Scope for Growth

Realising the country’s biomass potential

 

India is witnessing significant growth in terms of renewable energy capacity addition. While solar and wind power have been in the limelight, biomass has not experienced similar interest despite being widely available. In fact, it also has the potential to offer employment opportunities in rural areas.

Biomass is used to produce electricity through thermochemical processes such as combustion, gasification and pyrolysis, with the first being the most common one. In this process, biomass is burnt in a highpressure boiler to generate steam, which in turn runs a turbine to generate electricity. If the heat energy from the system is partly or fully used for other heating activities, the system is called a cogeneration system. In India, the cogeneration route is used mainly in industries such as sugar, which uses bagasse as a fuel for its cogeneration systems. The plant load factor of biomass and cogeneration projects ranges from 45 to 55 per cent and 70 to 75 per cent respectively.

As of December 31, 2016, the cumulative installed capacity of biomass and cogeneration-based projects was 7,900 MW. Of this, biomass projects are mainly located in Andhra Pradesh, Chhattisgarh, Maharashtra, Madhya Pradesh, Gujarat and Tamil Nadu, and cogeneration projects are located in Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Uttar Pradesh. The current availability of biomass is estimated at about 500 mmtpa (million metric tonnes per annum). As per studies sponsored by the Ministry of New and Renewable Energy (MNRE), there is about 120 to 150 mmtpa of surplus biomass available from agricultural and forest residues. In all, the total potential of biomass is estimated at about 18,000 MW. This is besides the 7,000 MW of capacity that can be generated through bagasse cogeneration in the country’s 550 sugar mills.

In order to promote biomass and co-generation-based projects, the MNRE is implementing programmes such as Promotion of Grid Interactive Biomass Power and Bagasse Cogeneration in Sugar Mills, and Programme on Energy from Urban, Industrial and Agricultural Wastes/Residues during the Twelfth Five Year Plan. In addition, the projects are eligible for financial incentives (see table).

 

Challenges

While the government offers financial incentives for a variety of projects, the segment still faces a number of challenges. The key ones are as follows:

  • The segment lacks a reliable and sustainable biomass supply chain at a reasonable price.
  • There is a need for an efficient market mechanism for biomass collection, processing, transportation and safe storage.
  • The cost of capital is high.
  • Inadequacy to raise finances from financial investors for both setting up projects and meeting the working capital requirement.
  • Inadequate feed-in tariff in some states.
  • Delayed payments by discoms.
  • Inordinate delays by the state electricity regulators in signing power purchase agreements (PPAs).
  • Unavailability of grid for evacuation.
  • Lack of single-window clearance for project approvals in many states.
  • Unavailability of land and lack of skilled human resources that can run the power plant at an optimal rated capacity.

Conclusion

The central government has set a target to achieve 10 GW of biomass capacity by 2022. In order to ensure that the segment sees a capacity installation of over 2.1 GW in the next six years, the state and central governments have to undertake a number of measures to address the challenges faced by the segment. These include timely payments and signing of PPAs, providing adequate grid availability for power evacuation and financing options to cover high cost of capital. In addition, the state electricity regulatory commissions should set tariffs, that are in line with those set by the Central Electricity Regulatory Commission. If undertaken in an appropriate manner, such steps can lead to effective realisation of the country’s vast biomass and cogeneration potential.

By Jyoti Yadav

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