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Biomass power generation scene smoky in India

According to reports, for a country where almost 70% population is dependent on agriculture, it is safe to assume that biomass power generation should be promoted religiously by the policy makers. But, speakers at the ongoing two-day workshop on biomass power generation, here, on Wednesday struck a discordant note while talking about biomass promotion.

Experts and entrepreneurs at the workshop ‘to promote biomass power technologies and identification of pipeline projects’ organized by the ministry of new and renewable energy (MNRE), UNDP and Global Environment Facility (GEF), cautioned that most of the 10 MW biomass power plants set up in the country in the past few years were on the verge of closing down due to unavailability of a steady supply of feedstock.

They also noted with concern that solar and wind power generation was being promoted at the cost of biomass even though biomass provided more revenue to the rural economy and was considered carbon neutral. Figures provided by V K Jain, director, MNRE, were pointer towards biomass being least preferred as a source of power generation, though, he said the ministry was keen to change the scene.

“The country produces 150 million tonnes of biomass every year from which 16,000 MW of energy can be produced, besides the 5,000 MW energy can be generated through bagasse, (the residue of sugarcane after extraction of juice). So far, we have installed capacity of only 4300 MW, which means this sector has immense, untapped potential,” Jain revealed.

Entrepreneurs who have installed successfully running biomass plants were upset with the regulations that the central and state governments put on such projects which prevent them from becoming popular.

“Issues like giving undertaking about a certain amount of power generation every day, or not getting paid for any extra amount of power generated on a given day can be discouraging especially when the feedstock inflow in unpredictable,” said Dr B C Jain who has set up the country’s first 1.2 MW biogas plant running on gasification technology in village Sankheda.

The biomass power generation scene is no better in Gujarat if figures given by Gujarat Energy Development Agency director D P Joshi are any indication. “Wind power projects in Gujarat produce 3093 MW of power followed by solar power projects at 857 MW. Biomass projects provide 31.2 MW power,” he revealed, adding that three biomass plants of 10 MW capacity each were located at Junagadh, Amreli and Bhavnagar.


  1. If viewers are in LinkedIn the comments and the mail sent to Mr.VK Jain of MNRE ( am yet to receive the Answers) can be known including the havoc of Capital Subsidy (or Viable Gap Funding) allied with Accelerated Depreciation in transferring the public property to Private developers without recovering these Capital Subsidy and Taxes saved through AD as many of these plants are not functioning which were approved and Subsidy was released!!!

    Though this Discussion is not for Biomass, but, Solar Irrigation has the mention to use roof of Huts at the fields for water supply, instead of wasting the lands for growing biomass:

    Mail excerpts sent to Mr. VK Jain, MNRE on Biomass for a Seminar / Workshop being organised at Vadodara):

    Please find enclosed the Project Financials for a Biomass power project (without carbon and charcoal benefits as envisaged by us for now, which needs moderation) for a 20 year project period and with an additional investment of Rs. 1.5 Crore (estimate only) after 10 years due to producer gas Engine’s major overhaul….. I hope these should be highlighted by the Equipment suppliers as many Biomass power project developers have burnt the fingers on some / many of these accounts:

    a). Raw material escalation is not compensated under the present tariff being paid by any state government. In some of the states, the power tariff is not even compensating the Raw material costs with interest + O & M (one can see from the financials, which of course can be modified by the wizards). REC model is quite uncertain.

    b). High interest rates in INDIA.

    c). Non availability of biomass (many promoters extracted (or enjoyed)) the Capital subsidy and now the defaulters of Debt, so what is the use of DPR and how do you fix the responsibility on DPR making agencies, credit rating agencies, certifying agencies or the Consultants or Experts or Bank Manager’s accepting such DPRs and the responsibility of the Release of Capital Subsidy from MNRE etc.

    d). Many 5 to 6 MW projects of few EPC company (promoters are in deep red due to no biomass or high cost of biomass) are defunct, but, Debt is not paid…what is the action put in place to develop sustainable action plan for Biomass power project development? Request xxx and MNRE Secretary / Officials, xxx to explain / address on this aspect.

    e). How is the O & M support after a 10 years of Project running. What is the result and spending of O & M expenses of the project being shown by xxx run project with realistic figures on Raw material purchase, O & M Costs, Energy Generated, Carbon benefits, Charcoal benefits, any major failures or how to mitigate the yearly escalation costs of biomass?

    f). Can Government provide minimum support price for the Biomass to control the escalation of biomass costs and its transportation due to failed DPRs as biomass is not available (please note nearly 8000 MT/MW/year of biomass is needed to run 24×7 to have 80% plant capacity due to 15 to 20% Auxiliary power consumption by the plant itself!!)

