Relaxed FGD norms to save thermal power plants ₹19,000-₹24,000 crore annually: CareEdge Ratings
flue-gas desulphurisation
(FGD) systems for most coal-based
thermal power plants
is projected to save them a substantial ₹19,000 crore to ₹24,000 crore in annual tariff expenses. This translates to a saving of ₹0.17 to ₹0.22 per unit of tariff, according to
CareEdge Ratings
, as reported by IANS.
The revised framework, announced last week by the Ministry of Environment, Forest and Climate Change, introduces a differentiated compliance approach. Under the new rules, FGD mandates will now primarily apply to plants located within 10 kilometers of cities with a population exceeding one million, and will also consider the sulphur content of the coal used. The new rules exempt the majority of India's thermal power plants from installing FGD systems.
Positive impact on thermal independent power producers
The report highlights that the exemption of Category C plants, which represent 80 per cent of the capacity for which FGD was yet to be implemented, is a major positive for thermal independent power producers (IPPs).
According to CareEdge Ratings estimates, this will reduce the capital expenditure burden by a significant ₹87,000 crore to ₹1,16,000 crore, assuming a capital expenditure of ₹0.6-0.8 crore per MW.
Sabyasachi Majumdar, Senior Director at CareEdge Ratings, said, "The exemption of Category C projects from implementation of FGD is a positive for thermal power producers since such projects comprise 80 per cent of the capacity for which FGD is yet to be implemented. This would also ease the burden of the impending tariff hike to compensate for the FGD capital expenditure."
Coal-Based power remains energy backbone
Despite the increasing focus on renewable energy,
coal-based power generation
continues to be the bedrock of India's power sector. It accounted for approximately 75 per cent of the total generation in FY2025, even though it only represents 47 per cent of the total installed capacity. This disparity is attributed to the higher Plant Load Factor (PLF) of coal-based plants compared to renewable and hydroelectric sources.
Looking ahead, the report projects that the share of coal-based plants in power generation will remain significant, at around 60 per cent by FY2030.
Furthermore, with overall energy consumption on the rise, the total off-take of thermal power is expected to remain substantial, reaching around 1,233 billion units in FY2030.
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