Proposed Revision Of Coal Plant Emission Control Compensation Mechanism

The Central Electricity Regulatory Commission (CERC) is proposing revisions to the compensation mechanism for coal-based power plants installing emission control systems. This draft order was issued on July 3, 2024.

It may be recalled that on August 13, 2021, CERC issued an order outlining compensation for power plants complying with stricter emission standards set by the Ministry of Environment, Forest & Climate Change.

The CERC had recognized the need for a mechanism to determine the compensation for installation of Emission Control Systems by the thermal generating stations in compliance of Revised Emission Standards notified by the Ministry of Environment, Forest & Climate Change, Government of India (MoEF&CC).

These Emission Control Systems were notified by the Environment (Protection) Amendment Rules, 2015 on December 7, 2015 and further amended on October 19, 2020 and April 1, 2021 in respect of the thermal generating stations.

This initial mechanism had limitations due to lack of available data.

Reasons for Revision

  1. Challenges faced by power companies in financing emission control systems.
  2. Technological advancements in the field.
  3. Availability of operational data.
  4. Recent regulations revising the framework for installing, financing, and operating these systems.

Therefore, CERC has proposed revisions to the compensation mechanism in a draft order.

Proposed Revisions

The CERC is of the view that the existing compensation mechanism applicable to tariff based competitive bidding projects needs to be revisited on the following aspects:

(a) Recovery of Depreciation
(b) Operation & Maintenance expenses
(c) Cost of debt & equity of emission control system and
(d) Interim Relief in the form of Provisional Tariff

It has therefore issued Proposed Revised Compensation Mechanism and Stakeholders and interested parties are invited to submit comments, suggestions, or objections by July 24, 2024.

How to Submit Feedback

  1. Electronically via the SAUDAMINI Portal for registered users.
  2. By email to and
  3. By mail to Secretary, CERC, New Delhi-110029.

This revision process reflects the recognition of the necessity of balancing the need for cleaner energy production with the financial viability of power generation companies.