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New Thermal Power Clusters

The currently planned expansion of thermal power generation capacity works out to 1.3 times the existing generation capacity. The geographic distribution of this expansion is highly uneven, showing clustering in certain coal-mining states, and further within districts and regions. By backing independent power producers through comprehensive memoranda of understanding, state governments have forsaken the communities that will bear the environmental, health and livelihood impact of these thermal clusters.


to set up a plant. On the successful conclu-New Thermal Power Clusters sion of the first stage of scrutiny, they are provided the terms of reference (TOR), a list of environmental issues that have Kannan Kasturi to be evaluated for the Environmental

The currently planned expansion of thermal power generation capacity works out to 1.3 times the existing generation capacity. The geographic distribution of this expansion is highly uneven, showing clustering in certain coal-mining states, and further within districts and regions. By backing independent power producers through comprehensive memoranda of understanding, state governments have forsaken the communities that will bear the environmental, health and livelihood impact of these thermal clusters.

Kannan Kasturi ( is an independent researcher and writes on law, policy and governance.

hermal power – currently accounting for 65% of overall installed capacity in India1 will continue to be the mainstay for power in the coming years. The Central Electricity Authority (CEA) expects that about 80% of the new capacity addition during the Twelfth Plan will be thermal (CEA 2009:36).

The prevailing policy environment has led to an explosion of interest in thermal power generation in recent years. Evidence of this is available in the number of memoranda of understanding (MOU) that state governments have signed with private companies and in the number of new applications the Ministry of Environment and Forests (MoEF) gets every month for environmental clearance. The list of companies planning or building thermal power plants is not limited to large business houses such as Tata, Reliance, Vedanta and Adani. It also includes a number of unknown entrepreneurs with no experience of any large industrial enterprise, let alone power generation. Private investors clearly sense a great opportunity here.

How much thermal capacity is actually under development? In the past, the CEA, as the body responsible for planning and monitoring power generation in the country, would have provided the figures. With the private sector playing an increasing role in new generation capacity, the CEA has become cagey about figures. It is, however, possible to obtain estimates from a different source, the MoEF.

Estimating Capacity Development

Setting up a thermal power plant based on the common fuels – coal, lignite and gas – with capacity equal to or greater than 500 megawatts (MW) requires clearance from the MoEF. The clearance is broadly a twostage process.2 The MoEF maintains a public record of projects clearing each stage. Project promoters approach the ministry after reaching an understanding with the government of the state where they intend

october 1, 2011

I mpact Assessment (EIA) of the project.

During the second stage, the EIA is carried out and a public consultation is held with the people affected by the project. Environmental clearance is subsequently granted after a detailed scrutiny of the EIA and other project documents. Environmental clearance represents a significant milestone for a thermal project, for at this stage, the project site has been identified, agreements exist with the state government for provision of land and water, the formal consent of the people of the area has been obtained for the project and most importantly, the linkages for fuel are in place. Specifically, if the project intends to use domestic coal, it has either been a llotted captive coalfields or been provided linkage with a coal-mine. Construction activity can begin as soon as land acquisition is complete.

Counting only projects that have a capacity of 500 MW or above, data from the MoEF indicates that since 2006, environmental clearance has been given to nearly 200 projects for generating close to 2,20,000 MW of power.3 Thermal plants take a minimum of five years from the start of construction to get their first units operational and two to three years more to get additional units on stream. In the normal course, this approved capacity should become available for electricity generation between 2011 and 2019. To put this number in perspective, the total existing electricity generation capacity in the country – from thermal, nuclear, hydro, and other sources – was just over 1,76,990 MW at the end of June 2011 (CEA 2011). The thermal generation capacity expansion underway works out to 1.3 times the total generation capacity in the country.

How much additional electrical generation capacity does India need? While the Planning Commission exercise for the Twelfth Plan is yet to conclude, reports suggest that the target will be around 1,00,000 MW from all power categories (DNA 2011). Assuming that 80% of this

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new generation capacity is thermal and liberally extrapolating for the two years beyond the Twelfth Plan, one arrives at a figure of 1,20,000 MW of new thermal capacity until 2019. Measured against this, the 2,20,000 MW thermal capacity under d evelopment indeed seems on the high side.

