India plans to add 14,700 MW of thermal power capacity this year

India has targeted increasing its thermal power generation capacity by 14,700 megawatt in FY24. It is an ambitious target as in FY23, both Centre and the states added just 1,460 MW against the target of 6,350 MW. In percentage terms, only 23% of the target was achieved by the Centre and states and the question remains as to whether this year's target will be met or not.

"The entire 14,700 MW is not going to be from new projects. There are several thermal projects which have been delayed due to various reasons over the years. We are hoping to solve all these problems and see the thermal projects are commissioned in the next 11 months," a senior Central Electricity Authority official stated.

Out of the 14,700 MW, the Centre's target is to add 6,880 MW, and states set a target of 7,820 MW. The aim to add 14,700 MW of thermal capacity also shows that the country stays dependent on coal or oil to generate power in the coming years.

In 2022-23, the Centre added only 660 MW against the target of 3,580 MW, and state discoms added 800 MW against the target of 2,770 MW.

"The Central Electricity Authority (CEA) monitors the progress of under construction power projects through site visits and interaction with the developers and other stakeholders. CEA holds review meetings periodically with the developers and other stakeholders to identify and resolve issues critical for commissioning of projects," said the official.

Regular reviews are also undertaken by the Centre to identify the constraints and facilitate faster resolution of inter-ministerial and other outstanding issues.

Each month, the amount of power demand and consumption is on the rise in all states. To cater to this increasing power demand, thermal projects were proposed and conceptualised in Bihar, Jharkhand and several other states but they are pending completion for the past 6 to 12 years.

Incidentally, only the NTPC's thermal units have been delayed in Bihar and Jharkhand. Although Jharkhand provides coal to several thermal units across the country, the North Karanpura thermal project has been pending for the past four years due to various reasons.

Projects are delayed due to various reasons. The main reasons for the delay include contractual issues, lack of readiness of railway line/railway sidings to bring fuel for the thermal units, delay in supply by equipment manufacturers, delay in land acquisitions, disruption of work due to local issues, and delay due to change in design.

Many thermal projects which were announced by various state-owned distribution companies (discoms) could not begin construction as the contractor chosen did not have enough funds to start work or land acquisition could not be completed.

"For example, Bhavanapadu TPP Ph-I project in Andhra Pradesh with a capacity of 660MW is held up due to a liquidation order for the company which won the tender for the project. Liquidator has partially sold the assets of the company on a standalone basis through e-auction," said the official. The cost of this project has increased from ₹6,571.94 crore to ₹9,343.15 crore.

Similarly in Rajasthan, Bithnok TPP with a capacity of 250 MW has been delayed due to withdrawal of power purchase agreement (PPA) by the state discom. The discom has decided to appoint a consultant to take forward the project and a final decision is expected after the consultant submits his report. Due to cost overrun and time overrun, the tariff of this project is likely to be high, said a CEA report on various projects delayed.

There are several such projects which are in the pipeline under the Centre and states. Some projects are delayed as these thermal units don't have coal linkage and may have to depend only on imported coal.

"Since most of the discoms are owned by the state governments, land for a new thermal project is not a problem unless it is very close to a town or city. Most of the projects are delayed as the contractor providing the boiler and other equipment is a Public Sector Undertaking (PSU) is causing the delay. There are instances of a boiler falling in a river during transit from Uttar Pradesh to North Chennai," said a former NTPC chairman.

The delay in commissioning thermal projects means a discom has to depend on private power generators whose cost per unit is ₹5. "It is always advantageous for discoms to have their own thermal capacity. The cost per unit of power generation by a state-owned discom will be less than Rs 4 per unit," said the former chairman.

"For pit-head thermal units, the cost will be lesser. Thus, Jharkhand which has several coal mines can generate power at very less cost provided the projects are completed on time," he said.

"With increasing production and adequate coal stock of 69 MTs at our pitheads we aim to meet the projected target with our best shot and satiate the demand," the CEA official said.

Coal India's production and off-take for 2023-24 is targeted at 780 million tonnes. "We do not foresee a situation where the power generation will be interrupted for want of coal," said the official.

"Coal India has pegged supply to the power sector in 2023-24 at 610 million tonnes to meet the demand for coal-fired power plants. This is 23.4 million tonnes, or 4% higher than the highest recorded 586.6 MTs that it had supplied to power plants in the previous financial year," said the CEA official. Its supplies to the power sector hit an all-time high of 586.6 million in 2022-23, he said.

In the wake of forecasts that a hot summer may push up coal demand, Coal India is gearing itself to meet the requirement on the back of adequate coal stocks at its pitheads and increased production in the first quarter of 2023-24.

"For at least the country will have to depend on thermal projects for its power supply. Though renewable power capacity is increasing each year, the problem is battery. We need a solution to save wind or solar power generated at various times of the time so that it can be used when the demand is high. Till we find a solution to this problem, our dependence on thermal will not come down," said the former NTPC chairman.