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Tight pollution norms to hit power generation, harden prices in 2020: Study

Scenario to benefit power exchanges, merchant producers

Jayajit Dash  |  Bhubaneswar 

New emission norms for thermal power projects are scheduled to kick in by March 2022 in a phased manner | File photo

Failure to meet the revised pollution norms set for power projects located in critically polluted areas has cast fears of shortfall in generation.

A sectoral report on power by Axis Capital sees 2020 as the year of large scale disruptions, leading to either partial or full shutdowns of the impacted power plants and levy of severe penalties.

“We expect supply disruptions to push power prices up. It will benefit volume growth for power exchanges and producers like (Energy) and Torrent (Power) with merchant capacities. But, there will be lesser impact on NTPC as most of the FGD (Flue Gas Desulphurisation) orders for 24.6 Gw capacity were placed in 2018”, the report noted.

New emission norms for thermal power projects are scheduled to kick in by March 2022 in a phased manner. The Central Pollution Control Board (CPCB) had accelerated compliance deadlines for power stations in Punjab, Haryana and western Uttar Pradesh to December 2019, factoring in air pollution woes in region. Few other power projects concentrated in urban centres had also been assigned swifter timelines to ensure compliance.

Power projects of capacity totalling 163 Gw have been identified for FGD installations to meet sulphur dioxide norms. FGD orders for 8.1 GW or 64 per cent of the identified capacity are yet to be placed by state governments. Such power projects run the risk of partial or complete shutdowns unless the Supreme Court or CPCB provide special exemptions since it takes 18-24 months to install FGD equipment.

CLP India Pvt Ltd is the only company to have complied with December 2019 deadline. JSW’s Ratnagiri station and Adani owned Mundra IV unit have also installed FGD. NTPC awarded FGD in 2018 which is likely to be commissioned in FY21. “We expect shutdown of NTPC’s capacities for a month or two for FGD integration and time overrun for 3.32 GW capacities”, the report from Axis Capital noted.

Going by the deadlines for critically polluted areas, 56.8 Gw capacity would be at risk. As earmarked by CPCB, 24.6 Gw of NTPC’s capacities are in critically polluted or sensitive areas. Such large capacity can neither be shut down nor can they conform to the reduced timeline. The outcome could be either extension in compliance deadline or penalties. FGD installation needs significant capital investment, estimated between Rs 40 and Rs 70 lakh per Mw.

First Published: Sat, March 07 2020. 17:58 IST