Power sector wakes up to Rs.30k-cr opportunity

More than three months after the tariff policy amendments were unveiled by the government, the power sector is waking up to an obscure provision that has the potential to attract over Rs.30,000-crore investment into sewage water treatment plants around thermal generating stations.

The policy has made it mandatory for thermal plants within 50 km of sewage treatment facilities to use treated sewage water. The policy would ensure availability of more potable water in the areas adjacent to the power plant, the government had said.

“We have started implementing the policy for thermal plants with NTPC’s Nagpur unit being the first to source treated sewage water from the city’s municipal body. Additionally, we have always made extensive plans for groundwater conservation in coal and mineral mining,” power minister Piyush Goyal told reporters.

He added that the government was also looking at making thermal plants along the Ganges use treated water so that the effluent isn’t discharged into the river.

As per industry estimates, nearly 80 gigawatt (GW) of thermal capacity would be covered by the provision. If all these plants source their entire water requirement from sewage treatment plants (STP), it would amount to nearly 8,000 million litres per day (MLD). Typically, a thermal power station requires about 3-5 litres of water to produce one unit of power.

It is estimated that the extra cost for a power plant in procuring this water, including the associated pipeline of average 50-km length, would result in a tariff hike of about 5-7 paise/unit.

“This clause would apply mostly to the Centre and state-owned plants that are located around the periphery of cities and towns,” a top NTPC official told FE. He added that the company had already signed an informal agreement for use of sewage treated water at its plants in Mouda and Solapur in Maharashtra.

The company has been prompt in signing pacts for Maharashtra plants as several state-owned thermal stations have been forced to suspend operations temporarily due to scarcity of water this year.

This practice is likely to take off with NTPC’s involvement in it. The state-run thermal power giant has entered into an agreement with Vishvaraj Infrastructure, a company that has been selected to run Nagpur’s 200-MLD STP in a first public-private partnership project in water treatment.

“We will be supplying 150 MLD to NTPC Mouda plant while we are looking for buyers for remaining 50 MLD supplies,” Arun Lakhani, chairman and managing director of Vishvaraj Infrastructure, told FE. He added that the difficulty in making return on investment on sewage plants had been holding the interested investors at bay.

Most urban centres’ STPs are run by local bodies with grossly inadequate capacity to handle sewage generated by a particular centre. For example, Nagpur alone produces over 500 MLD of sewage water, but the treatment capacity is for only 100 MLD.

“The industry and government are both waking up to the water crisis. We already have the policy from the power ministry that will create incentives for private players to install STPs as buyers would now be available,” Arun Lakhani said.

This New is Originally Posted on THE FINANCIAL EXPRESS