By Srijan Naayak
The bioenergy segment has the potential to address environmental concerns, create employment and bolster rural economies by providing socio-economic benefits to the farming communities. India’s total installed bioenergy capacity stood at 10.84 GW as of October 2023, the approximate segment-wise break-up being 9.43 GW biomass power/bagasse cogeneration, 828 MW non-bagasse biomass cogeneration, 250 MW waste-to-energy (WtE), and 324 MW WtE off-grid. While several initiatives have been taken in this space during the past year to harness the segment’s potential, a lot remains to be done.
Renewable Watch provides a brief overview of the key developments in this space…
Co-firing of biomass pellets
The use of biomass pellets in co-firing thermal power plants is seen as one of the effective solutions for addressing the issue of stubble burning and reducing the pollution associated with it, especially in the northern states. A number of initiatives have been taken by the government to this end. As on June 16, 2023, 180,000 mt of biomass fuel had been co-fired in 47 thermal power plants (TPPs) across the country. Of this, over 50,000 mt was co-fired during the first two months of financial year 2023-24. Besides, about 114 mmt of biomass pellets are at various stages of tendering and several TPPs have placed purchase orders for approximately 6.9 mmt of biomass pellets. Furthermore, the Ministry of Power (MoP) has issued the Revised Biomass Policy to mandate at least 5 per cent co-firing from financial year 2024-25 and 7 per cent from financial year 2025-26.
In June 2023, the MoP decided to benchmark the prices of biomass pellets used for co-firing in TPPs with effect from January 1, 2024. The benchmarked price will take into account the business viability, the impact on electricity tariff, and pellet procurement by power utilities. This will enable the TPPs as well as pellet vendors to establish a sustainable supply mechanism.
In November this year, the ministry benchmarked the prices of non-torrefied biomass pellets for the northern (excluding the National Capital Region [NCR]) and western regions at Rs 2.27/7,000 kcal and Rs 2.24/7,000 kcal respectively. The price specified is excluding GST and the transportation cost.
It is noteworthy to mention that NTPC Limited and GE Power India Limited signed an MoU to reduce the amount of coal fired from NTPC’s coal-fired units and gradually replace it by co-firing alternative fuel. The collaboration will support NTPC in co-firing biomass pellets beyond 20 per cent and up to 100 per cent, along with testing carbon-neutral fuels such as green methanol and green ammonia. Also, the Commission for Air Quality Management in NCR & Adjoining Areas directed all captive TPPs in the region to initiate immediate steps to co-fire biomass-based pellets (with a focus on paddy straw utilisation) with coal through a continuous and uninterrupted supply chain targeting at least 10 per cent co-firing by December 31, 2023.
Waste-to-energy
With its growing population and rapid urbanisation, India has witnessed a staggering increase in municipal solid waste (MSW), which poses significant environmental challenges. According to a report by The Energy and Resources Institute, the country generates 62 mt of waste each year, of this, 43 mt (70 per cent) is collected. Out of the collected waste, about 12 mt is treated while the remaining 31 mt is dumped at landfill sites. According to the Ministry of New and Renewable Energy, the total estimated energy generation potential from urban and industrial organic waste in India is approximately 5,690 MW. Hence, the setting up of WtE plants becomes crucial. As per data shared by the union minister for power and new and renewable energy in the Lok Sabha, central financial assistance of Rs 5.75 billion was disbursed to eight WtE projects across six states from April 2022 to March 2023.
During the past year, JITF Urban Infrastructure Limited emerged as the lowest bidder for the implementation of a 28 MW WtE facility at Narela-Bawana, Delhi. The plant will be built in public-private partnership (PPP) mode on a design-build-finance-operate-transfer (DBFOT) basis at an estimated cost of Rs 6,042.60 million. The project is expected to process 3,000 tonnes per day (tpd) of MSW. In addition, Sustainable Business Development (SuSBDE) signed an MoU with the Nagpur Municipal Corporation to set up a 1,200 mt WtE plant in Nagpur, Maharashtra. To be set up in the PPP mode, the project is estimated to cost Rs 3 billion. Meanwhile, NTPC Limited commissioned the first reactor module of 200 tpd for the Ramana WtE plant at Varanasi, Uttar Pradesh. The work on the installation of the remaining two modules is underway. The project involves setting up a torrefied charcoal/refuse-derived fuel (RDF) WtE plant at Ramana with a capacity to process 600 tpd of waste.
