A new research lines up a plan to save Tamil Nadu’s TANGEDCO and your power bills

A new research lines up a plan to save Tamil Nadu’s TANGEDCO and your power bills
Representational image only.Unsplash
  • The state-owned power distributor is losing ₹2.2 for every unit of power sold, according to the latest research by a Bengaluru-based group Climate Risk Horizons.
  • By taking steps which include retiring old plants and replacing them with renewable energy sources, the distribution company can save over ₹57,000 crore in 5 years
  • This will not only reduce emissions but the money saved can help ease the pressure of electricity bills on the consumer.
  • Check out the latest news and updates on the environment on our dedicated section at Business Insider.
The state-owned power distributor in Tamil Nadu, one of India’s more developed states, is losing ₹2.2 on every unit of power sold. This has led to a debt pile up of over ₹1.13 lakh crore ($15.4 billion). Now, a Bengaluru-based research group Climate Risk Horizons, has come up with a plan to save the company and consumers’ money on electricity bills.

The cash-strapped discom Tamil Nadu Generation and Distribution Corporation (TANGEDCO) can save up to ₹57,766 crore over five years if it retires older plants, rationalise under-construction projects and avails of cheaper power to meet future demand, according to the report dated February 5.

Like in many other states, TANGEDCO has been struggling for a while. In October 2020, the central government approved a ₹30,230 crore bailout package. But that would only the inevitable collapse until another bailout or corrective measures. The recommendations of the report not only aim for cleaner air but any money saved by the distribution company (popularly called discom), may help in reducing the power bills on the consumers.

Here’s a breakdown of the estimated amount the discom in Tamil Nadu can save by moving to renewables

Potential savings Cost
Phase out power plants that 20 years and older₹1,670 crore
Replace lost generation from plants 20 years and older with renewable energy₹1,459 crore p.a. / ₹7,295 crore (5 years)
Freeze expenditure on early-stage plants₹26,514 crore
Phase out all plants with tariffs > ₹4kWh & replace with ₹3/kWh₹6,097 crore p.a. / ₹30,485 crore (5 years)
Total savings ₹34,100 crore (first year) ₹57,766 crore (5 years)

Retire the old plants

Some of the ideas shared in the report should, ideally, be under execution. For example, shutting down coal-based power plants that are older than 20 years like the ones in Thoothukudi, Mettur, Salem, and North Chennai.

Such plants are typically less efficient and pollute more. Legally, they should be moving towards meeting the 2015 air and water emission norms notified by the Ministry of Environment, Forests and Climate Change. The deadline for compliance with the norms is 2022.

However, so far, little progress has been made on reducing the sulfur dioxide emissions caused by coal combustion boilers in these plants. The researchers say it may be cheaper to replace these plants instead of trying to upgrade them, which may cost another ₹1,600 crore.

For the same reason, the authors of the report also say that under-construction projects like the one in Uppur, Udangudi and Ennore should be frozen.

The recommendation is similar to the one made by Lord Adair Turner of the Energy Transitions Commission who said that every bit of power capacity that India adds hereon should be from renewable sources.

The power from new renewables in India is much cheaper than power from fossil fuels like coal. In India, solar bids declined from a high of 10.95 per kilowatt hour (kWh) in 2010 to less than ₹2/kWh now. By 2030, renewable power in India is expected to be 56% cheaper than new-build coal.

A new research lines up a plan to save Tamil Nadu’s TANGEDCO and your power bills
BI India

However, not just the state governments, even the central government seems to be going for a rather hybrid approach. “Actually, we are doing rather well in terms of creating solar capacities, but you know there is also a resilience issue here. While we go into solar, we will be making sure that we do have back up capacities from traditional fields, so we're also opening up some new coal mines. So you do need some resilience, some sort of shock absorbers to allow, while we build out these new capacities well,” said Sanjeev Sanyal, the Principal Economic Advisor at the Ministry of Finance in an interview with Business Insider.

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