Of course, not all of this capacity may materialise in this time frame. There could be problems with land acquisition, financing or project management delays. Promoters may even decide to go slow for other reasons. Nevertheless, the fact remains that development activity for these projects has been unleashed.

Thermal Power Hubs

The thermal capacity addition underway across India is unevenly distributed. The top six coal-mining states – Jharkhand, Orissa, Chhattisgarh, West Bengal, Madhya Pradesh (MP), and Andhra Pradesh (AP) – account for close to half of the capacity addition. Tamil Nadu, Maharashtra and Gujarat account for a third. The remaining is spread across Uttar Pradesh (UP), Bihar, Haryana, Rajasthan, Karnataka, Punjab, Delhi and Tripura. The focus of the rest of this article is on the features of thermal power development in the first group of states.

Table 1 shows the total power generation capacity currently available from all sources and the thermal capacity addition in various stages in the top coal-mining states. Projects “under development” are those for which the MoEF has given environmental clearance; projects “in the pipeline” only have the TOR for the EIA. The project statistics span the different types of projects – public sector and state and central government promoted, private sector projects based on competitive bidding and Independent Power Producers (IPPs) projects. They include both new and expansion projects. The ratio of the thermal generation capacity under development to the generation capacity from all sources currently available to the state is presented in the column headed B/A.

Coal-rich states, with the exception of West Bengal, are adding between 2.2 and

4.7 times their existing generation capacity in thermal power alone, against the all-India average of 1.3, a clear indication that capacity is being developed for export

o utside this region. Chhattisgarh, for i nstance, has a long-stated policy of becoming a power hub, using its large coal d eposits to competitive advantage. In line with this policy, the state government has signed MOUs with 61 would-be IPPs to generate more than 50,000 MW of power. Most of the other coal-rich states have also signed numerous MOUs.

A typical MOU promises the IPP help in acquiring land, meeting water requirements, conducting the public hearing mandated under the Environmental Protection Act, facilitating clearances from state and local bodies and pushing the case of the company with the central

Table 1: Thermal Generation Capacity Addition in the Top Coal-Mining States

a uthorities for coal linkages and other central clearances.4 Companies with projects in the pipeline have, except in West Bengal and AP, the backing of state governments through MOUs.

At over 2,00,000 MW, the thermal capacity addition from the projects in the pipeline is huge. However, the question arises whether one ought to attach much significance to these projects. To get environmental clearances, these projects will need fuel linkages and that can be a major problem today.

With the exception of the coastal regions of AP, where imported coal and piped gas are options, the viability of projects in these states depends on the availability of the relatively inexpensive local coal. For that they have to approach the central government. Given that the increase in coal production is not keeping pace with the increase in coal-based thermal generation capacity, the Ministry of Power has sought to prioritise the allocation of coal linkages. For IPPs seeking coal linkage, progress in acquisition of land for the plant will count towards higher priority.5 Thus government policy is driving IPPs to acquire land even before obtaining environmental clearance.

The projects in the pipeline, backed as they are by the state governments, therefore need to be taken seriously for the immediate footprint they will leave on the ground even if plant construction is some years away.

Thermal Clusters

State Current Generation Thermal Generation Capacity Addition Thermal projects in the coal-mining states Capacity (all sources) MOU with IPPs Under Development In the Pipeline

are concentrated in certain districts. For

MW (A) Number of IPPs MW Number of Projects MW (B) B/A Number of Projects MW

select districts, Table 2 shows the genera-

Chhattisgarh 4,987 61 50,000 20 23,240 4.7 39 41,830 AP 15,575 28 33,665 2.2 30 51,440 tion capacity of thermal plants that are

Jharkhand 2,509 24 40,000 11 10,890 4.3 16 12,100 in operation, the capacity under develop-

Orissa 5,379 30 38,000 11 14,285 2.7 23 34,250 ment and capacity expansion and new

MP 8,476 49 67,000 15 20,430 2.4 40 51,790

West Bengal 8,567 12 7,420 0.9 9 9,780

Total 45,493 97 1,09,930 157 2,01,190

Source: For current generation capacity, see CEA (2011), for MOU information, see news reports; for thermal generation capacity addition, see MoEF Environmental Clearance Database.

