Derived from a plethora of green feedstock, bioenergy provides a clean alternative to meet the energy needs. There has been a steady growth in the biomass-based power capacity in India over the years, albeit slower than solar and wind power capacity. Even though it is a reliable energy source, unlike wind and solar, the biomass supply chain faces a number of challenges.
Renewable Watch takes a look at the current scenario, key developments over the past year and the future outlook for the bioenergy segment…
As per the Ministry of New and Renewable Energy (MNRE), India has the potential to generate around 18,000 MW of renewable energy using biomass and an additional 7,000-8,000 MW from bagasse cogeneration. The current availability of biomass is estimated at about 500 million metric tonnes per year. Biomass-based power plants mostly use agricultural waste as feedstock. Initially, biogas plants were developed for digesting cattle dung. However, over a period of time, technology for biomethanation of various types of biomass materials and organic wastes has developed. Small-scale decentralised gasifier plants are used across the country to power homes. Meanwhile, large thermal plants are connected to the grid, although their capacities, ranging from 8 to 15 MW, are still small as compared to other countries.
The total installed capacity of biopower stood at 10,314.56 MW as of September 2020, which is beyond the MNRE target of 10,000 MW. This comprises 9,373.87 MW of biomass bagasse cogeneration, 772.05 MW of non-bagasse biomass and 168.64 MW of waste-to-energy. The states with the highest installed capacities of biopower are Maharashtra, Uttar Pradesh, Karnataka and Tamil Nadu. The combined installed capacity in these states makes up almost 75 per cent of the total biopower in the country. Most of this capacity consists of projects based on bagasse cogeneration. Further, of the agriculture-heavy states, only Uttar Pradesh features amongst the top five. Thus, there is a lot of untapped biomass potential in states such as Punjab and Haryana. Recently, there have been efforts to make biopower tariffs more viable in these states; however, these measures may take time to become effective.
Policy and programme support
The government has launched various programmes to support the bioenergy segment. These programmes provide frameworks for setting up bioenergy projects and offer CFA for supporting programme implementation, information dissemination and training. The two main schemes introduced for promoting the installation of off-grid and decentralised biogas plants are the New National Biogas and Organic Manure Programme (NNBOMP) and the Biogas-based Power Generation (off-grid) and Thermal energy applications Programme (BPGTP). The NNBOMP facilitates the setting up of small biogas plants (based on cattle dung and mixed biodegradable waste) of 1 cum-25 cum size in remote, rural and semi-urban areas while the BPGTP is being implemented for the deployment of 3-250 kWh medium sized plants.
In November 2019, the MNRE invited bids for conducting an independent evaluation of the implementation of the NNBOMP across 13 states. In the same month, the ministry issued an expression of interest for an independent third-party evaluation of the BPGTP. This programme has been implemented across eight states and it helps in meeting the captive power needs of farmers, small dairies and rural industries. Of the eight states, Uttar Pradesh has the maximum number 13 of projects.
For efficient utilisation of biomass and bagasse-based cogeneration in sugar mills, power generation has been taken up under the biomass power and cogeneration programme. Under this scheme, biomass cogeneration projects are being provided CFA at the rate of Rs 2.5 million per MW of surplus exportable capacity and Rs 5 million per MW of installed capacity depending on the type of fuel used. Earlier set to end in March 2020, the programme has been extended until March 31, 2021, or until the recommendations of the 15th Finance Commission come into effect, whichever comes first.
Biomass can be used to produce heat and electricity, and it can also be converted into fuels such as methanol and ethanol. One fuel source that has seen significant uptake is biomass-derived fuel or biofuel. It is produced from a variety of feedstock such as wood residue, agricultural waste, plant waste, industrial waste and municipal waste.
The government is working on a four-pronged strategy for promoting ethanol, second-generation ethanol, compressed biogas and biodiesel. In fact, several initiatives have been taken since 2014 to increase the production and blending of biofuels. The government is also considering blending biogas with natural gas to improve domestic availability of biofuels and reduce reliance on imports. It is promoting compressed biogas as an alternative green transport fuel and a solution to efficiently manage biomass and organic waste. To this end, oil PSUs launched the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative in October 2018. The SATAT initiative works towards addressing environmental problems arising from landfill emissions and stubble burning while bringing down the dependency on oil and gas imports.
For promoting biofuels, the central government announced a national policy on biofuels in 2018. The aim was to achieve a 5 per cent biodiesel blending ratio by 2030, utilise indigenous non-feedstock raised on degraded or waste land, and promote research and development in cultivation, processing and production of biofuels as well as the blending of fuels with ethanol. As per the US Department of Agriculture, this would require 7.3 million tonnes of biofuel annually. However, blending rates have been low so far due to limited feedstock availability and an underdeveloped domestic supply chain. In March 2019, the government introduced the Pradhan Mantri JI-VAN (Jaiv Indhan – Vatavaran Anukool fasal awashesh Nivaran) Yojana for providing financial support through viability gap funding to integrated bioethanol projects using lignocellulosic biomass and other renewable feedstock. This is expected to help in setting up second-generation ethanol projects across the country.
