Bioenergy is considered a key solution to meet the country’s renewable energy and climate goals and at the same time promote the rural economy and mitigate waste woes. India, being an agrarian economy, has a huge surplus of biomass waste that can be utilised for renewable energy generation. While a part of the available biomass is used as cattle feed and for fertiliser production, the unused part is often burnt, leading to air pollution. At the 12th edition of the CII Bioenergy Summit, Minister of Petroleum and Natural Gas Hardeep Singh Puri noted that the country had over 750 million metric tonnes (mmt) of available biomass, with about two-thirds being used for domestic purposes such as cattle feed and compost fertiliser, as well as for bioenergy generation. As of September 2024, India had a total installed biopower capacity of 11,328.95 MW across various segments such as bagasse cogeneration, biomass cogeneration and waste-to-energy (WtE). Maharashtra is the leading state with 2,984.05 MW of installed bioenergy capacity, followed by Uttar Pradesh and Karnataka at 2,265.39 MW and 1,909.95 MW respectively. The scope of the sector has been increasing over the years and new segments in this space are being tapped. These include compressed biogas (CBG), ethanol blending of petroleum and co-firing of biomass in thermal power plants. Meanwhile, the traditional municipal solid waste-based (MSW) WtE segment has witnessed tepid growth, as several legacy issues remain unresolved.
Renewable Watch provides a round-up of the developments in the bioenergy sector during the past one year…
Biogas and CBG
As of September 2024, India had a total installed capacity of 9,802.67 MW and 921.79 MW of biomass (bagasse cogeneration) and biomass cogeneration (non-bagasse) capacity respectively. Under the GOBARdhan scheme, 1,407 biogas plants have been registered, with 972 functional plants, 85 completed plants and 240 plants under construction.
The CBG segment has, however, received much more policy and industry focus over the years. The central government’s Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, launched in October 2018, has been instrumental in promoting CBG production. The initiative set an ambitious target of achieving 15 mmt of CBG production by 2023, aiming to establish 5,000 CBG plants. However, the actual progress has been slow vis-à-vis the target. According to the SATAT portal, as of November 2024, only 77 CBG plants have been commissioned, contributing to 17,801 tonnes of CBG to the energy market for 2024-25.
The government has further expanded support for CBG integration through the CBG-CGD Synchronisation Scheme. Under this scheme, GAIL has been mandated to operationalise synchronisation, ensuring that CBG, comingled with domestic gas at a uniform base price, is supplied to city gas distribution (CGD) entities. According to GAIL (India) Limited, as of September 2024, 74 CBG producers and 31 CGD entities were active under the Synchro Scheme, facilitating the sale of approximately 97,000 scmd (2,131 mt) of biogas. However, a key issue with this policy was the lack of subsidy available for setting up pipeline infrastructure connecting CBG projects with the CGD network. This was restricting private sector investments in the space. Fortunately, this issue was resolved last year when the government approved the “Scheme for Development of Pipeline Infrastructure for Injection of Compressed BioGas in the City Gas Distribution Network”, with a total financial allocation of Rs 9.945 billion over the period 2023-24 to 2025-26. The scheme will finance the creation of grid connectivity for 100 CBG projects, reducing logistics costs and ensuring efficient offtake of CBG for enhanced energy distribution.
To further provide confidence to CBG developers and investors, the National Biofuel Coordination Committee recommended the implementation of a CBG blending obligation (CBO), mandating CGD entities to blend CBG at prescribed rates in the CNG (T) and PNG (D) segments. This obligation will remain voluntary until 2024-25, becoming mandatory with gradual blending targets: 1 per cent in 2025-26, 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent from 2028-29 onwards. Furthermore, under the updated guidelines released in July 2024, the MNRE has continued the issuance of concessional customs duty certificates for the establishment of CBG projects, another key incentive for
CBG developers.
Given the policy push in the CBG space, several developments have taken place in the past year. A brief of the key industry developments:
Bharat Petroleum Corporation Limited (BPCL) formed joint ventures with Sembcorp Green Hydrogen and GPS Renewables to develop CBG projects and meet its CBO. Investments worth Rs 18.5 billion have been committed. In addition, BPCL and the Chhattisgarh Biofuel Development Authority, along with the municipal corporations of Raipur and Bhilai, signed an MoU for the production of CBG in Chhattisgarh. As per the agreement, BPCL will lead the setting up of CBG facilities in Raipur and Bhilai, investing around Rs 1 billion in each plant.
