Water scarcity has not only hit the farming sector, but also coal power companies, which have suffered an estimate revenue loss of Rs. 2,400 crore in the first five months of 2016, according to a report prepared by Greenpeace India.
The crisis in large parts of the country has cost coal power companies nearly seven billion units in electricity generation. The Greenpeace findings have been independently reviewed by equity analysts at the research firm, Equitorials. “The coal power sector consumes 4.6 billion cubic metres of water per year, which could have met the most basic needs of 251 million people. These figures will be more than double if all proposed coal plants are built. We already know that the expansion of coal power plants will increase air pollution and deforestation; this data shows us that it will also worsen the water crisis, posing a financial risk to lenders and investors in the coal power projects,” said Ravi Chellam, executive director of Greenpeace India.
The Greenpeace analysis is based on daily outage reports from the Central Electricity Authority, and Right to Information replies from the National Thermal Power Corporation (NTPC). Water shortages have led to shutdowns of coal power plants in West Bengal, Karnataka and Maharashtra. NTPC, Adani Power, GMR, Mahagenco and Karnataka Power Corporation are among the companies affected.
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Repeated shutdowns at NTPC’s Farakka plant in West Bengal between February and April resulted in lost generation of over 1 billion units of electricity, translating into a revenue loss of Rs. 390 crore. Similarly, shutdowns at Adani’s Tiroda plant in Maharashtra in May have cost the company 570 million units, with a value of nearly Rs. 200 crore. Mahagenco’s Parli plant in Beed district has been shut down for a large part of the last four years due to water shortage.
The Greenpeace analysis includes case studies of two regions where water scarcity poses a financial risk to new plants – Solapur in Maharashtra and Krishna basin in Karnataka. NTPC’s Solapur plant is facing commissioning delays due in part to uncertainty over water supplies. In Karnataka’s Krishna basin, NTPC’s Kudgi plant and KPCL’s Raichur plant were affected by lack of water this summer.
Jai Sharda, founder of Equitorials, said, “It’s clear that water scarcity can have a real impact on the profitability of coal power projects. Lenders and shareholders should look carefully at this; the power sector cannot afford more stranded projects or non-performing assets.”
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Shripad Dharmadhikary from Manthan Adyayan Kendra cautioned that on current trends, water conflicts between industry and agriculture are bound to multiply. “Coal power plants are already in conflict with other water users, especially in Maharashtra. Despite this, we have the Centre and the State government continuing to give permits for more coal plants, even in water-stressed areas. What is of concern is that the sitting policy for thermal power plants, an outdated document since 1987, does not even consider water stress as a criteria when deciding the location of a coal project.”