How India's FGD Shift Will Cut Electricity Cost By 25-30 Paise Per Unit

The government's move to ease sulphur emission rules for most coal-fired power plants strikes a delicate balance between costs, climate and compliance and is expected to cut electricity costs by 25-30 paise per unit, officials said on Sunday.

In a gazette notification, the government has restricted the 2015 mandate of installing flue-gas desulphurisation (FGD) systems that remove sulphur from a power plants' exhaust gases, only to plants located within 10 kilometres of cities with a population exceeding one million.

Plants in critically polluted areas or non-attainment cities will be evaluated on a case-by-case basis while all other plants -- accounting for nearly 79 per cent of India's thermal power capacity -- are exempt from mandatory FGD installation.

The notification stated that the decision was made following a detailed analysis by the Central Pollution Control Board, which found increased carbon dioxide emissions resulting from the operation of existing control measures.

Industry officials said this would lead to differentiated compliance based on proximity to urban populations and the sulphur content of the coal used.

The new framework has been finalised after extensive deliberations and multiple independent studies. The decision follows a series of studies by IIT Delhi, CSIR-NEERI and the National Institute of Advanced Studies (NIAS), which found that ambient sulphur dioxide levels in most parts of India are well within the National Ambient Air Quality Standards (NAAQS).

Measurements across multiple cities showed sulphur oxide levels ranging between 3 and 20 micrograms per cubic meter, significantly below the NAAQS threshold of 80 micrograms per cubic metre.

Officials said studies had also questioned the environmental and economic efficacy of a universal FGD mandate in the Indian context.

Indian coal typically has a sulphur content of less than 0.5 per cent, and due to high stack heights and favourable meteorological conditions, dispersion of SO2 is efficient.

The NIAS study warned that retrofitting FGDs nationwide would add an estimated 69 million tonnes of CO2 emissions between 2025 and 2030 due to increased limestone mining, transportation, and power consumption.

Industry officials said the relaxed norms are expected to bring down the cost of electricity by 25-30 paise per unit. That benefit, they said, will ultimately flow to consumers.

In a high-demand, cost-sensitive economy, the impact could be significant -- helping state discoms contain tariffs and reducing the subsidy burden on governments.

The financial burden of mandatory FGD retrofitting was previously estimated at over Rs 2.5 lakh crore, or Rs 1.2 crore per MW, with installation timelines of up to 45 days per unit.

Several power producers had warned that this would not only raise costs but also jeopardise grid stability during peak seasons.

Industry executives welcomed the decision.

"This is a rational, science-based move that avoids unnecessary costs and focuses regulation where it is most needed," said a senior executive at a leading public sector utility. "More importantly, it will help keep electricity affordable."

Officials stressed that the government remains committed to environmental protection, but with a smarter lens.

"This is not a rollback. It is a recalibration based on evidence," said a senior government official. "Our approach is now targeted, efficient and climate-conscious."

An affidavit incorporating these findings will be submitted shortly to the Supreme Court in the MC Mehta vs Union of India case, where FGD enforcement timelines have been under judicial scrutiny.

ICP Keshari, Director General of Power Producers Association (PPA), hailed the decision as "good and consumer-centric". The move will benefit power plants based on domestic coal, he said.

Indian coal, he said, does not have any big sulfur oxides (SOx) emission problem and it is only the particulate matter, which is of concern. The new FGD norm identifies the problem and does not unnecessarily load cost on consumers.

"They have not exempted anyone... wherever it is needed, it will be done and where not, it won't be," he said.