In India, the biomass segment, including bagasse-based cogeneration, accounts for about 14 per cent of the total installed renewable energy generation capacity of 8,181.7 MW. The country’s biomass-based power generation potential stands at 18,000 MW and an additional 5,000 MW of power could be generated through bagasse-based cogeneration from more than 500 sugar mills scattered across the country. Punjab holds the highest biomass potential of 3,172 MW, followed by Maharashtra (1,887 MW) and Uttar Pradesh (1,617 MW). The states currently leading biomass power projects are Chhattisgarh, Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra, together accounting for over 70 per cent of the total installed capacity base of biomass-based power projects in India.
However, the growth of biomass as a source of power generation has remained sluggish due to the lack of strong regulatory support, unavailability of quality raw materials at affordable prices, poor logistical facilities, inadequate storage infrastructure, improper handling at the pre-processing stage, and ineffective maintenance and payment recovery practices. These issues, along with a stagnant policy and regulatory framework, make the bioenergy industry less attractive as compared to the solar and wind energy segments.
Current status
Over the past four years, capacity additions in the biomass segment have been constantly declining, from 307.7 MW in 2013-14 to 251.6 MW in the subsequent year and only 171 MW in 2015-16 to reach a cumulative capacity of 4,161.9 MW. The Ministry of New and Renewable Energy (MNRE), in its latest statistics on the renewable energy sector, has recorded the cumulative installed biomass capacity of 8,181.7 MW for 2016-17. According to MNRE officials, the seeming discrepancy in the figures published is currently under review. They also point out that while the cumulative capacity would be in the given range, the anomaly seems to be in the capacity addition figures given earlier, as the states could have been quoting the exportable capacities instead of the installed capacities. Dr G.C. Datta Roy, adviser, Development Environergy Services Limited, agrees that the irregularity could be an information gap as significant bagasse-based cogeneration capacity has been added over the years.
As of March 2016, Maharashtra had the highest installed capacity of biomass projects at 1,220.78 MW, followed by Karnataka at 872.18 MW and Uttar Pradesh at 842 MW. Other states with significant capacities are Tamil Nadu (626.9 MW), Andhra Pradesh (380.75 MW) and Chhattisgarh (279.9 MW). Besides the traditional states, Punjab has emerged as an attractive destination to set up these projects. The state has about 2 GW of biomass potential, of which only 155.5 MW had been developed as of March 2016. The state government is in talks with various investors to harness its untapped biomass potential.
Capital costs
Biomass-based power plants are highly cost intensive as compared to other renewable energy plants. However, even as capital costs continue to fall for solar and wind, little has happened in this segment. The capital costs for biomass-based plants are location specific. To address the vast differential in biomass installation costs across states, the Central Electricity Regulatory Commission (CERC) decided to fix the benchmark cost through amendments to the tariff regulations of 2012.
The CERC has announced separate state-wise tariffs for various biomass fuels and technologies for 2017-18. For 2017-18, the capital costs have been maintained at 2016-17 levels. For rice straw and juliflora projects with water-cooled condensers, the capital cost has been fixed at Rs 61.08 million per MW, and for those with air-cooled condensers it is 65.22 million per MW. Meanwhile, for other projects with water and air condensers, capital costs have been fixed at 55.9 million per MW and 60.04 million per MW respectively. Similarly, the 2016-17 capital costs for bagasse-based cogeneration projects have been retained for 2017-18 at Rs 45.27 million per MW.
Challenges
Besides the northern states of Punjab, Haryana and Rajasthan, no other state has shown any noticeable interest in developing biomass-based power capability, particularly in comparison to the targets and policies defined for the solar and wind energy segments. There are multiple factors that prevent the growth of biomass as a popular source of power.
Feedstock
While solar and wind power systems do not require raw material, biomass plants require feedstock to generate power. Over the years, the commercialisation of crops and crop residue has affected the feedstock availability in the segment. Rice husk was the first such feedstock to be fully commercialised followed by cotton stock and mustard residue. Paddy straw in north India, and juliflora and other minor energy-rich crops in other parts of the country are non-commercial crops, which are now increasingly being used as feedstock. Paddy straw has emerged as a popular option but only in the northern states as it is considered to be bad fodder there, whereas it is used as good fodder in the rest of the country, preventing it from being used as a regular feedstock.
Logistics
Existing biomass-based power plants are also finding it increasingly difficult to maintain their feedstock at optimum levels as the window for procuring the material for the whole year is available for a short period of 35-40 days after the harvesting season, creating a physical and logistical challenge for plant owners. Biomass players lack the financial muscle to scale up logistical operations, which continues to be a constant challenge for the segment.
Finance
While Maharashtra has been a leader in the biomass segment, it ran into financial troubles in the past year due to its dependence on cooperatives for biomass-based power generation. These problems were resolved in due course through financial recourses such as public-private partnership and project-based finance models. Similar models were applied to promote the technology in states such as Andhra Pradesh and Karnataka. However, there is a lack of competitive capital in this segment due to high tariffs and low returns.
Biofuels
The biomass segment is no longer competitive given the steep fall in wind and solar tariffs. Therefore, the use of biomass is likely to shift increasingly towards the production of biofuels to be blended with conventional petrol. To this end, in April 2016, the Ministry of Petroleum and Natural Gas permitted oil marketing companies (OMCs) to increase the ethanol blending limit to 10 per cent in petrol to achieve 5 per cent ethanol blending across the country. In order to improve the availability of ethanol and encourage its blending, the government has fixed the delivered price of ethanol in the range of Rs 48.50-Rs 49.50 per litre.
OMCs are also investing significantly in research and development (R&D) for the biofuels application. Hindustan Petroleum Corporation Limited has recently issued a tender to determine the logistics of paddy straw for one of its pilot biofuel projects.
Outlook
The use of biomass as a source of power generation seems to be declining as many states have withdrawn support programmes for the technology. Achieving the 10 GW biomass target by 2022 would be difficult unless energy plantation is considered as a viable option on land that is unfit for both conventional farming as well as renewable power plant installation. Also, given the similarities in generation processes of biomass-and coal-based power, many biomass power plants are being misused by burning cheap coal to generate power in the absence of feedstock and to achieve profitable power production.
To overcome these challenges, Dr Datta Roy suggests that the National Institute of Renewable Energy, Jalandhar, should undertake R&D in biomass technology. The focus on air pollution issues could lead to a better solution for the logistical problems associated with biomass as burning of crop residue is not a viable option. Also, he says the vicious financial cycle that prevents competitive capital access to the segment will need to be converted to a virtuous cycle by plugging the wide financial gap through long-term low-interest capital. At the state government level, entities such as Markfed in Punjab could utilise their networks to create feasible solutions for collection, storage and transport of feedstock for conversion to biopower or biofuels. Lastly, the MNRE must set lower targets for the biomass segment as that will help revitalise the segment. These measures could help recover biomass as an alternative fuel for transport though its future as a source of power generation remains bleak.