Sunday, September 30, 2007

World Bank to help replace power plants

The World Bank is finalizing a $1 billion (nearly Rs4,000 crore) loan to Maharashtra and West Bengal, to help the states replace old and inefficient power plants with new electricity generating stations instead of repairing the present ones as earlier planned.

“We had initially shortlisted projects in these states where we wanted to rehabilitate them by retrofitting them with new equipment. However, there are sites where it does not make any sense to rehabilitate them as it would not improve their efficiency,” said Salman Zaheer, sector manager (energy) for the South Asia region at the World Bank.
“It will be better to build new power projects at the same location,” he added.

The move to build new power plants at the same locations is driven by easy access to coal, a major ingredient in generating power, and water linkages. They are also situated near the large-scale power sub-stations for evacuating power to the transmission grid.
“We have shortlisted two sites of 500MW each in Maharashtra and West Bengal for replacement. The loan amount will be around $1 billion. We are also open to offer the loan facility to a third state for the same,” Zaheer said.

The Central Electricity Authority, the apex power sector planning body in the country, has already identified around 30,000MW of coal-based plants to be retrofitted or repaired. Most of these old plants are in states that are often cash-strapped and cannot finance renovation and maintenance.

Even the Union government has been planning to raze inefficient old power plants and use the sites for setting up more efficient and large-sized projects as reported by Mint on 2 March.
The government’s rationale is that such a move will help in adding to the targeted capacity addition of 78,577MW by 2012. India currently has a power generation capacity of 135,006MW.
Government-owned NTPC Ltd, India’s largest power generation company, has started the process of building a new power station to replace the existing one at Bongaigaon in Assam.
A 240MW plant has been scrapped in the North-Eastern state, and three new units of 250MW each are now being set up on the same site.

The power ministry is considering using a 3,000 kilocalorie (kcal)-limit to generate a unit of electricity as the upper end to identify inefficient plants; efficient units typically run at 2,300-2,400kcal a unit.

The World Bank stepping in to replace the old plants will also be environment-friendly, an analyst said.

“As and when the new capacities start coming, the old plants with a 50% efficiency can be phased out. It would also help the environment and help utilize natural resources (coal, water and land) in a better way,” said Abhishek Puri, an analyst with ASK Securities.

The estimated annual coal demand for power projects in India by 2012 is 544 million tonnes (mt), but a shortage of 62mt is expected by then, as the domestic availability will be around 482mt. Using available coal more efficiently is seen as one of the solutions to bridge this shortfall for power generation.
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