New emission norms for thermal power plants are likely to increase NTPC's cost of producing power by 10 per cent. This extra cost would be passed on to consumers, executives with the country's largest power producer said.
After commitments made by the government during the Paris Climate Summit in December, the environment ministry notified new standards for thermal power stations relating to consumption of water, particulate matter, SO2, NOx and mercury.
"For capital expenditure, we have a rough estimate around Rs 20,000 crore. These costs fall under the ambit of 'change of law' and hence will be allowed by regulators as a passthrough to consumers," said an NTPC director.
NTPC executives said the cost of power production would increase by Rs 50 lakh per Mw. The current cost of power production is Rs 5 crore per Mw. This translates into a 50-60 paise increase in the final customer tariff.
An executive said NTPC was assessing each of its projects and units for retrofitting. "Some of the plants are partially compliant with the revised standards. Other units require retrofitting," he added.
It will take around six months to complete the initial report before the retrofitting can start. "The cost can go up after we have firmed up the technological part. In some cases, there might be changes in the layout," said the executive.
The industry, however, reckons NTPC's estimate is just half of the real final cost. "The ballpark estimate of increase in cost comes out to be Rs 1-1.40 crore per Mw. This is based on calculations made by the Central Electricity Authority. The variable cost will go up and so will the tariff paid by states to purchase power," said A K Khurana, director-general of the Association of Power Producers.
He said the final tariff was likely to go up by 80 paise per unit. "Apart from the impact on tariffs, the shutdown of 50 per cent of the capacity during retrofitting will hurt grid stability," he added.
The new standards were aimed at improving the air quality in and around thermal power plants, said the government's statement in December. The technology employed should also lead to restrictions on water use and mercury emission. The standards have been made more stringent for new plants and are tighter for those that will be set up in the future.
Source- business standard