On February 28, 2020, the Ministry of New and Renewable Energy (MNRE) issued the revised guidelines for the waste-to-energy (WtE) scheme, “Programme on energy from urban, industrial, agricultural wastes or residues and municipal solid waste”. These guidelines supersede the previous guidelines of July 2018. According to the revised guidelines, municipal solid waste (MSW) has been included in the WtE programme. Further, approval has been accorded for the grant of central financial assistance (CFA) of Rs 4,780 million along with a physical target of 257 MWeq for the remaining period of 2019-20. This includes a CFA of Rs 4,000 million along with a physical target of 200 MW for MSW-based WtE projects.
Objectives and scope
The main objectives of the WtE programme are to promote the setting up of projects for generating biogas, bio-CNG, power from urban, industrial, agricultural and municipal solid waste. It will also promote projects for power generation and thermal applications through gasification in industries. The programme intends to create conducive conditions, with a proper fiscal regime, to disseminate information about and demonstrate the use of wastes and residues for the recovery of energy.
The guidelines provide for CFA in the form of capital subsidy and grants-in-aid for biogas plants, bio-CNG projects, power generation projects using industrial, urban and agricultural waste, waste from sewage treatment plants, or MSW. Subsidy is also available for biomass gasifiers that feed power into the grid or meet captive and thermal power requirements of industries and villages. The revised guidelines mandate that wherever urban, industrial and agricultural wastes are used, there should be no mixing of fossil fuels or flue gas. In MSW-based WtE projects, mixing of any waste of renewable energy nature or biomass may be to the extent of 25 per cent of the total waste used or as per the regulations issued by the central or state electricity regulatory commissions.
With regard to eligible technologies, projects based on bio-methanation, combustion, gasification, pyrolysis or a combination thereof or any new technology for WtE as approved by the MNRE shall be eligible for CFA. Projects that generate power from biogas shall be based either on 100 per cent biogas engines or steam turbines with a minimum steam pressure of 42 bars, according to the revised guidelines. Also, the bio-CNG that is produced will have to meet the specifications of BIS IS 16087: 2016.
Along with new projects, the existing plants that intend to add capacity are also eligible and CFA will be considered only for the enhanced capacity. There is no maximum limit on the capacity of eligible WtE projects supported under this programme. However, biogas plants that are fuelled by agro-based industrial residues of up to 250 kW power capacity and up to 2,500 cubic metres volume shall not be eligible under this programme, while biomass gasifier projects of any capacity are eligible for CFA. Projects which intend to add capacity to the existing plants (WtE or biomass gasifier) shall also be considered for grant of CFA. CFA for such projects will be considered only for the enhanced capacity.
According to the MNRE, the total estimated energy generation potential from urban and industrial organic waste in India is approximately 5,690 MW. However, only 201 WtE projects with a total capacity of 331 MW have been set up as of December 2019. The WtE segment has suffered for the longest time due to the absence of clear policies and regulations, and the lack of proper tariff determination mechanisms. In addition, the lack of efficient waste handling and treatment has proved to be a major hurdle in the growth of this segment. Lately, the Swachh Survekshan Abhiyan has helped create healthy competition to some extent among municipal corporations. Moreover, regulations have provided clarity regarding must-run and must-purchase status of WtE projects with project-specific tariffs; this has instilled confidence among developers.
The revised guidelines for the WtE programme have provisions for financial support to project developers to give a further boost to the segment. The inclusion of MSW in WtE projects has opened up a huge area of opportunity for both municipal corporations and private players. Clearly defined technologies along with proper timelines and monitoring mechanisms are expected to ensure project quality and operations. Going forward, comprehensive pre-feasibility studies are required for a more realistic assessment, and risk sharing among corporations and private parties also needs to be improved.
Thus, there is a clear trend of an emerging ecosystem to drive growth in the segment and the revised guidelines of the WtE programme are a step in the right direction.