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Bio Energy in India : Issues and Challenges

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Issues and Challenges of Biomass Energy in India

The various issues and challenges faced by biomass power plants as well as the major barriers impeding an enhanced promotion of biomass power plants in the states are covered in the following article.

The Government has been implementing the biomass power and cogeneration program since 1994. In the last 14 years or so, just about 4 per cent of the total estimated potential of about 16,881 MW (based on agro residues) has been realized so far. However, it is definitely better on the bagasse cogeneration front with 19.4 per cent capacity of the total estimated potential of about 5,000 MW having been realized in practice.

There are a number of technical and economical reasons for this lack of progress, especially from agro-based sources. Some of the most important issues deserving attention from all stakeholders are:

  1.  Technical/Technological Aspect: Boilers are designed depending on the selection of biomass type. The boiler once designed for particular type of one or two or multiple biomass will not perform efficiently if other type of biomass is used. For example, a rice husk feed biomass boiler will give less efficiency and will require more fuel when other biomass such as baggasse, mustard husk or rice straw are used.
  2. Availability Issue: Out of 540 million tonnes of residues from agriculture, forestry, agro-based industrial plants and plantations, only 140 million tonnes of usable agro industrial and agriculture residue is available for power generation. Rest of the waste (70-75 per cent) is used as fodder, as fuel for domestic cooking and for other economic purposes. Also, the availability of biomass depends upon the season when crops are to be grown. Hence, in that period, availability of biomass will be higher and due to market dynamics, the cost will be lesser compared to non-seasonal period.
  3. Rising Prices: In the initial stages of plant installation, the agro-residue was considered as waste and was thus available at throwaway prices with landed price of about INR 500-1,200 per tonne. However, in recent times (last 4-5 years), biomass prices have gone up very rapidly. During the current year, rice husk price has gone as high as INR 2,500 per tonne in the crowded biomass power plant clusters such as Gangavati belt in Karnataka.
  4.  Working Capital: Biomass power plants are relatively less capital-intensive but need a huge working capital owing to the manpower -intensive nature of the operations and substantial fuel cost requirement. Biomass prices fluctuate widely due to their seasonal availability. Hence, huge working capital investment is required to procure and store large quantities of biomass during the season when biomass is relatively cheaper.
  5.  Unstructured Biomass Market: Currently, agricultural and forest residue is traded informally and, as such, no structured market is available for meeting the demand of a biomass?based energy industry. This means that the biomass fuel is outside the purview of regulatory control with prices varying seasonally and within regions. Further, since much of the biomass fuel is agricultural residue, its quality depends on the cropping pattern which is again seasonal and variable. These factors make it difficult for biomass energy applications to secure investments. Thereby, a concerted effort to help structure the traditional market into a modern commercial system is needed.

Cost is a Major Concern in Biomass Energy Development

India is predominantly an agricultural economy. The estimated food grain production in India in 2011-12 is estimated as a little over 250 MT (Source: PIB). Since biomass energy is primarily derived from the agricultural waste, this sanctify India with huge potential for Biomass power generation. However reality eludes this. The growing O&M costs and stagnant tariffs have made biomass power development financially unviable for the developers. As a result, despite the country having a biomass potential of 8,000 MW; the current installed capacity for the same stands way below – only 1050 MW.

Factors Affecting the Cost of Production Of Biomass

Before we analyze the major bottleneck in the development of biomass based power plant, we need to look at the factors on which the cost of production of biomass power depends. The various financial and operational factors affecting the same are:

  • Capital cost (the cost of plant /machinery/civil works/erection/commissioning etc.)
  • Loan tenor for the project
  • Interest on the loan taken
  • O & M expenses
  • Plant load factor
  •  Interest on working capital
  • Return on Equity
  • Cost of fuel and its gross calorific value (GCV)
  • Plant’s auxiliary power consumption
  • Depreciation.

Read more about Biomass Advantages & Disadvantages.


Rishi Srivastava

Rishi is a student of MBA in Power Management from Centre of Advance Management in Power Studies ,NPTI. He has over 3 years of experience in IT-consulting domain. His areas of interest include Renewable Energy, CDM, Demand- side management and rural electrification through off-grid/micro-grid.

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