Shutting down old coal-based power plants and freezing those under construction can save over Rs 1.45 lakh crore at a time when electricity demand has been hit due to COVID-19, a report said. According to the report by research organisation Climate Risk Horizons released on Thursday, this move will also improve the financial health of the rest of the coal fleet. With lack of power demand due to COVID-19, and difficulties in revenue collection, power distribution companies’ overdues to generators have increased to Rs 114,733 crore, it pointed out.
The report estimates that replacing electricity from older coal plants with cheaper renewable sources will reduce the gap between cost of supply and revenue generation for distribution companies (discoms). COVID-19 has destroyed electricity demand and caused an economic contraction of 23.9 per cent. Making continued investments in outdated technologies (is a) financial suicide. State governments and discoms should take advantage of the demand slump to tap into savings that will accrue from retiring the oldest, least efficient plants and replacing them with cheaper renewable energy, said Ashish Fernandes, the lead author of the report.
