Biomass Plants in India are shutting down as feedstock costs have increased rapidly while government regulated electricity tariffs have yet to increase.60% of India’s Biomass Plants have closed down as they are longer profitable.Note India has a massive growth target for biomass electricity capacity up from 1 GW at present (2 GW if you count cogeneration).A number of agricultural companies have set up a number of plants besides dedicated green utilities.However inflation in India has affected the operation of plants specially those who don’t have inhouse feedstock supply.

Grantham has made a famous call that the rise in commodities is not a cyclical phenomenon but a secular long term one.He says that the rise in commodity prices is different from the past.Note Grantham has done an extensive study of bubbles and is one of the leading minds in the investment community.While every time in the past,the statement “this time is different” has led to a crash,Grantham’s call cannot be taken lightly.He says that the rise in population,shortage of resources,the growing consumption power of massive chunks of prosperous citizens in India and China will lead to a continued surge.Note commodity prices have declined secularly in the last century and since 2000 have managed to erase all their losses to form new peaks.Grantham also says there is a possibility of a massive short term decline which will give a historic opportunity to load on commodities.Jim Rogers is the most famous commodity bull and now Grantham has joined him.Note famous hedge fund managers have already made huge bets on gold and are winning currently.Note CIA and German Military are already on the record for calling Peak Oil which would lead to a drastic fall in living conditions worldwide as the global growth fueled by cheap fossil fuels sees an end

A number of Agricultural Companies and Green Utilities are focusing on setting up biomass plants in different places in India.Note Biomass Energy accounts for almost 20-30% of the Energy Requirements of the country and is the main source of energy for most of the rural communities for cooking and heating.Biomass Energy is best suited where Crop and Animal Residue are cheaply available.Most of India’s Biomass Power Plants have been built by companies involved in agri industries particularly sugar.Now Rice Companies are finding Biomass Energy perfect for their needs as they generate huge amounts of waste Rice Husk which can be used to generate electricity for their inhouse needs as well as for sale to the power grid.Note on top of this,Rice Biomass Electricity is also eligible for Subsidies from the State Governments.Haryana is seeing a surge in Rice based Electricity Plants with 16 MW installed already.Note Haryana is one of the top agri states in India alongwith Punjab and provides a lot of potential.Note a number of Rice Companies such as Lakshmi Energy and Foods have made Biomass Electricity a key part of their growth strategies even changing their names.Here are a couple of Rice Companies with aggressive Biomass Electricity Plans.

India had set up around 500 MW of Biomass Capacity by 2007 and has increased it by almost 150 MW since then to reach around 1 GW capacity today.Most of Indias’ Biomass Electricity is being generated in Andhra Pradesh,Maharashtra,Tamil Nadu,Karnataka and Rajasthan.A lot of new capacity is being built in Punjab and Chattisgarh as well.India with a total biomass capacity of around 1 GW is planning to increase it by 10 times to 10 GW by 2020 by setting up a number of 1-2 MW biomass plants around the country.Around 400-600 acres of land are required to support 1 Mw of Biomass Capacity and 200-300 acres using energy intensive crops.This is much more than what is required for even thin film solar energy which is around 10 acres.The large land requirements make Biomass Energy Scalding a difficult proposition,however it has a great use in niche applications where there is a large amount of crop and animal residue/waste

Biomass Energy is clearly seeing a massive investment of private capital by a number of Green Energy companies.A number of these companies are backed by Private Equity Players.Almost all Sugar Companies in the country co-generate biomass power at their sugar plants.The size of the segment is quite large and has not been listed here.In India 3 types of companies are focused on biomass electricity – Sugar Companies,Rice Companies and Green Energy Utilities.The first 2 categories will be successful as their cost of feedstock is essentially zero while the the success of the third kind will depend on the management and execution.

A  Record Drought in Russia and Worst Floods in China since 1998 are driving up wheat and rice prices up more steeply than in the commodity bull run in 2008.Secular factors like Globalization of Agriculture has already driven up food prices around the world,on top of this such seasonal factors will drive the prices even […]