The Telangana government announced plans to set up five WtE plants in Hyderabad having a cumulative capacity of 5,100 tpd. Likely to start operations from 2024, these comprise plants at Dundigal (15 MW), Pyaranagar, Medak district (15 MW), Yacharam (12 MW), Bibinagar (11 MW) and Jawaharnagar Phase II (24 MW).
Going forward, the Urban Development and Housing Department, Bihar, is expected to invite tenders for setting up a 15 MW WtE plant on 86 acres of land at Ramchak Bairiya, in Patna, Bihar, by December 2023. The plant will treat the waste generated in the Patna metropolitan area. Besides this, a 100 tpd biomethanation plant as well as separate plants for the disposal of compost, manure and other solid waste will be established. The projects are estimated to cost around Rs 4,600 million.
The central government also inaugurated a WtE plant in Pune, Maharashtra. Having a capacity to treat 700 tpd of waste and generate 14 MW of electricity, the Moshi WtE plant has been developed by a joint venture of Lara Enviro and Anthony Enviro Private Limited on a 61 acre plot. The plant has been built on a DBFOT basis for a concession period of 21 years at an estimated cost of Rs 2,083.6 million.
Biogas
As of July 2023, 643 biogas plants are functional in the country under the GOBARdhan scheme in comparison to only 14 plants at the inception of the scheme in 2018-19. Chhattisgarh is the frontrunner in terms of the no. of biogas plants registered; having a total of 241 plants, followed by Madhya Pradesh and Uttar Pradesh having 93 and 62 operating plants respectively.
For 2023-24, the central government allocated funds worth Rs 100 billion for setting up 500 new “waste-to-wealth” plants under the GOBARdhan scheme with the objective to promote a circular economy. These comprise 200 compressed biogas (CBG) plants, including 75 biomethanation plants in urban areas, and 300 community or cluster-based plants. As of April 2023, the central government had approved its plan for setting up 42 biomethanation plants. It also set a target to increase the share of CBG in the energy mix up to 15 per cent in 2030 to make India a gas-based economy.
Furthermore, the National Biofuels Coordination Committee has announced a phase-wise, mandatory blendng of CBG into compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic segments within the city gas distribution sector. The compressed biogas obligation (CBO) will remain optional until financial year 2024–2025 followed by mandatory obligations from 2025-2026. For 2026, 2027, and 2028, the CBO will be set at 1 per cent, 3 per cent, and 4 per cent, respectively, of the overall consumption of CNG or PNG. From 2028-29 onwards, the CBO will increase to 5 per cent.
In the past year, GAIL Gas Limited sought approval from the Karnataka government for setting up 15 CBG plants (having a capacity of 100 tpd, at an investment of Rs 4.5 billion). Meanwhile, the board of Indian Oil Corporation Limited (IOCL) approved the formation of two joint ventures – one with EverEnviro Resource Management Private Limited and the other with GPS Renewables Private Limited – to set up CBG plants. The projects will be set up under the SATAT scheme, which was launched by the central government to establish 5,000 commercial CBG plants by 2024-25. Mahanagar Gas Limited (MGL) and the Brihanmumbai Municipal Corporation (BMC) signed an MoU for setting up Asia’s largest CBG plant having a capacity of 1,000 tpd in Mumbai at an investment of Rs 5 billion. While MGL will bear the entire cost, BMC will provide land for the plant.
In addition, Reliance Industries Limited successfully commissioned its first commercial-scale CBG plant at Barabanki, Uttar Pradesh. Another private player, Adani Total Gas Limited, won a contract from the Ahmedabad Municipal Corporation for the development of a CBG plant in Ahmedabad under the PPP mode. The plant will have a production capacity of 500 tpd.
The Punjab government announced plans to construct a CBG plant at Baroti village in Hoshiarpur, Punjab. It is expected to have a capacity of treating 49,350 mt of agricultural residue, and industrial and municipal waste annually as well as producing 20 tonnes of CBG per day and 91 mt of bio-manure per day as by-product. Estimated to cost Rs 1,400 million, the project is likely to start operations from December 2023. Besides, the state cabinet of Kerala approved the setting up of a CBG plant by Bharat Petroleum Corporation Limited (BPCL) at Brahmapuram in Kochi. To be set up on the land provided by the Kochi Municipal Corporation, the plant will initially have the capacity to process 150 tonnes of waste, and entail an investment of Rs 750 million to Rs 800 million.
