The Expert Appraisal Committee on Thermal Power of the Ministry of Environment and Forests (MoEF) processes, on average, 45 applications for projects every month. Even accounting for the fact that a project promoter typically appears twice before the committee, this is a large number of applications. Thermal power plants are the flavour of the day.

The first time around, the Committee looks at the project proposal and specifies the issues to be addressed in the Environmental Impact Assessment (EIA) of the project. The second meeting normally happens after the project promoter has presented the EIA report at a public hearing at or near the project site and recorded the objections of the community. The Committee generally grants environmental clearance after setting certain conditions on the presumption that the project promoter will meet these.

The MoEF has given environmental clearance to over 270 thermal power projects since 2007. Environmental clearance represents a significant milestone towards the construction stage of a thermal power project, for, at this point, the project site has been identified and agreements inked with the state government for land and water and linkages made with the coalmines. Construction can begin as soon as the land is acquired.

Too much power?

Data from the MoEF indicates that in just 10 states, thermal power capacity addition of 177,000 MW from around 220 projects has been cleared since 2007. To put this number in perspective, the total electricity generation capacity in the country - from thermal, nuclear, hydro, and other sources - is just over 173,000 MW in March 2011. Thermal plants take a minimum of 5 years from the start of construction to get their first unit operational and 2-3 more years to get the additional units on stream. The proposed new capacity should become available for electricity generation between 2012 and 2019.

  Total generation capacity (MW)
Mar 2011
Thermal capacity under development
Number of projects MW
Andhra Pradesh 15,035 34 32,000
Maharashtra 22,645 29 26,000
Tamilnadu 15,515 39 23,000
Chhattisgarh 4882 25 21,000
Madhya Pradesh 8381 13 18,000
Gujarat 15,722 24 16,000
Odisha 5378 19 14,000
Uttar Pradesh 10,457 11 11,000
Jharkhand 1983 14 9000
West Bengal 8316 14 7000
Total (10 states) 108,314 222 177,000
All India 173,626    

Of course, not all of this capacity may materialise in time because of opposition from local communities or the promoters themselves deciding to go slow. Nevertheless, the development activity has been unleashed with all its consequences on the local communities and the environment.

However, it's worth asking how much of this additional generation capacity India needs. The exercise of the Planning Commission for the 12th Plan (2012-2017) is yet to conclude. The Central Electricity Authority (CEA) has talked about a target of between 75,000 to 100,000 MW of capacity addition from all power categories. Eighty percent of this new generation capacity is expected to be thermal. With a liberal extrapolation for the two years beyond the 12th plan, one arrives at 120,000 MW of new thermal capacity until 2019.

Measured against this, the thermal capacity under development in just 10 states totaling 170,000 MW indeed seems on the high side.

How much of the proposedadditional generation capacity does India need? In just ten states, 170,000 MW are planned over the next seven years - almost 50% higher than all of India's likely demand over the same period.

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Liberal policy

What can explain this tremendous interest in thermal power generation that, on the face of it, looks to be leading to a situation of over-capacity?

Private investors are clearly happy with the policy environment, which does away with licensing and allows flexible selling arrangements and the realisation of market-determined prices. In the name of attracting investments, state governments are vying with one another to offer the most favourable conditions for companies to set up power plants. Their help is not limited to acquiring land and meeting the water requirements, but also extends to managing the public hearing, facilitating clearances from state and local bodies and pushing the case of the company with the central authorities for coal linkages and other clearances.

In return, the state governments require the power producer to sell them a portion (that may vary from state to state) of the electricity generated. For instance, Orissa government has kept first rights to the power supply from one of the four units of Sterlite Energy's 2400 MW plant, allowing the company to sell the power from the remaining units in the energy market. Chattisgarh government's agreement with the Korba West Power Company calls for 35 per cent of the power to be offered to the state.

Private companies influenced by the current power shortage and judging the future power market to be a sellers' market have responded enthusiastically to the government's overtures. The list of companies building thermal power plants extends from the power companies of the large business houses like Tata, Reliance, Adani, Vedanta, Jindal and Thapar to a number of unknown entrepreneurs with no experience of any large industrial enterprise, let alone power generation.

There is however one element outside the control of the state governments that is crucial to the plans of private investment in thermal power plants: coal. Importing coal is a viable option only for coastal power plants located near ports. The success of the thermal projects in states like Orissa and Chattisgarh is dependent on the availability of local coal. There is a long waiting list for 'coal linkages' - agreement with collieries for supply - with current production not able to meet the requirements of existing power plants.

This explains the intense pressure that is being brought on the Environment Ministry to allow mining under India's remaining densely forested territories, the so called "no go" areas.

Power hubs and hot spots

Several states - Chattisgarh, Orissa and Andhra Pradesh among them - are building thermal power capacity far in excess of their foreseeable needs. Chattisgarh, for instance, is developing 21,000 MW of thermal power, more than four times the generation capacity that it uses today.