Table 2: Districts with the Highest Coal-Based Thermal Generation Capacity

District, State Operational Under Expansions Total New Plants in the Pipeline Total MW(A) Development in the Pipeline MW MW (B) MW (C) Number MW (A+B+C) Number MW (D) (A+B+C+D)

Nellore, AP 0 12,260 3,300 7 15,560 3 5,160 20,720

Singrauli, MP 3,260 15,630 660 8 19,550 1 660 20,210

Korba, Chhattisgarh 4,980 5,550 1,320 8 11,850 1 500 12,350

Raigarh, Chhattisgarh 1,300 5,760 2,500 7 9,560 9 11,920 21,480

Janjgir-Champa, Chhattisgarh 0 8,400 0 5 8,400 21 22,970 31,370

projects that are in the pipeline. The past record suggests that expansion projects in the pipeline will get environmental clearance and so these have been clubbed with projects under development.

Within these districts, the projects tend to cluster in locations that will presumably minimise operational costs. All the plants in Nellore district, for example, are located near Krishnapatnam port, which will berth the large cargo ships transporting the imported coal. They will meet their cooling

Source: MoEF Environmental Clearance Database. water requirements from the sea or, in

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some cases, from inland creeks nearby. In Janjgir-Champa and Raigarh, all the plants are located along the Mahanadi, from where they will draw their cooling water. The railway and national highways, which will be used to transport the coal, are close enough.

The effects of such a deadly concentration of coal-based thermal power plants are likely to prove devastating to the communities in the midst of whom they are coming up. The loss of farming land and commons will be felt first. The CEA estimates land requirements for pithead thermal plants to range from 0.6 to 1.1 acre per MW. Taking Janjgir-Champa as an example, and assuming a land requirement of one acre per MW, the land needed for all the planned plants works out to 2.8% of the area of the district!6 Twenty-one of the 26 plants planned in the district do not have environmental clearances yet. However, land acquisition is already underway,7 with government policy linking progress in land acquisition with allotment of coal linkage.

Once the plants become operational, the surrounding communities will face threats to their health and, where there is agriculture, to their livelihood. Thermal power plants using coal are extremely polluting: environmental damage arises 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 large quantities of water for cooling and the disposal of wastewater and effluents. Indian coal has high ash content and a practical solution is yet to be found for its safe disposal.8

Returning to the subject of clusters, if preferred locations for thermal power plants are mainly related to geography and connectivity, one should see clustering across district boundaries. Table 3 shows certain regions spanning districts and even state boundaries, with large c oncentrations of thermal plants.

The Singrauli region, centred on the reservoir of the Rihand dam and composed of parts of Singrauli district of MP and Sonebhadra district of UP will be the largest thermal cluster in India in the near future, hosting 14 thermal plants with a total capacity of about 33,000 MW. Incidentally, this area with its six operational plants

Table 3: Regions with Large Concentrations of Thermal Power Plants

Region Districts Plants in Operation or New Plants Total Under Development in the Pipeline Number MW

Number MW Number MW

Samal reservoir and downstream Angul, Dhenkanal, on Brahmani river Orissa 9 14,370 8 14,070 17 28,440

Singrauli area Singrauli, MP; Sonebhadra, UP 14 33,320 1 5,180 15 38,500

Hirakud reservoir and upstream Jharsuguda, Orissa; Raigarh, on Mahanadi Janjgir-Champa, Chhattisgarh 16 26,675 30 34,890 46 61,565

Source: MoEF Environmental Clearance Database.

and 12,000 MW capacity is already marked as critically polluted.9

The geography of regions with large thermal plant concentrations provide pointers to potential large-scale environmental effects. The plants in Raigarh and Janjgir-Champa districts of Chhattisgarh are located along the Mahanadi. The Chhattisgarh government has announced plans to construct a chain of seven barrages on the river upstream of Hirakud dam to ensure supply to these plants (Indo Asian News Service 2011). Several thermal projects in Jharsuguda district of Orissa are also slated to withdraw water from the Hirakud reservoir.10 Studies are yet to be carried out on the sustainability of using Mahanadi waters for so many power plants and the effects this may have on other water users downstream.