There are currently 216 waste-to-energy (WtE) plants with an aggregate capacity of 370.45 MWeq. These include plants that generate power, biogas or bio-CNG. While some projects are based on municipal solid waste, others recover energy from agricultural, urban and industrial waste. The technologies for recovery of biogas or power from such waste are well established and with continuous supply of feedstock and proper operations and maintenance, these plants can run efficiently. The MNRE is promoting various technologies for setting up WtE projects. These technology options are for the recovery of energy in the form of biogas and bio-CNG, and electricity from agricultural, industrial and urban wastes.
In August 2018, the ministry approved the Programme on Energy from Urban, Industrial and Agricultural Wastes/Residues for the period 2017-18 to 2019-20. The programme aims to promote development of projects for the generation of biogas, bio-CNG and power from urban, industrial and agricultural waste. In March 2020, the MNRE issued revised guidelines for this programme. The revised guidelines seek to promote biomass gasifiers for either feeding electricity into the grid or meeting the captive and thermal needs of villages and industries such as rice mills. Biomethanation projects based on any kind of biodegradable waste are now eligible for CFA. However, such projects can use only segregated or uniform biodegradable waste.
Low tariffs and high capital costs have affected the viability of biomass projects. To help resolve this issue, in April 2020, the Maharashtra Electricity Regulatory Commission issued a tender to study and evaluate the price of fuel for biomass and bagasse-based power projects in Maharashtra. In another development, the Haryana Electricity Regulatory Commission (HERC) finalised the levellised tariffs for three biomass power projects in November 2020. The tariffs set by the commission are Rs 4.93 per kWh, Rs 4.92 per kWh and Rs 4.47 per kWh. The HERC had approved power purchase agreements for a total of 49.8 MW of paddy straw biomass-based power projects in January 2019. Earlier, in March 2020, the Gujarat Electricity Regulatory Commission (GERC) issued a draft order to determine the tariffs for procuring power from biomass- and bagasse-based cogeneration projects. The GERC proposed to allow an escalation in variable charges of 3 per cent annually from 2020-21 to 2022-23. The GERC’s proposal states that the energy charge and variable cost for biomass-based power projects is Rs 4.13 per kWh for FY 2020-21, followed by Rs 4.25 per kWh in FY 2021-22, and Rs 4.38 per kWh in 2022-23.
Various government agencies across the country are promoting biomass-based fuels. In June 2020, the Uttarakhand Renewable Energy Development Agency issued a tender seeking developers for briquetting or bio-oil projects based on biomass-based fuels. In September 2020, NTPC Limited issued a tender for the supply of biomass pellets to use as fuel alongside coal at its thermal power stations. This would help mitigate the air pollution caused by stubble burning. NTPC plans to use 5 million tonnes of pellets in the current year at 17 of its power projects in the country, including the ones in Chhattisgarh, West Bengal, Uttar Pradesh and Karnataka. Biomass briquettes and pellets are two main types of compacted biomass and can be used interchangeably. However, in view of their different sizes, briquette fuel is only used in mid- and large-size industrial applications while pellets can be used in small-scale applications as well.
One of the key challenges in the bioenergy segment is the management of biomass. The market for agricultural residue is unorganised and biomass is not always readily available. Biomass resources are geographically distributed and agricultural residues are unavailable during the non-harvesting season. There are also competing uses of biomass in fodder, mulching and domestic fuel. Seasonal availability of biomass results in storage challenges. This often translates into difficulty in obtaining long-term supply arrangements. Low bulk density requires large storage spaces while high moisture content reduces transport efficiency. High quality biomass in terms of calorific value is not always available. Agro-forestry residues have lower quality and high micro elements such as potassium, calcium and magnesium. This reduces the combustion efficiency of biomass.
Biomass projects require high initial investment. In addition, there are high transportation costs associated with moving biomass. It is also difficult to avail long-term funding at a competitive rate for biomass-based projects with wind and solar power in the spotlight. Further, regulatory challenges prevail. In addition to inadequate tariffs in relation to the cost structure, there are often delays in tariff approval by state electricity regulatory commissions. Although some states have suggested taking the bidding route for biomass projects, standard bidding guidelines are still to be notified.
Technology barriers to biomass power projects also exist; this is mainly due to the dependence of energy conversion technology on the characteristics of biomass feedstock. Technologies for processing stalks or straw residue are still evolving. Lack of standards for bioenergy systems and equipment further adds to this. There is a need to match the type of biomass with the conversion technology and plan capacity addition accordingly; and focus on research and development to provide knowledge-based, competent solutions that are technologically and economically feasible.
Co-firing of biomass with coal has proven successful. In line with this, greater uptake of briquettes and pellets can help reduce the reliance on coal. Even though the bioenergy target for 2022 has been met, there is still a large untapped potential present. Of the 12 million small-scale biogas plants targeted to be installed by the government, only 5 million have been set up so far. The proper implementation of the existing and extended programmes should be ensured to work towards this goal. Despite the existing issues, the slow and steady growth has led the segment to achieve its 2022 target much in advance. However, its real potential remains untapped, with much scope for its growth in the future.
By Meghaa Gangahar