Is there still a case for Proposed Khurja Thermal Plant as Delhi continues to Choke?

The Institute for Energy Economics and Financial Analysis (IEEFA) in its latest report on proposed the Khurja Thermal plant has raised serious questions and has recommended re-evaluation of the proposal against severe air pollution in Delhi.

At a round-table where the report was released, Tim Buckley, Director of Energy Finance Studies, IEEFA, said electricity users, state and central government, and the project’s lenders should not be burdened with yet another expensive stranded asset at a time when local residents needed cleaner energy options.

“Delhi already has the dubious reputation of having the worst air pollution of any city in the world. If the Khurja coal plant is built as planned near Delhi, this will increase the impact on local residents, emergency workers as well as the local government.”

“The Khurja power plant was feasible when first proposed eight years ago in response to power supply shortages and outages across northern India, but technology has moved on,” Buckley said.

IEEFA’s analysis shows that power generated at the Khurja plant would likely be sold for Rs 5.67/kilowatt hours, while renewable energy prices today are only  +/- Rs 3/kilowatt hours. They further add that the economics of the project look dim and urge for re-evaluation of Khurja proposal.

Kashish Shah, IEEFA Energy Research Associate and co-author of the report, says India’s ambition to sustain double digit economic growth hinges on improving energy security and reducing the cost of power, and that requires sensible investment. Khurja will likely add to the Power Finance Corporation’s Rs 31,000 crore of stranded assets, and has been doggedly hampered by numerous legal and environmental challenges still before the courts.

In response to this, The Tehri Hydro Development Corporation said that its Khurja thermal plant would supply power at competitive rates and is equipped with a technology to reduce emissions which would be 50 per cent less than permissible levels. “The first year tariff is estimated at 390 paise per unit while levelised tariff is 361 paise per unit considering the coal supply form Amelia Coal Mine and is duly vetted by Central Electricity Authority. It is the price which is quite competitive and reasonable,” THDCIL said in a statement.

Interestingly, the claims and counter claims come just a day after the CEA claimed that no new coal plants would be approved going forward, as existing plants worth a total of 14 GW in the pipeline were enougn to meet growth  and grid requirements till 2030. On top of that, consider the fact that PLF’s of coal plants have consistently been falling, down to a level below the crucial 60% figure in the past two years. Most of these plants have seen much better days, with NTPC itself regularly reporting PLF’s of over 70% in its heydays. In that situation, one really has to wonder on the logic given for the Khurja plant, other than a last ditch effort by bureaucrats at Tehri perhaps to stay relevant and take attention away from the disappointing performance of the Tehri Project itself on almost all project parameters.

THDCIL is a joint venture of the Centre and Uttar Pradesh government with equity sharing in the ratio of 3:1. UP has signed PPA for 60 per cent power allocation from the project. In this game of power politics, policymakers have bungled up the air of Delhites, who every year gasp for clean air in and around the same period. With the latest closure of Badarpur Thermal plant, Delhi did show intent to clear the air so to speak. But Khurja which is in the 100-Km radius of the capital may further become a dark cloud for Delhi’s clear sky.