Although Tamil Nadu is rapidly increasing the proportion of renewables in its energy mix, the southern state continues to remain invested in coal-fired power plants
Early in February, the Tamil Nadu government unveiled a policy that reiterates the state’s pioneering efforts in renewable energy. The state plans an installed capacity of 9,000 megawatts of solar energy by 2023. With an installed capacity of 2,034 MW as on March 2018, the state will install nearly 7,000 MW of solar energy capacity over the next four years.
Despite being a hailed a pioneering state in renewables, especially in wind energy, Tamil Nadu continues to invest in expensive and unviable coal-fired power plants. While experts question these investments, government sources say that they are doing so only to make sure the state has stable energy, even if it means spending more money.
“Tamil Nadu already operates the most diversified electricity generation fleet in India, with renewables representing 35% of installed capacity as of March 2017, nuclear 8% and hydroelectricity 7%. Coal-fired power capacity represents 45% or 13.4 GW. Tamil Nadu represented almost one fifth (18.5%) of India’s total renewable energy generation in 2016/17,” read a 2018 report by the Institute of Energy Economics and Financial Analysis (IEEFA). An official in the Tamil Nadu’s energy department said the proportion of renewables in the energy mix will go up to 44% by 2023.
Despite the fast growth in renewables, the state department continues to propose and build more thermal power plants. “If every thermal power plant currently proposed comes to operation in Tamil Nadu, the state will have one plant every 40 km on the coast,” said Shweta Narayan, India Coordinator at the Healthy Energy Initiative, a global collaboration of health researchers and organisation advocating the need to move away from fossil-based-power generation. “Some of these plants are dangerously close to protected marine ecosystems like the mangrove forests in Pichavaram and the coral reefs in Ramanthapuram.”
According to the state’s energy policy note for 2018-19, there are five on-going projects with a combined capacity of 5,700MW, with a total cost of nearly INR 470 billion (USD 6.6 billion). IEEFA estimates that power plants with a total capacity of 22.5 GW were announced as of March 2017. “There is a growing stranded asset risk for these thermal power companies. New non-pithead thermal coal-fired capacity requires tariffs in excess of Rs5.50/kWh, entirely failing to deliver cost-effective solutions for TN customers,” read their report.
Collapsing utilisation rates are making even the existing coal plants less competitive with each passing year. In 2016-17, it was an estimated 61.7%, a ten-year low, said the report. “Add in the high cost of transporting thermal coal to Tamil Nadu, plus falling renewable energy tariffs, and TN’s coal-fired PPAs of Rs4.91-5.23/kWh are increasingly uncompetitive and unjustifiable,” it added.
Unviable power plants
Across the state and the country, coal power plants are not just facing environmental problems, but are also becoming financially unviable. For example, the 4,000 MW ultra mega power plant (UMPP) in Cheyyur in Tamil Nadu has hit yet another roadblock with the federal ministry of environment asking the project proponent to apply for a fresh environment clearance despite obtaining one in 2013.
The developers of the 25,970 crore-project wanted to change their coal from imported to domestic. The move, financial experts say, could be to reduce costs. However, it will also increase the amount of fly ash generated by the plant as domestic coal has a lower calorific value. Along with the change in the source of coal, the Cheyyur Tamil Nadu Power Limited, a special purpose vehicle, which is a wholly owned subsidiary of the Power Finance Corporation, also wanted more land for dumping the fly ash it generates. From 1,058 acres, the land requirement has increased to 2,007 acres.
“The environmental impacts from the domestic coal for a large size power project will also change significantly. It has been informed that the project configuration, layout and other technical parameters will also be revised. Accordingly, committee is of the opinion that a fresh EIA and Public Hearing may be required,” read the minutes of an expert appraisal committee, which met on January 23. “In the last five years, the baseline status in the area may have changed and new industries may have come up. Presently, the EC is valid till September 2020 (seven years). It may not possible to complete the construction within the validity period, even if it is extended for further period of three years.”
Across India, 16 UMPPs have been planned, of which only two have been built so far, both of which are considered stranded assets. The 4,000 MW Coastal Gujarat Power Ltd of Tata Power, the 4,620MW power plant at Mundra of Adani Power Mundra Ltd and 1,200 MW Essar Power Gujurat Power Ltd in Salaya requires a combined relief of INR 1.29 trillion over the next 30 years, Business Standard reported. “The risk stands transferred from project developers to consumers and lenders, without any fault of theirs. The INR 1.29 trillion benefit to power developers will burden the consumers in Gujarat, Haryana, Maharashtra, Punjab and Rajasthan,” the report said, quoting an unnamed source.
Experts question the need to push for these stranded assets. “To IEEFA, Tamil Nadu has moved on from the Cheyyur UMPP, but for some reason the GoI (Government of India) has refused to cancel this centrally sanctioned project in its entirety,” Tim Buckley, director of energy finance studies at IEEFA, told indiaclimatedialogue.net. “Coal plant proponents always understate the real cost of the project, underestimating delays and cost blowouts, and ancillary costs,” he said, adding that while officials costs of the plant, according to the Tamil Nadu’s policy note, is USD 3.6 billion, IEEFA estimates the project cost to be around USD 5 billion. “This is more realistic by the time the project is commissioned, including construction financing, delays and cost blowouts,” he said.
Apart from financial costs, the state government has not taken into account the loss of livelihoods caused by thermal power plants. “For the last two decades, most coal-fired power plants have come up on the coast, and have taken up common spaces. Unlike agrarian economies, fisheries and other livelihoods along the coast depend on common spaces like the beaches, wetlands and saltpans. Taking away common lands also does not give compensation to those living near plants,” said Pooja Kumar, a researcher and activist from Coastal Resource Centre, a Chennai-based fisher solidarity organisation. “Also, since these communities cannot move away as their livelihoods are dependent on the coastal ecosystem, they share an unfair burden of pollution as they continue to live near coal-fired power plants.”
The most immediate threat to those living around coal-fired thermal power plants is fly ask, which is generated when the coal is burnt. This contains toxic heavy metals like arsenic, nickel and manganese. Central government norms say that all thermal power plants need to utilise all the fly ash it generates. However, nearly a third of the fly ash generated in Tamil Nadu gets mixed with water and the sludge is indiscriminately dumped into surrounding water bodies. According to a December 2018 report from the Central Electricity Authority, the state generated 10.42 million tonnes of fly ash in 2017-18, while utilising only 6.99 million tonnes, or 67%.
Ironically, the state government acknowledges the importance of reducing carbon emissions. In 2017-18, it has harnessed 13,000 million units of wind energy, 2,905 million units of solar energy, leading to a combined reduction of 5,406 million tonnes of carbon emissions. As of March 2018, the state has a total renewable capacity of 11,113 MW.
Despite the growth in solar and wind energy and cheaper energy, the state government does not have any plans to phase out coal. “Supply from renewable energy is not stable and we do not have the storage capacity,” said a senior official from the Tamil Nadu energy department. “During Cyclone Ockhi, the entire state did not have power. Bureaucrats and ministers are of the view that renewables cannot be trusted and are not stable.”