This is however not the complete picture. Chattisgarh has signed dozens of memoranda of understanding (MOU) with companies to generate more than 50,000 MW of power. Most of these companies have joined the pipeline of projects working towards getting environmental clearance from the MoEF. The state's profligacy in signing MOUs is in line with its long stated policy of becoming a "power hub", of using its large coal deposits to competitive advantage and "exporting" power to other states.

Thermal hot spots District, State Operating Being built In the pipeline Number of new plants
Coast around Krishnapatnam port Nellore, AP 0 12,260 8460 10
Samal reservoir and downstream on Brahmani river Angul, OR 4420 2250 11,710  
Dhenkanal, OR 0 5420 4820 15
Jharsuguda, OR 1620 4400 2660  
Raigarh, CG 1300 6360 13,040  
Hirakud reservoir and upstream on the Mahanadi Janjgir-Champa, CG 0 8400 22.460  

Orissa, with similar ambitions, has signed MOUs with 30 private companies for generating 38,000 MW of power, over and above the power generated in state and public sector plants. Some of these projects are in the construction phase, the rest in the pipeline. Andhra Pradesh, too, wants to be a "power hub", using imported coal at its coastal power plants.

In these "power hubs" of the future, the projects (under construction and in the pipeline) are concentrated within a few compact geographical regions. Private producers, given the freedom, will invariably pick the locations for thermal plants suited to produce electricity at the lowest cost. The stretch of the Brahmani river in Orissa near Talcher and the stretch of the Mahanadi river just upstream of the Hirakud reservoir are extremely popular, and the reasons are not too far to seek. Coalfields are located nearby, the water from the rivers and reservoirs can be accessed for meeting the large cooling water requirements of the thermal plants, and the areas are well connected by National Highways and railways.

The reasons for the concentration of plants around Krishnapatnam port in Andhra Pradesh are similar. The port will be able to handle large bulk cargo vessels that will bring in coal imported from Indonesia and other countries. Water for cooling can be withdrawn from the sea or from creeks, and road and rail connectivity is certainly not a problem in Nellore.

Environmental consequences

While private producers will have their preferences, should the state not take into account the interests of local communities before agreeing to locations?

Thermal power plants using coal are known to be extremely polluting. Environmental consequences arise from the transport of coal to the plants, the emissions from the smoke stack, the storage and disposal of the ash from the burning of coal, the continuous withdrawal of a large quantity of water for cooling and the disposal of wastewater and effluents. The emissions of poisonous gasses and suspended particulate matter are not only hazardous to human health but, in high concentrations, toxic for vegetation.

The ash content in Indian coal is very high and its safe disposal has always been a major problem. Stored in ponds, the ash poses a hazard to surface water sources from runoff and to ground water from percolation. While environment regulations call for disposing the ash in dry form, all coal based thermal plants are equipped with ash ponds supposedly for emergency use. The fact is that even existing plants are unable to dispose off their fly ash in dry form to other users.

The industrial area of Angul-Talcher on the Brahmani River is "critically polluted" according to a recent IIT Delhi study. The thermal plants and other industries use fresh water from the Brahmani and release wastewater, industrial effluents, and overflows from ash ponds back into the river. Downstream, not only is the river biologically dead, the pollution has spread to other water bodies, severely affecting villages near the river.

Despite many representations from communities along the riverbanks, the Orissa government has been unable to stop the pollution of the river. This failure has not deterred it from supporting 14 new thermal plants along the Brahmani in Angul district and downstream.

The adjacent districts of Janjgir-Champa and Raigarh in Chattisgarh have the most deadly concentration of thermal power plants coming up - 40 plants with a humongous 50,000 MW capacity! The Chattisgarh government plans to construct a chain of seven barrages on the Mahanadi River upstream of the Hirakud dam to ensure water supply to these plants.

The dam, Nehru's flagship project, has been in the news in recent years for the wrong reasons. Farmers in Orissa have been protesting against the diversion of increasing quantities of water from the dam to industry even as the annual inflows have been falling. Not to be left behind, the Orissa government has promised water supply for several thermal projects from Hirakud.

The large number of power projects intending to draw water from the Mahanadi has not escaped the attention of the Expert Appraisal Committee of the MOEF. However, they have been content to sound a warning and have not denied environmental clearances to projects.

The electricity policy has certainly succeeded in attracting private capital into power generation. However, the scenario unfolding in the thermal power sector throws up several issues. Thermal power plants clearly come at a great cost to the communities where they are located. It is therefore incumbent on the state to ensure that generation capacity is developed only in step with need. State governments should also ensure that thermal plants are not bunched in certain areas causing severe environmental distress to them. And, as a precursor to all that, existing plants should be made to obey the environmental regulations before new ones are allowed in the same place.