TN to gain Rs 4,000 cr by repurposing old coal units for clean energy

Four coal plants are approaching or have crossed the 25-year mark after which they have to mandatorily be retired. They have high per-unit running costs and depend on lengthy coal supply chains

With the Tamil Nadu government set to increase its renewable focus as its thermal plants get phased out one by one as they turn 25 years old, a study indicates that retiring four coal-based power plants with a combined capacity of 3,990 mega watt (Mw) and repurposing them for clean energy and grid stability services can deliver Rs 4,000 crore to the state in benefits. At the same time, it can bring stability to the state’s electricity system.

The study by research organisation Climate Risk Horizons has quantified the costs and benefits associated with retiring 3,990 Mw of old coal plants-- Tuticorin I, II & III (1,050 Mw), Mettur I & II (840 Mw), North Chennai Stage-I (630 Mw) and NLC-II Stage-I (1,470 Mw).

The four old coal plants are approaching or have gone past the 25-year-old life after which they have to mandatorily be retired. They also have high per-unit running costs and are dependent on lengthy coal supply chains that are prone to disruption, as seen by the recent power crisis caused by low coal stocks due to supply and evacuation issues. Previous research had shown that retiring these plants and replacing their planned generation with cheaper, new, renewable energy would save the Tamil Nadu Generation and Distribution Corporation (Tangedco) Rs 35,000 crore by way of lower electricity costs.

The analysis looked at the specific details of the plants in question and detailed the decommissioning costs and financial benefits that would accrue from repurposing the existing land and electrical infrastructure for a combination of solar PV, battery storage and grid stabilisation services.

“Our study suggests that the financial benefits of repurposing these coal plants would be 2-3 times the costs of decommissioning, and would, in almost all cases, more than cover the cost of new capital expenditure required for solar, batteries and synchronous condensers,”  said Gireesh Shrimali, head of transition finance research, Oxford Sustainable Finance Group, who is lead author of the report.

Total decommissioning costs for the four plants assessed was about Rs 1,300 crore,  while the one-time benefits from repurposing for solar PV with battery storage would be Rs 2,400 crore. The analysis also found that while repurposing coal plant for solar PV and battery storage, if the old power plant turbogenerator is also repurposed to serve as a synchronous condenser, the benefits are even more significant at nearly Rs 4,000 crore.

Utilising the pre-existing land and grid connection facilities would result in a significantly reduced cost for the power generated. This would bring the Levelised Cost of Energy down to Rs 1.42 and Rs 2.33 per unit respectively for solar PV and PV with battery storage, providing Tangedco with a cheap source of flexible power. Repurposing the plants and their associated ash ponds for solar and battery storage would yield capacities of 348 MW of solar and 36 MW of four-hour battery storage.

“Reducing dependence on expensive and obsolete coal plants is essential for Tamil Nadu’s energy and financial security. With growing air and water pollution from coal plants, as well as the severe climate change impacts that Tamil Nadu is facing, the state needs to look at long-term solutions,” said G Sundarrajan of Poovulagin Nanbargal, a Chennai-based NGO.

“As the state grapplrepurposing its expensive coal plants must be part of the discussion. Tamil Nadu has the opportunity to improve its financial and environmental health while also starting the journey to decarbonise its electricity sector,” said Ashish Fernandes, chief executive officer of Climate Risk Horizons.