Biomass ProjectLack of adequate support from the government is stifling biomass-based power generation in India.

As per Ministry of New and Renewable Energy estimates, the current availability of biomass in the country stands at 500 million metric tonnes per year. Government sponsored studies estimate surplus biomass availability at 120 – 150 million metric tonnes per annum covering agricultural and forestry residues. The power generation potential from biomass is about 18,000 MW. In addition, another 5,000 MW power could be generated through bagasse based cogeneration in the 550 sugar mills across the country with adoption of technically and economically optimal levels of cogeneration for extracting power from the bagasse produced.

At present, India’s installed biomass and bagasse based cogeneration power capacity totals 3,530 MW. A target of 1,900 MW, which includes 1,400 MW from bagasse based cogeneration and 500 MW from other biomass, has been set for the 12th Five Year Plan.

The capital cost of installation for biomass power plants is between Rs. 4.5 to 5.0 crore per MW, depending upon boiler pressure and capacity. The cost of generation ranges from Rs. 3.50 to Rs. 4.00 per kWh. The Plant Load Factor is 70 to 75 percent. Biomass power projects have a distinct advantage because of the high PLF.

In case of wind power, the average PLF is 25 percent. Therefore, though the installed capacity exceeds 19,000 MW, based on the average PLF, the actual generation would be around 4,750 MW.

For bagasse based co-generation projects, the capital cost of installation is also in the range of Rs. 4.5 to Rs. 5.0 crore per MW. The capital cost depends on technical, financial and operating parameters. The cost of generation varies from Rs. 3.25 to 3.75 per kWh, depending upon the PLF and interest on term loans. The PLF is 45 to 55 percent.

The Ministry of New and Renewable Energy encourages setting up of biomass-based power generation projects through various technological routes such as combustion, gasification and cogeneration. Incentives through capital subsidy, concessional customs duty on import of machinery and components, excise duty exemption, accelerated depreciation on major components and relief from taxes are available for setting up biomass based power projects. Preferential tariff is provided for sale of power from biomass power plants.

Despite the measures initiated by the government, biomass-based power generation in India continues to be confronted by a host of challenges. According to the Indian Biomass Power Association, among the hurdles faced are low tariff, irregular tariff revision, inability to secure long term supply of biomass fuel at stable prices, lack of support from government in developing energy plantations, delayed payments from utilities, refusal by some states to grant open access facility, high cost of funds, increasing capital and operation and maintenance costs and competition faced from coal-based power plants in sale of power through open access.

The IBPA, in a bid to revive the biomass power sector, has put forward several recommendations before the government for consideration. The recommendations seek priority sector lending status, long term funding with 2 percent interest subvention, Minimum Alternate Tax waiver for 10 years from commercial operation date, electricity tax waiver on sale of power by renewable energy companies, cross subsidy charges waiver on sale of green power to industries, annual tariff revision in respect of variable costs reflecting biomass cost inflation, full excise and customs duty waiver on plant and machinery, fuel handling and fuel processing equipment, Generation Based Incentive at Re. 1 per kWh and access to National Clean Energy Fund.


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