On September 19, 2024, the EAC granted environmental clearance to the proposed two units of coal-based supercritical thermal power plant with 660 MW capacity, in Nagpur, Maharashtra.MPCB
Environmental clearance (EC) has finally been granted for two new 660 megawatt (MW) supercritical thermal power units at the state-owned power utility Maharashtra State Power Generation Company Ltd (Mahagenco) Koradi Thermal Power Plant in Nagpur, Maharashtra.
The thermal power station currently has a capacity of 2,190 MW, comprising Unit-6 (210 MW) and Units 8-10 (660 MW each, totalling 1,980 MW). Units 1-4 (420 MW total) were retired in 2010, Unit-5 (200 MW) in March 2017 and Unit-7 in August 2021.
Mahagenco has plans to significantly increase the state’s energy generation. However, it has not addressed the environmental pollution caused by the power plant over the years. The expansion proposal, which emerged in May last year, faced strong opposition from environmentalists, who argued it would substantially increase pollution levels in and around Nagpur.
Mahagenco has referred to the project as an expansion of the existing plant, but environmental activists have questioned why the new units are being concentrated in Nagpur rather than in areas where older plants are being decommissioned. They have warned that the new units will have the same output as the six retired units, effectively doubling pollution levels in the area, impacting both urban and rural communities.
The existing Koradi and Khaparkheda Thermal Power Plants are situated within a radius of approximately 8-10 kilometres and the ash ponds of both plants collect ash from their operations. These ash ponds have a long history of causing severe pollution in the region. Pollution from the ash ponds has been extensively documented by the media, civil society groups, government agencies and local communities for over a decade.
At the mandatory public hearing for the expansion, conducted by the Maharashtra Pollution Control Board (MPCB) last year, residents and activists raised concerns about the persistent pollution issues at Koradi, including widespread fly ash contamination. Ash from the existing plant already coats trees, plants and pollutes nearby water bodies.
Farmers in the area are struggling with crop losses, with agricultural land increasingly being converted into brick kilns due to pollution. Local residents are also facing serious health hazards, as fly ash contaminates water sources. The Kanhan river, which supplies water to Nagpur, has been affected on multiple occasions, particularly during the monsoon season.
EC questionable
If this power plant is already causing massive damage to the environment and society, can its expansion proceed without exacerbating these adverse impacts? On May 21, 2019, Mahagenco applied to the Union Ministry of Environment, Forest and Climate Change to expand its power station with two units of 660 MW capacity each at the site of retired Units 1-5.
In December 2019, the Expert Appraisal Committee (EAC) denied approval due to the absence of flue gas desulphurisers in the existing units. By June 2020, the state cabinet postponed the expansion due to revenue shortfalls, public opposition and Mahagenco’s failure to control pollution.
Despite this, the EAC extended the terms of reference for environmental clearance shortly afterwards. In May 2023, it was reported that the Environmental Impact Assessment (EIA) for the proposed expansion had been completed, with an announcement that the new units would replace the old ones within the next five years. The state also approved an equity investment of Rs 2,215 crore, while Mahagenco was allowed to raise the remaining 80 per cent (Rs 8,500 crore) as debt from financial institutions, including banks and development finance institutions.
On September 19, 2024, the EAC granted environmental clearance to the proposed two units of coal-based supercritical thermal power plant, with 660 MW capacity, despite the well-documented disadvantages of existing thermal power infrastructure.
The environmental clearance for this project raises several concerns. Should the plant be allowed to expand, given the significant impacts on people’s health, the environment and the climate? Moreover, should the custodians of public funds, such as the Power Finance Corporation (PFC), the Rural Electrification Corporation (REC) and the State Bank of India — who had previously financed the project — provide further loans for this expansion?
Financial burden of the expansion
Does the expansion make financial sense? Isn’t it better to invest in renewable energy?
The energy sector plays a critical role in addressing climate change, which poses severe challenges to society. The Indian government’s ‘Panchamrut’ agenda targets 500 gigawatts of non-fossil energy by 2030, a one-billion-tonne reduction in carbon emissions, a 45 per cent reduction in emission intensity by 2030 and Net Zero emissions by 2070. Financial institutions claim to support clean energy projects across the country through competitive financing aligned with these ambitious goals. Yet, they continue to finance the expansion of fossil fuel-based facilities like the Koradi power plant.
In its December 2023 report, Costly and Unnecessary, nonprofit Climate Risk Horizons used publicly available data to demonstrate that the proposed expansion does not meet the criteria for financial prudence, especially when more viable renewable energy solutions are available.
The report highlighted that the expansion of Koradi would substantially increase the financial burden on electricity consumers through higher tariffs and fixed costs, irrespective of the plant’s level of utilisation.
It estimated that replacing the planned thermal power capacity with renewable energy and storage could save Maharashtra Rs 6,000-Rs 7,100 crore in power purchase costs over the first five years. Even in scenarios of increased demand, renewable energy would remain more economical while avoiding additional pollution.
The proposed Koradi power plant expansion carries significant financial risks. The investment required for the 1,320 MW plant was Rs 9,882 crore, according to its pre-feasibility report. However, in October, the Maharashtra state government approved a revised capital expenditure of Rs 10,625 crore.
Based on project costs, interest rates and operating costs of similar coal plants in Maharashtra, the cost of power from the new units is estimated to impose an annual fixed cost burden of around Rs 2,000 crore for the first ten years of operation, starting from the plant’s expected completion in 2029. This cost will need to be paid regardless of the plant’s utilisation level and the burden will ultimately fall on ordinary consumers.
Why renewable energy should be prioritised
The project is estimated to cost Rs 10,625 crore, including loan interest and financing charges. The new units will be built on land previously used by the decommissioned 4 units of 120 MW and 210 MW capcity at Koradi. However, the project will necessitate the clearing of 168 acres of land, resulting in the felling of thousands of trees — a move that has sparked protests from environmental activists. As part of the plan, Mahagenco will decommission six old power units and replace them with two modern supercritical units.
While Maharashtra’s current surplus power capacity is expected to be exhausted in the coming years, the state already has the highest installed renewable energy capacity in the country. Any thermal power plant expansion today must ensure that future demand is met with the least costly alternatives. Prioritising renewable energy will enhance the financial performance of utilities, improve industrial competitiveness and reduce government subsidies, ultimately benefiting the state’s economy and its power consumers.
This article was originally published in Down To Earth and can be read here.
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