September 14, 2020 Read More →

Retiring old coal plants could help India clean air, save money

How can India clean up its environment, get rid of air pollutants and, at the same time, pull its cash-strapped power distribution sector out of colossal debt? A new study suggests that retiring old coal power plants could be an effective strategy to achieve all these aims.

If 54 coal plants that are 20 years or older, located across 11 states, could be shut down over the next two years, it would yield savings of up to Rs 53,000 crore ($7.2 billion) over five years for these states’ electricity distribution companies, as per a new analysis by Climate Risk Horizon, a non-profit that analyses the risks to the Indian economy from climate change. This could make up for over 50% of the dues of the discoms.

“After the discoms have paid for the fixed capacity charges of coal plants, the choice is [between the] variable charges of coal electricity and the competitive tariffs of renewables electricity,” said Kashish Shah, energy finance analyst at The Institute for Energy Economics and Financial Analysis, a think-tank. “Renewable would win this contest because their prices – under Rs 3 per unit, currently, are flat for 25 years in a contract. They are also deflationary – in some years renewable tariff could reach below Rs 2 per unit.”

For coal, inflations have to be adjusted in tariffs along with increased railway freight charges. Thus, renewables make economic sense for discoms. Retiring old plants was among the most important solutions offered to help discoms deal with their financial stress, according to an August study by the think-tank, which Shah co-authored.

[Bhasker Tripathi]

More: By shutting down old coal plants, India can clean up its air—and save Rs 53,000 crore

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