The Centre's recent decision to ease the mandatory requirement for flue gas desulphurisation (FGD) systems at most coal-based thermal power plants is expected to result in significant savings. According to a report released Friday, this move could help reduce annual tariff expenses by ₹19,000 crore to ₹24,000 crore, translating to a reduction of ₹0.17 to ₹0.22 per unit of power.
This exemption primarily benefits Category C plants, which collectively account for 145 GW of capacity. Given that FGD installation involves a capital investment of ₹0.6&ndash;0.8 crore per MW, the move will lower capex needs by ₹87,000 crore to ₹1.16 lakh crore, according to CareEdge Ratings.
Sabyasachi Majumdar, Senior Director at CareEdge Ratings, stated that removing the FGD obligation from Category C plants is a significant positive step for thermal independent power producers (IPPs), as these projects make up 80 percent of the capacity yet to be equipped with FGDs. The exemption is also expected to prevent a potential spike in consumer tariffs that would have been introduced to recover the FGD costs.
Last week, the Ministry of Environment, Forest and Climate Change finalized the revised FGD policy. The new compliance framework focuses on plant location and coal quality. Only power plants situated within 10 kilometers of cities with a population of over one million are now required to install FGDs.
Coal-based power continues to dominate India&rsquo;s electricity generation landscape. While it constitutes only 47 percent of the installed capacity, it generates about 75 percent of the country&rsquo;s power due to higher plant load factors compared to renewable and hydro sources.
The report also highlights that despite a growing focus on renewable energy and a slowdown in new coal plant additions, coal is expected to remain a key contributor. By FY2030, coal plants are projected to generate about 60 percent of India&rsquo;s electricity, supplying nearly 1,233 billion units.
According to Shailendra Singh Baghel, Associate Director at CareEdge Ratings, the revised policy strikes a balance between reducing costs for thermal power producers and maintaining environmental standards, with FGD mandates retained for Category A and B projects. [Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]

FGD Waiver to Cut Coal Tariffs by ₹24,000 Crore

Centre eases FGD rules for thermal plants, lowering power costs and capex burden

FGD Waiver to Cut Coal Tariffs by ₹24,000 Crore

Centre eases FGD rules for thermal plants, lowering power costs and capex burden

July 18, 2025 | 14:12 IST