Praveer Sinha, CEO and MD of Tata Power, implored the Government of India and the state governments to shut down old power plants that are currently producing 60,000 megawatts of power. This has multiple benefits which far outweigh the damage closure would entail.
Speaking at a webinar recently, Mr. Sinha said a Tata Power’s internal report revealed that 280 power plants were more than 25 years old and produce 35,000 MWs at a very high cost to the consumer and the environment. A bold decision to close them down will not hurt India’s supply and that the distribution companies could benefit immensely.
As per the current system, discoms have to pay a fixed cost to power plants even when they don’t buy power from them. The lower fixed cost can reduce the cost to the consumer. The biggest beneficiary would be the renewable energy firms that are stuck with excess capacity. With more solar and wind power firms coming up the situation could get worse.
Mr. Sinha revealed that India could save Rs. 92,000 crore by stopping thermal power plants that are in the early stage of construction. It’s easier since many are in the public sector domain.
One of the reasons Suzlon, a pioneer in renewable energy, is suffering with huge debt is because of myopic or short-sighted power purchase and distribution policy of the central and state governments. The vicious cycle of power plants not getting paid by discoms, and discoms not getting paid on time by state governments, has put the power sector on the edge.
The current logjam is hurting investor sentiment in renewable energy, except the ones that are closer to the dispensation. Also, many new coal-based power plants are stranded for lack of the government’s decisiveness about solving the problems.
Delhi Air Quality Will Improve
The first big decision Delhi chief minister Arvind Kejriwal took after coming to power in 2015 was to shut down the coal-based Rajghat Power Plant. The shutting down of the Badarpur power plant, near Delhi, by the Supreme Court was another milestone. But still, according Mr. Sinha, there are several thermal power plants in the 100 km radius of Delhi producing 5,000 MW. Most of them are more than 25 years old.
Despite the negative publicity facing the coal power plants India still needs them for its energy security for at least two more decades. The challenge is how to make them eco-friendlier and more efficient.