An MoU was signed between Oil India Limited and the Tinsukia Municipal Board (TMB) to convert 40-50 tonnes per day (tpd) of segregated MSW into CBG. OIL has also signed an MoU with the Guwahati Municipal Corporation to generate 2 tpd CBG from 75 tpd MSW on the outskirts of Guwahati.
ARYA, a subsidiary of GPS Renewables, secured Rs 1 billion as part of a Rs 2 billion funding round to set up CBG projects in collaboration with Indian Oil Corporation Limited (IOCL) and BPCL. The initial Rs 1 billion is being provided by InCred Opportunities Fund and Spark Capital.
Adani Total Energies Biomass Limited started commercial production of Phase I of a CBG plant in Mathura, Barsana, which will process around 225 tpd of agricultural waste and cattle dung, and generate 10 tpd of CBG.
Bajaj Hindustan Sugar Limited and EverEnviro Private Limited signed an MoU to develop CBG plants in Uttar Pradesh. Currently, Bajaj Hindustan Sugar produces approximately 500,000 metric tonnes of press mud each year for use in biogas plants in collaboration with EverEnviro.
Several big plans have been announced by different private players. For instance, Reliance Industries Limited intends to invest Rs 650 billion in Andhra Pradesh to establish 500 CBG plants over the next five years, generating an estimated 250,000 jobs. Gruner Renewable Energy has also announced a $60 million investment for CBG projects across the country.
Ethanol blending
India’s ethanol blending initiative has gained traction, with the ethanol blended petrol (EBP) programme progressing notably in recent years. According to a government release, ethanol blending levels have increased from 1.53 per cent in 2014 to nearly 15 per cent as of September 2024. This has been possible due to a rapid increase in ethanol production capacity, which has more than doubled in the past four years to 16.23 billion litres as of September 2024, highlighting the government’s commitment to achieving a 20 per cent blending target by 2025. Financially, the EBP programme has brought substantial benefits, reportedly saving around Rs 1,060.72 billion in foreign exchange by reducing petroleum imports. Additionally, oil marketing companies have made disbursements of Rs 1,459.3 billion to distillers and Rs 875.58 billion to farmers, further bolstering the agricultural economy and promoting rural incomes. The increase in ethanol production can also be attributed to the interest subvention that was announced in December 2023 by the central government at 6 per cent per annum or 50 per cent of rate of interest charged by banks/financial institutions, whichever is lower, for five years.
The future outlook for the segment looks positive on the back of government support. In August 2024, amendments in the Pradhan Mantri JI-VAN Yojana extended the scheme’s timeline for implementation by five years, until 2028-29, and expanded its scope to include advanced biofuels produced from lignocellulosic feedstocks, such as agricultural and forestry residues, industrial waste, synthesis gas, and algae. Furthermore, new segments are being tapped in this space and in the past year blending targets of 1 per cent by 2027 and 2 per cent by 2028 were announced for sustainable aviation fuel.
Co-firing of biomass pellets
Co-firing of biomass pellets with thermal power has gained policy focus in a bid to reduce biomass wastage, avoid stubble burning and reduce coal usage. In May 2024, the Ministry of Power revised the “Policy for Biomass Utilisation for Power Generation through Co-firing in Pulverised Coal-fired Boilers”, requiring coal-based thermal power plants (TPPs) – owned by utilities with ball and race mills – to use a minimum of 5 per cent biomass pellets starting May 2025, while coal-based TPPs – owned by utilities with ball and tube mills – will be required to use a 5 per cent blend of torrefied pellets with a volatile content below 22 per cent by May 2025. This obligation is expected to increase to 7 per cent from 2025-26, and the objective is to integrate ago residue-based biomass pellets into the operations of TPPs. The new guidelines are scheduled to remain in place for 25 years, or until the end of the useful life of the TPP, whichever is earlier. They also specify that the contract period for the procurement of biomass pellets by generating facilities shall be a minimum of seven years, and emphasise the importance of establishing a robust supply chain for biomass pellets, ensuring that power plants can seamlessly integrate these renewable energy sources into
their operations.
In addition, the Scheme to Support the Promotion of Manufacturing of Briquettes & Pellets and Biomass (Non-Bagasse) Based Cogeneration in Industries for 2021-22 to 2025-26, notified under the umbrella scheme of the National Bioenergy Programme, witnessed several amendments during the past year. In particular, central financial assistance (CFA) for briquette/pellet manufacturing plants has been revised. Under the updated guidelines, issued in July 2024, the CFA for non-torrefied pellet manufacturing plants has been increased to Rs 2.1 million per 1 metric tonne per hour (mtph) production capacity (with a maximum of Rs 10.5 million per project), and for torrefied pellet manufacturing plants, it has been set at Rs 4.2 million per 1 mtph production capacity (maximum Rs 21 million per project).
