Ministry of Environment Forest and Climate Change (MoEFCC) has stipulated that all coal-fired power generating units need to reduce harmful sulfurous gas emissions by retrofitting necessary pollution control equipment. The deadline for thermal power plants to install Flue Gas Desulphurization (FGD) units that cut sulfur dioxide emissions has been moved three times.

The Central Electricity Authority of India (CEA) has recently released the installation status of FGD units in the thermal power plants across the country.

According to the CEA, bids for FGD installations at 69.26 GW of thermal power units have been awarded by the Ministry of Power (MoP) so far since 2019 against a planned capacity of 169.26 GW.

The progress has been slow, with only four central government projects of 840 MW and two private enterprise projects of 1.32 GW commissioned to date with FGD systems. State governments have not commissioned any FGD installations to date.

FGD is a process to remove sulfur dioxide from exhaust flue gases of fossil-fuel power projects and the emissions of other sulfur oxide emitting processes such as incineration of waste materials. It substantially reduces the sulfur dioxide emissions released in the flue gases by thermal power projects and is a critical step towards environmental sustainability.

Mitigating the cost of FGD installations

The MoP had proposed a ₹835 billion (~$11.70 billion) plan to meet the cost of FGD installation to improve air quality. The Prime Minister’s office also suggested waiving the cess on coal (clean energy cess) to help the thermal power projects install FGD to curb pollution. Since 2010 as of the financial year 2019-20, over ₹1.15 trillion (~$15.6 billion) has been collected in clean energy cess. The Forum of Regulators has recommended that the clean energy cess proceeds should be brought back to the electricity sector to mitigate the incremental cost of FGD installations.

Deadline for compliance

Initially, a 2017 deadline was set for thermal power plants to comply with emissions standards by installing FGD infrastructure to cut toxic sulfur dioxide emissions. Subsequently, separate timelines were set for different regions, with the deadline ending in 2022. Another order dated March 31, 2021, from the Environment Ministry says thermal plants close to heavily populated areas and New Delhi will have to comply by 2022, while plants closer to critically polluted areas have up to 2025 to comply or retire the units.

Status of bids

Plans are to install 442 FGD units at thermal power plants with a combined 169.26 GW capacity. This includes 54.8 GW of plants owned by the central government, 53.22 GW by the states, and 61.23 GW by private players. Of these, bids have been awarded for FGD installations in 69.26 GW of thermal power plants.

The government has awarded bids to install FGD units in 47.74 GW of thermal projects and state governments for 4.32 GW. Private companies have awarded bids for 17.2 GW of projects.

Notices inviting tenders (NIT) have been issued for FGD units in 132.30 GW of thermal projects. The Union government has issued NITs for 54.8 GW capacity, while state governments and private companies have issued NITs for 32.21 GW and 45.29 GW respectively.

Across the country, the central government has awarded bids to installed FGD units at 55 projects with a capacity of 28.32 GW located in critically polluted areas. State governments and private companies have awarded bids for four projects with 2.6 GW and eight projects with 4.97 GW, respectively.

In the National Capital Region, the central government has awarded 3.32 GW in bids for FGD installation at thermal projects and private companies for 4.7 GW.

In 2020, the Central Electricity Regulatory Commission recommended in a staff paper that thermal power projects retrofitting pollution control systems on commissioned units should be allowed to recover their costs in part from buyers during the tenure of power purchase agreements.

Mercom had earlier reported that NTPC Limited entered into a foreign currency loan agreement with the Japanese Government’s financial institution, the Japan Bank for International Co-operation, for funding its FGD and renewable energy projects.