Current electricity policy has turned thermal power generation into a lucrative proposition. Generation capacity is coming up in dense clusters in the main coal-mining states in locations chosen to minimise running costs. While many of these planned plants may not deliver on the promise of power because of nonavailability of domestic coal, they are already leaving their imprint on the ground. Given the drastic negative fallout from coal-based thermal power plants for the health and livelihood of communities where the plants will be located, one would expect government to intervene on behalf of these communities.

These clusters are, however, coming up with the full support of the state governments. The central government’s efforts to regulate the location of power plants are limited to ensuring that the rules and procedures laid down for obtaining environmental clearance are followed. It has refrained from taking any decisive action to stop clustering of thermal plants. One can only conclude that the government – both in the states and at the centre – has forsaken the communities who will bear the brunt of these thermal clusters in favour of power producers.



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1 Inferred from CEA (2011). 2 The environmental clearance process is described in MoEF (2006): “Environmental Impact Assessment Notification, 2006”, Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii). Viewed on 15 September 2011: http://envfor.nic. in/legis/eia/so1533.pdf

3 These numbers have been arrived at by aggregating data from the MoEF Environmental Clearance Database, Last viewed on 19

September 2011: 4 The model for the MOU that Chhattisgarh signs with companies is available at departments/sipb/Model%20Mou.pdf, last accessed 5 September 2011. 5 The coal linkage policy for Twelfth Plan projects is laid out in a Ministry of Power office memorandum of 21 October 2009. IPPs wanting coal linkage are assigned priority based on the points they score on several criteria. Progress with land acquisition is the most important criteria with 50% weight. Viewed on 4 September 2011: http://

linkage_policy_for_12th_plan_projects.pdf 6 For district area, see http://janjgir-champa.nic. in/aboutdistrict.htm (Last viewed on 19 September 2011). 7 See Sharma (2011) for a report on land acquisition for a thermal project that has not yet received environmental clearance.

8 See Sethi (2011) for the problems faced by India’s largest power producer, National Thermal Power Corporation (NTPC), in handling fly ash.

9 See MoEF office memorandum, 13 January 2010. Viewed on 19 September 2011: divisions/iass/circ_EP_index.pdf

10 Water sourcing details for thermal projects granted TOR are available in the MoEF Environmental Clearance Database.


CEA (2009): “Key Inputs for Accelerated Development of Indian Power Sector for 12th Plan and Beyond”, Base paper, “International Conclave on Key Inputs for Accelerated Development of Indian Power Sector for 12th Plan and Beyond”, 18-19 August, New Delhi, viewed on 4 September 2011: www.cea.nic. in/more_upload/base_baper_int_conclave.pdf

– (2011): “Monthly All-India Installed Generation Capacity Report”, June, viewed on 4 September 2011: inst_capacity/jun11.pdf

DNA (2011): “1,00,000 mw: Sushil Kumar Shinde Says That’s the 12th Five-Year Plan Goal”, Daily News and Analyses, 22 January, viewed on 19 September 2011: report_100000mw-sushil-kumar-shinde-saysthats-the-12th-five-year-plan-goal_1497521

Indo Asian News Service (2011): “Chhattisgarh to Build Seven Barrages on Mahanadi”, Yahoo News India, 15 January, viewed on 19 September 2011:

Sethi, A (2011): “Power Plants Insulated from Protests”, The Hindu, 7 February, viewed on 5 September 2011: 2011020759200200.htm

Sharma, S (2011): “Chhattisgarh Minister’s Son Buys Farmland for Videocon”, Times of India, 23 June, viewed on 5 September 2011: http://articles. india/29726774_1_tribal-land-tribal-farmerschhattisgarh.







october 1, 2011 vol xlvi no 40

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