Following government mandates and targets, several policy and industry developments took place in this space over the past one year. Notably, NTPC demonstrated 20 per cent co-firing with torrefied biomass in Unit 4 of the Tanda plant in March 2024. This milestone marked India’s first large-scale use of torrefied biomass. NTPC has achieved 7-10 per cent co-firing with non-torrefied biomass at the Dadri plant since 2017, reducing the pollution caused by stubble burning. Additionally, in October 2024, NETRA, the R&D wing of NTPC Limited, and LWP Biocoal LLP developed and installed a 10 tpd integrated torrefaction and pelletisation plant for the demonstration of indigenous technology and promotion of manufacturing of torrefied pellets in the country. This will further promote biomass co-firing. In addition, NLC India Limited began co-firing biomass in its lignite-based Barsingar thermal power station in Rajasthan in July 2024, using circulating fluidised bed combustion (CFBC) technology.
Even though policy and industry developments in this space have been on the rise, industry experts continue to debate the viability of co-firing biomass versus using the same biomass for bioenergy production. This is a key concern that needs to be addressed going forward.
MSW-based WtE
As of September 2024, India had installed capacities of 249.74 MW of WtE and 354.75 MW of off-grid WtE. Among the leading states having the maximum installed capacity of WtE projects are Uttar Pradesh (114 MW), Andhra Pradesh (83 MW), Telangana (60 MW) and Maharashtra (60 MW).
In September 2024, the Ministry of Environment, Forest and Climate Change announced an amendment to the Municipal Solid Waste Management and Handling Rules, 2016, aimed at supporting municipalities in developing WtE facilities. This framework includes updated guidelines for integrating WtE solutions within existing municipal solid waste management systems, encouraging local authorities to adopt cleaner disposal methods.
In a noteworthy industry development, a Rs 3.75 billion WtE plant was set up at Piplaj, Ahmedabad, by the Ahmedabad Municipal Corporation under PPP mode with Jindal Urban Waste Management Limited, in November 2024. Meanwhile, prominent urban WtE projects are looking to expand and attract investments. For instance, the Timarpur Okhla WtE plant, which underwent upgrades to increase its processing capacity in January 2023, is attracting investments from both public and private sectors to enhance its operations and expand its outreach. Similarly, the Narela WtE plant, which currently operates at 24 MW, is looking to expand to 60 MW. It is also expected to attract both public and private sector investments.
The way forward
The market projections for India’s bioenergy sector are promising, with the sector being valued at approximately $44 billion in 2023 by Wood Mackenzie. According to a PwC report released in 2023, the bioenergy market in India is set to grow, potentially reaching $125 billion by 2050 as renewable energy adoption accelerates. If aligned with global net zero targets, this valuation could surge to an estimated $500 billion, making bioenergy one of the most valuable sectors within the country’s renewable energy ecosystem.
However, challenges that are hindering the progress of bioenergy initiatives need to be overcome, in particular, supply chain and logistical issues that impact production and distribution of biomass and MSW. The poor quality of raw material and hurdles in facilitating stable offtake at a lucrative price are other key challenges that delay project implementation and increase costs.
Going forward, ensuring additional revenue for developers through the sale of carbon credits, monetisation of by-products such as organic manure, as well as providing tax credits and low-interest financing, will encourage greater investments. These measures would also alleviate challenges associated with high feedstock costs and logistics, enhancing the overall economics of bioenergy projects. International collaborations in this space are also necessary. India has already taken the necessary steps in this direction. In a notable development, the country has strengthened its biofuel partnership with Brazil, which is recognised as a global leader in biofuel production. With this collaboration, formalised in October 2024, both countries have committed to sharing technological expertise and enhancing investment flows in biofuel projects. The Global Biofuels Alliance, formed last year at the G20 summit in India, will further assist international collaborations in this space.
Net, net, with the right initiatives, India can further harness its bioenergy potential. This will not only help in meeting renewable energy and climate goals but also support the rural economy and tackle air pollution. Nevertheless, better implementation of existing policies and resolution of the challenges being faced by the industry and civil society are paramount for the industry to move forward.
