While redefining India’s renewable energy targets to meet the country’s Intended Nationally Determined Contributions, the government had set an ambitious target of 10 GW of installed capacity for bioenergy by 2022. Despite the high potential of bioenergy in the country, the segment has not progressed as expected and growth has been sluggish. This segment has been eclipsed by the success of the wind and solar energy segments, which are characterised by much lower tariffs determined through reverse auctions. Although biomass presents a diverse array of applications, including energy generation, only a few have been implemented and that too on a small scale.
As of October 2017, the country’s total biopower generation capacity stood at 8.3 GW. Of this, biomass power/cogeneration projects contributed 8.2 GW and waste-to-energy (WtE) projects contributed 0.11 GW. At present, biopower occupies 13.7 per cent share in the renewable energy sector and a meagre 2.5 per cent share of the total installed capacity in the country. Given that the segment has an estimated power generation potential of 25 GW (biomass and cogeneration combined), it has a long way to go in terms of additional power generation capacity that can be set up.
Over the past few years, capacity addition in the segment has seen a decline. In 2013-14, the segment added a capacity of 307.7 MW, which fell to 251.6 MW in 2014-15 and 171 MW in the subsequent year. However, the Ministry of New and Renewable Energy (MNRE) has contested these figures, stating that the quoted data could have been exportable capacities by the states, instead of installed capacities. However, the final data is awaited.
Punjab has the highest bioenergy generation potential (3,517 MW) in the country, but has fallen behind in project implementation. As of March 2016, the state had only 155.5 MW of biomass-based generation projects. However, Punjab is amongst the handful of states that have been regularly notifying tariffs for biomass every year.
Maharashtra, with the second highest bioenergy generation potential, leads the country with a biomass-based installed capacity of 1,220.78 MW as of March 2016. Karnataka and Uttar Pradesh follow closely with 872.18 MW and 842 MW of installed capacity respectively. Other states with significant biomass capacities are Tamil Nadu (626.9 MW), Andhra Pradesh (380.75 MW) and Chhattisgarh (279.9 MW).
Biofuels can help reduce energy costs not only for the transport sector but also for industrial consumers that rely heavily on diesel for meeting their electricity needs. In addition, biofuel applications have found new interest in the telecom sector and its usage in powering telecom towers is being tested by using jatropha oil as fuel.
To this end, companies have been carrying out research and development to reduce costs and blend biofuel with conventional fuel. Hindustan Petroleum Corporation Limited recently issued a tender to determine the logistics of paddy straw for one of its biofuel pilot projects. In 2016, the Bangalore Metropolitan Transport Corporation launched a pilot project with a fleet of 135 buses fuelled by biodiesel. In addition, the Karnataka State Road Transport Corporation (KSRTC) announced plans to deploy 1,700 biofuel buses from 15 depots across the state. According to the company, each litre of fuel will contain 20 per cent biodiesel and 80 per cent regular diesel. Earlier, in 2015, KSRTC introduced 10 bio-buses on a trial basis and reported a reduction in greenhouse gas emissions. In April 2017, the Ministry of Petroleum and Natural Gas permitted oil marketing companies to increase the ethanol blending limit to 10 per cent across the country. To support this new order, the government has fixed the price of delivered ethanol in the range of Rs 48.50-Rs 49.50 per litre.
Interest in biofuel production is supported by the fact that the country has large arable lands that can be exploited for the production of these crops. However, the question of sacrificing land for energy crop production instead of food crops has been raised across the world. Although these new plantations could benefit farmers and industries, the cost of food crops could increase, which would lead to problems in a country that already faces food security issues. The government, therefore, needs to assess these probable issues and formulate an action plan to address them.
The government had set a target of achieving 400 MW of grid-connected capacity addition from biopower and 10 MW from WtE for 2016-17. Besides, under off-grid renewable energy systems, targets of 15 MW from WtE, 60 MW from biomass non-bagasse cogeneration and 10 MW from biomass gasifiers were set. No family-size biogas plants were planned for 2016-17.
In 2016-17, off-grid power capacity from biomass gasifiers in eight rice mills and other industries including flour mills, bakeries for meeting captive electricity demand and thermal applications were installed in various states. More than 35,000 biogas plants of the approved models were installed with financial support from the MNRE, taking the cumulative installation to over 4.94 million biogas plants in all states and union territories. In the Northeast, 5,753 biogas plants were installed during the year.
Under the National Biomass Cookstoves initiative, several pilot projects were taken up during the year for the deployment of improved cookstoves that were demonstrated for domestic and large-sized community cooking in anganwadis, midday meal schemes in schools, tribal hostels, etc. Moreover, projects taken up under the Unnat Chulha Abhiyan are eligible for carbon credits under the clean development mechanism. At present, 53 models of improved cookstoves have been approved by the MNRE. As part of the new initiative to support bio-CNG production, three projects with a cumulative production of 10,767 kg per day were commissioned during the year in Punjab, Rajasthan and Maharashtra. In addition, the MNRE, which is a partner in the IMPacting Research Innovation and Technology (IMPRINT) initiative, agreed to support five projects that included the biofuel segment.
A plan to launch an integrated bioenergy mission was proposed in 2015 to create a pathway for various schemes to promote the segment and address common issues faced by the subsegments. To this end, a bioenergy advisory committee was formulated, along with subcommittees on biomass, biofuels, and biogas. Moreover, a technical committee was proposed to be set up for formulating a complete scheme for feedstock and crop residue supply chain management for the biofuels segment. The committee has been working towards enhancing the biomass pelletisation industry. It has decided to create standards for biomass pellets and to certify the same as a renewable energy fuel. The MNRE is considering generation-based incentives for cogeneration plants for carrying out operations during off-peak periods by using other biomass fuels.
The sector faces multiple challenges ranging from regulatory uncertainty, lack of clear policies and their implementation and high technology and logistics costs. Time and again, issues such as seasonality of raw materials for biomass plants, lack of storage options for raw fuel as well as fuel processing units have been highlighted as the key reasons for the low capacity addition in the segment. Similarly, the WtE segment has faced problems with the planning and implementation of waste collection and segregation, adding to the list of issues in the segment. Moreover, high capital costs and high variability in fuel costs (due to no provision of long-term supply contracts of raw materials with farmers) have made investors wary of setting up large biomass-based energy plants. In addition, the lack of adequate incentives from the government has failed to generate the much-needed interest from project developers and financiers. While some states have announced higher tariffs for bioenergy for the current year, the impact has been minimal. For example, Maharashtra increased biomass tariffs by 15 per cent. Rajasthan and Karnataka followed suit and also hiked tariffs.
Lack of proper operations and maintenance and payment recovery practices and a stagnant policy and regulatory framework have prevented the segment from harnessing its full potential. Moreover, with solar and wind tariffs falling to below the cost of conventional power in recent auctions, attention has been diverted from the bioenergy segment, which has comparatively higher tariffs.
To achieve the target of 10 GW of bioenergy capacity by 2022, about 1.8 GW of capacity addition needs to take place over the next five years. This seems unlikely, given the challenges faced by the segment.
Innovative business models are needed to reinvent the biomass-based generation segment. Fuel logistics need to be improved through technology and financial innovations. State governments need to proactively push the development of these projects, which not only provide commercial advantages but also offer social benefits in terms of efficient collection of agricultural waste and employment generation in remote regions. Meanwhile, biofuels are capable of becoming the “next big thing” in the renewable sector, as the need for cleaner and indigenously produced fuel increases every day. There needs to be a greater focus on research and development projects focused on bioenergy, which may eventually lead to a strong indigenous manufacturing base.