relies on a one-size-fits-all policy. A recent study found that the health benefits from FGD varied greatly by location, with the highest benefit being 28 times that in the location with the lowest benefit. The Central Electricity Authority (CEA) recently carried out a study to examine the issue of plant-location specific emission standards instead of a uniform standard, and has recommended segregation of areas by the level of ambient SOx into five categories and that pollution control be required only in the two categories with higher SOx levels. One gap in the CEA’s study is that it did not consider secondary particulates due to SOx emissions. More nuanced installation of FGD based on plant location-specific environmental conditions plus expected duty cycle can save a significant amount of money. However, the implementation of such an approach will be challenging given the difficulties in monitoring compliance in India.
As we have seen, the three issues — retirement, pollution control, and making plants flexible — are inter-related. They need to be addressed in an integrated fashion by distribution companies based on long-term system-level considerations of demand, supply and availability of new technologies. Distribution companies should be best placed to make these decisions because they are responsible for power procurement and additions or retirements of generation capacity from their portfolio.
As electricity markets become more effective, the true value of flexibility, the value of RE, and the need for capacity adequacy will become better known. This will make it easier for the distribution companies to make decisions about the optimal plan for retirements, making plants flexible, and installing FGDs. Therefore, rather than issuing rules on these issues in isolation, the government should focus on accelerating the introduction of effective electricity markets that provide the right signals for stakeholders to both invest in, but also operate plants once built, in the most cost-effective and clean manner.
Daljit Singh is visiting scholar and Rahul Tongia is senior fellow, Centre for Social and Economic Progress, a Delhi-based not-for-profit think tank.
The views expressed are personal