Retiring old coal plants can help Maharashtra save Rs 16,000 cr in five years: Report
Retiring old coal plants can help Maharashtra save Rs 16,000 cr in five years: Report

Maharashtra can save up to Rs 16,000 crore in the next five years by shutting down old coal-fired power plants, along with other measures, an environmental advocacy group said on Thursday.

The savings can go up to Rs 75,000 crore over a decade if the state follows a set of recommendations, the report by Climate Risk Horizons said pushing for more reliance on renewable sources of power and calling them cheaper as well.

The report said that over 4,000 megawatts (MW) of coal plant capacity owned by the Maharashtra State Power Generation Company can be retired by 2022.

It added that older coal plants are less efficient and more polluting, and will need to meet the 2015 air and water emission norms notified by the Ministry of Environment, Forests and Climate Change by 2024 at the latest.

Instead of retrofitting, retiring Bhusawal Unit 3, Chandrapur Units 3-7, Khaparkheda Units 1-4, Koradi Unit 6 and 7, Nashik Units 3-5 will save about Rs 2,000 crore in avoided costs, its lead analyst Ashish Fernandes said.

He added that replacing the scheduled generation from these old units with cheaper renewable electricity will save another Rs 1,600 crore annually.

"The power surplus situation in the state and country, as well as the advent of cheaper renewable energy, allows the state government a significant room to retire these end-of-life assets and generate savings which will benefit the discom and consumers," he added.

The report by the group added that Maharashtra's coal fleet has been running below-55 per cent plant load factor (PLF) for the last four financial years, even before the pandemic-induced slump in economic activity in 2020-21.

PLF is the ratio of average power generated by the plant to the maximum power that could have been generated in a given time.

The task of retiring old plants is easier because the unconventional energy policy is aiming to add over 17,000 MW of power in the state, even as Maharashtra is expected to have a power surplus of 15 per cent till 2025 as per the local regulator's calculations, he added.

The savings generated can be used to improve efficiencies in the electricity system, further reducing subsidy payouts from the government to Maharashtra State Electricity Distribution Co (MSEDCL), freeing up resources for other priorities in the health and infrastructure sector, the report suggested.

The re-allocation of coal resources after the retirement of the old units will bring down the coal transport bill to Rs 627 crore annually from the current Rs 927 crore.

Apart from shuttering of the old units, it also pitched for discontinuing the Rs 3,158 crore project to build a new unit at Bhusawal. There is "no economic rationale" for the unit, and if completed, MSEDCL will be forced to pay high fixed cost charges despite low demand for power, it added.

A 10-year transition to a renewable energy dominated electricity system can save the state thousands of crores through reduced power purchase costs, it said adding that this alone can lead to savings of up to Rs 62,000 crore over a five year period.

"The COVID-19 pandemic has hit both MSEDCL and state government finances. As the government explores ways to cut costs and improve financial health, retiring old coal plants should be part of the mix," he said.

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