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WASHINGTON, June 18, 2009 ─ The World Bank today approved a US$180 million loan to the Government of India, designed to renovate and modernize old, inefficient and polluting coal-fired power plants. The project, which is expected to lower carbon emissions and boost power production at these plants, is co-financed with a US$45.4 million grant from the Global Environment Facility (GEF).
This would be the first step in a decade-long Government of India plan to augment power supply by rehabilitating a range of old coal-fired plants even as the country moves to more climate-friendly options for energy generation in the long term. The planned modernization would bring these power producing units to energy efficiency levels comparable to similar units in OECD countries.
India’s power shortage is a daunting barrier to the country’s development. More than 40 percent of Indian homes do not have electricity and 60 percent of Indian industrial consumers are forced to make their own arrangements for securing a reliable power supply. For example, last year, the country faced a 16.6 percent shortfall during hours of peak consumption and a 9.9 percent gap for energy generation.
The Coal-fired Generation Rehabilitation Project will pilot a new approach to renovation and modernization that moves beyond simple life-extension to making the rehabilitated plants more energy efficient and environmentally sustainable. This means the renovated plants will use less fuel (coal) and emit fewer greenhouse gases for every unit of electricity produced. Currently some 80 percent of the electricity supplied to homes, farms and factories in India comes from coal-fired generation plants, one-third of which are old, inefficient, and emit harmful gases into the atmosphere.
“More than 400 million people do not have electricity in India,” said Roberto Zagha, World Bank Country Director for India. “This is the same as switching off power for the combined populations of the US, UK and France. Making coal more efficient and less polluting is an important step for India even as the government develops longer term solutions for addressing its climate change concerns.”
The project will rehabilitate and modernize around 200-220 MW of capacity at each of the three coal-fired power plants at Bandel in West Bengal, Koradi in Maharashtra, and Panipat in Haryana. It has been designated the first phase of India’s National Renovation and Modernization Program which, over the next decade, aims to rehabilitate old and inefficient power plants with a cumulative capacity of 27,000 MW, or almost one-fifth of India’s installed power capacity of 145,000 MW.
“Modernization of these plants can improve their efficiency by about 10 to15 percent,” said Mikul Bhatia, World Bank Energy Specialist and project team leader. “The Bank-supported project alone will help India reduce its direct greenhouse emissions by almost half a million tons of CO2 equivalent each year. If scaled up effectively to the remaining similar units needing rehabilitation, India could be looking at emissions cuts anywhere between 10 to 13 million tons of CO2 equivalent each year.”
In addition to helping reduce carbon emissions from these units, the project will also support efforts to control particulate emission, and improve water treatment and ash disposal at the plants, leading to better environment conditions for people living in the vicinity. A parallel focus on better operations and maintenance practices in the plants will help sustain the improvements made through the renovation and modernization effort. This combined emphasis will allow India to adopt a lower-carbon path to energy generation by modernizing its coal-fired plants and enabling them to add cheaper and cleaner electricity to its grid.
The loan from the International Bank for Reconstruction and Development (IBRD) has a 30 year maturity including a 5-year grace period.
For more information about the project: http://go.worldbank.org/WVCZI4TUM0
For more information on the Bank’s work in India: http://www.worldbank.org.in
For more information about the Global Environment Facility: http://www.gefweb.org/
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