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Ultra mega projects may not be a powerful idea

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Large power projects may be good politics but raise serious questions of viability economic and ecology. Instead, a more realistic development model would be to build small power plants distributed evenly across the country so that the sustainability of all resources is achieved even while the development targets are met, says S. PADMANABHAN.

A VARIETY OF factors cloud the viability of ultra mega power projects.
A VARIETY OF factors cloud the viability of ultra mega power projects.

S. Padmanabhan

The Union Government has planned ultra mega power projects, of 4,000 MW each, in MP, Chhattisgarh, Gujarat, Maharashtra and Karnataka. These are being set up through a nodal agency the Power Finance Corporation a dedicated power FI of the Government, which has called for bids from private investors for competitive tariff on long-term basis.

PFC has set up SPVs (special purpose vehicles) for these plants and offered to coordinate the various activities before the projects are awarded to the private developers. These services include site selection, surveying, water sourcing, appealing to the States to allot land for the sites and other development work. PFC has also indicated that they would consider financing these projects at appropriate time.

Laudable, yet...

No doubt this is a laudable effort. However, there are a few serious misgivings as to the viability of these projects, which need to be addressed to ensure that the growth plans of the power sector meet the demands of all the people, as targeted at least by 2020. With some States going slow on the electricity reform process, the problems that have plagued the power sector continue to remain unsolved. No concerted effort has been made to involve the States in increasing generation. The initiation of the reform process and making it a success solely rests with the States, and the Central Government has little role beyond passing the necessary legislation through Parliament.

Only five States Delhi, Andhra Pradesh, Goa, Karnataka and Gujarat have credit-rating scores of above 50, as evaluated by the CRISIL-ICRA team based on the data of 2004. Haryana is close at 49.63. All others have scored low. All these States are slow in reforms, have not performed well in generation and have poor commercial viability. How would a lender take risk on these States if they sign a PPA (power purchase agreement) for 4,000 MW. MP has a high demand-supply gap and it can use up the entire 4,000 MW, but would it be able to pay for it?

Chhattisgarh has no high demand, and the only reason for its inclusion in the 4,000 MW project is its proximity to coal reserves. The project's viability would depend on the States that would be willing to buy power from Chhattisgarh, and the home State's support.

Size and eco issues

Second major issue affecting the viability of these projects is their size and the environmental impact. Key among these is the damage to water sources, particularly in MP and Chhattisgarh. Normally, thermal projects of these sizes are set up on the coast, as has been proposed in case of Maharashtra, Karnataka and Gujarat where water for cooling is drawn from the sea and the excess water is let back into the sea. This is called `once through cooling'. Thermal plants use up very large quantities of water for cooling. In addition, water of high quality is required to feed the boilers that produce the steam. For a 4,000 MW project the make-up water requirement is around 5,60,000 litres per hour or around 13.50 million litres a day. Turbine cooling requires several times more. A project of this size would require around 480 million litres of water per day for cooling purposes.

For Sasun plant, MP, the Centre has indicated that the project would require 190 cusecs of water and this has been allotted from the Rihand reservoir in Uttar Pradesh (Gobind Ballabh Pant Sagar), which has the share of MP as well. This is now primarily used for irrigation and drinking. This is to be diverted for use at the power plant.

In terms of numbers, 190 cusecs would mean 19.40 million litres per hour or 6 TMC feet per annum. Given that MP has 56,60,000 hectares of irrigable land and has irrigation water availability of about 58 million acre feet, the diversion of the 6 TMC of water (1,37,500 acre feet) would deprive 33,700 acres of water availability. Though this represents only around 0.25 per cent , the desirability of this in the context of a poor State such as MP needs to be reviewed.

The Akaltara ultra mega power project in Chhattisgarh is not likely to be any better. With the same profile as MP and more industrialised and small, Chhattisgarh is fast becoming a dense industrial area in addition to being a rice belt of Central India. Water is a key resource and, as in MP, one needs to review the need to divert so much of good water for thermal plant cooling.

Girye in Maharashtra, Tadri in Karnataka and Mundra in Gujarat are coastal areas where water for cooling purposes can be drawn from the sea. The normal practice in `once through cooling' process for turbines is to let the extra water at higher-than-normal temperature to flow into the sea. However, with serious water shortage all over the world, it is also becoming economically viable for desalinating the cooling water as well with power drawn from the power plant itself. One by-product of the process is salt, which can be put to industrial use.

Emission problems

The third major issue in all the five projects is the problem of emission of carbon-dioxide. The annual emission of carbon dioxide from each of the 4,000 MW project would be around 52.70 million tonnes. The projects need to create a large green cover to allow absorption of the emitted carbon-dioxide. This also requires large quantities of water, and may have to be diverted from normal agriculture. In the case of coastal plants the sea can absorb the emitted carbon-dioxide and additionally a green cover can be built. Keeping this in view, the logic of the 4,000 MW model needs to be re-examined from a point of sustainability of the atmosphere, the infrastructure and the available resources, economic or otherwise. Some where over the last sixty years, we have been overwhelmed with the Nehruvian idea of mega sizes and this needs to be curbed.

A more realistic development model would be to build power plants of smaller sizes distributed evenly across the country so that the sustainability of all resources is achieved even while the development targets are met.

A large number of 800-1,000 MW pit-head plants would need less water, emit less CO{-2} and displace less resources instead of placing one region at great pressure with a 4,000 MW plant.

This will permit greater use of the domestic coal, which is available in plenty and tariff optimisation in terms of reduced coal transport costs can be achieved.

The same concept can be followed in case of coastal plants. Small plants can be built near minor ports. Besides, creating port handling infrastructure, these would serve smaller communities well instead of building large plants that need infrastructure of that size and may become difficult to sustain. Instead of the ultra mega projects, the Government would do well to think of a large number of smaller plants in distributed areas.

(The author, a power consultant, can be contacted at paddy8@gmail.com)

(This article was published in the Business Line print edition dated June 21, 2006)
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