Biofuel and ethanol blending
The biofuel segment is a key driver for achieving the country’s climate targets. It received a major fillip when, on September 9, 2023, the prime minister announced the launch of the Global Biofuel Alliance (GBA) at the G20 Summit in New Delhi. The GBA intends to expedite the global uptake of biofuels by facilitating technology advancements, intensifying utilisation of sustainable biofuels, and shaping robust standard setting and certification through the participation of stakeholders.
As per the government, the scheme for extending financial assistance to sugar mills for the augmentation of ethanol production capacity has led to a remarkable increase in molasses-based distilleries’ capacity, soaring from 2.15 billion litres in 2014 to 8.11 billion litres in 2023. For grain-based distilleries also, the increase has been significant, growing from 2.06 billion litres in 2013 to 4.33 billion in 2023. With this, the national ethanol production capacity has reached 12.44 billion litres. In addition, this has resulted in a host of other benefits including a reduction of 31.8 mmt of CO2 emissions and foreign exchange savings of around Rs 540 billion.
The central government has been proactive in policymaking for this segment. As of October 2023, the government had achieved the target of 12 per cent ethanol blending with petrol in ethanol supply year (ESY) 2022-23 (spanning from December 2022 to October 2023) under the Ethanol Blended Petrol (EBP) Programme launched in 2003. Further, it amended the National Policy on Biofuels, 2018 and set the target at 15 per cent for ESY 2023–24 (November 2023 to October 2024). It also revised the target of 20 per cent blending in petrol (E20) by ESY 2025-26; this will require expanding the ethanol production capacity to 1,700 litres. Earlier, in February 2023, it launch-ed E20 fuel at 84 retail outlets (ROs) of oil marketing companies across 11 states/ UTs, and by June 2023, this number had expanded to 350 ROs and 21 states/UTs.
In August 2023, the union minister for petroleum and natural gas launched the prototype of the world’s first BS-6 Stage-II, electrified flex fuel vehicle, developed by Toyota Kirloskar Motors. The vehicle has both a flex fuel engine as well as an electric powertrain, thereby offering higher use of ethanol combined with better fuel efficiency. In September 2023, the Bureau of Indian Standards (BIS) developed nine standards for biofuels.
During the past year, the Tamil Nadu government announced its Ethanol Blending Policy, 2023, to improve farmer income, revive the sugar industry and attract investments worth Rs 50 billion for molasses/grain-based ethanol production capacity.
PSUs have been doing commendable work in this space. Last year, Hindustan Petroleum Corporation Limited (HPCL) launched a pilot study on vehicles using E27 fuel and ethanol-blended diesel fuel. The study will assess the performance of engines and the emissions from vehicles through extended mileage accumulation, up to 10,000 km for two-wheelers and 20,000 km for passenger cars using E27 fuel. Besides, IOCL and its subsidiary, Numaligarh Refinery Limited (NRL), announced plans to invest Rs 80 billion to set up 2G ethanol plants.
Meanwhile, fertiliser cooperative Krishak Bharati Cooperative Limited plans to invest Rs 11 billion to set up three 250 kilolitres per day (klpd) ethanol plants using maize and broken rice as feedstock in Gujarat, Telangana and Andhra Pradesh.
Future outlook
According to the International Energy Agency, government policies such as the National Bioenergy Programme can help the segment produce 130 million tonnes of oil equivalent or about 15 per cent of India’s total energy demand by 2040. Also, the overall biomass market is slated to reach Rs 32 billion by 2030.
Although India can produce reliable, cost-competitive and ecologically sustainable bioenergy to meet its energy demand for power and non-power uses, the progress so far has been tardy. As of October 2023, only 8 per cent of the total installed generation capacity in the country came from biomass power, cogeneration and WtE projects. Besides, the bioenergy segment is exposed to challenges such as small landholdings of farmers, high costs in collecting biomass, lack of viable business models, and unstable feedstock supply.
Going forward, government support, industry collaboration, technological innovation and financing from big players will be crucial to overcome the challenges, revolutionise the industry and pave the way for a greener, more sustainable future.