    g). Agriculture department will not allow captive biomass to be grown (on NA land!!) and its cost control may be a feasibility, but, briquetting costs, growing the biomass grass (to generate power??) instead of food grain (Government declares land as barren, if nothing grows per year, but, how can we grow the biomass grass??)

    h). Biomass plant’s water pollution to the nearby agriculture field (scrubber waste disposal) and its toxicity reports must be made public. Can the project being maintained by xxx provide all these details including effluent treatment or its associated costs??

    i). In order to attract new small entrepreneurs in their native land with NABARD / ADB funding of Equity and Debt, we must publish the business and finance model, vetted by MNRE / REDLs so that low cost overheads to have low power price can be explored. Government nominee must on the Board of these Project Promoter companies till the debt is repaid along with interest.

    j). Seasonal Biomass availability can be stored (excess land requirement per project) and a small plant can be run (with necessary briquett storage mechanism in all seasons) so that PLF can be improved and the project profitability can be ensured.

    Many DPRs prepared for 3 to 5 years financial projects and then getting the equity + Capital Subsidy, then, abandoning the plant is not good for the Country and its Debt failure, which is already around USD 40 Billion and no action to recover, but, with the Parliament’s amendment, we hope we can curtail the growth of Bad / wrong project promoters or wrong equipment sellers (to boost their equipment selling with fictitious or failed DPRs), thus, we can ensure the sustainability in Biomass power project. Smaller the project size, more sustainability in case of Biomass Power project.

    Important: We must promote INTEREST SUBSIDY to make project promoters, DPR preparation agencies, Equipment suppliers responsible for an inclusive and sustainable growth in Biomass power generation as it will make these entities responsible till the debt payment. CAPITAL SUBSIDY OR VIABLE GAP FUNDING will make the system irresponsible and the Country’s Non Performing Assets will increase and the Indian Economy will get deteriorated.

    Together let us make good things happen in INDIA with responsibility and accountability with an improvement in financials and with Mentoring support from Government and such qualified agencies who can act as Independent directors in the board of these small entrepreneurs companies till the debt is paid back and also to ensure the smooth and timely energy bill payment (Escrow amount per year can be set aside or a LC can be revolving with revalidation etc) from the Government / DISCOMs irrespective of which party is in the ruling or such Political dynamics in the State or Central Government due to fiscal policies etc… Policy or administration change shall not impact the project viability or profitability….

  2. Solar PV, Wind (now only GBI good), Biomass power projects should not be promoted with this present regime of Capital subsidy (or Viability Gap Funding) and Accelerated Depreciation which is detrimental to the Economy and Government and hence Common Man….

    a). Assume that with the present Capital Subsidy and Accelerated Depreciation policy,a total of 4000 MW of Biomass or Solar PV Power Projects are executed in INDIA till date. Assume the Project cost of Rs. 6.5 Cr/ MW.

    So, the Total money invested with 4000 MW Biomass or Solar PV with present policy = 4000 x 6.5 cr/MW = Rs. 26,000 Crores.

    b). Capital Subsidy (or Viability Gap Funding) doled out at rs. 1.5 cr/MW (20 to 30%) = 4000 x 1.5 = Rs. 6000 Crore. (if 30%, then it will increase to rs. 1.95 cr/MW = 7800 Cr)

    c). Loss of Tax collection from these project owners and hence loss to Government exchequer due to Accelerated Depreciation at 80% on Project investment ( policy advantage to Entrepreneurs, but, who cared for Government or People!) = 0.8 x 4000 x 6.5 = Rs. 20,800 Crore !!

    d). Loan received by these Project owners (30:70 Equity:Debt) = Rs. 4000 x 0.7 x 6.5 = Rs. 18,200 Crore from IREDA or Banks.

    e). Total Loss or Cash outflow to the government = 6000 + 20,800 = Rs. 26,800 Crore, i.e 800 Cr more than the total investment, which Government could have OWNED these project on their own as the total investment is only rs. 26,000 Crore (refer item a), but, the property is on these pseudo investors (or tax saver’s) NAME?? Is this Policy making or Democracy?? How Can a Government Policy allow the transfer of Public property to the private people, that too as a reward for NON TAX PAYERS through AD?

    Please note that If GOVERNMENT would have created the Entire 4000 MW of Biomass or Solar PV Capacity, it would have required ONLY 30% of 26,000 Crore i.e Rs. 7800 Crore (as equity rest through International debt funding like kfw etc), which they could have easily managed from the Taxes collected from Rs. 20,800 Crore (which was doled out free through Accelerated Depreciation) which is not good and we should stop such errant policy making which also created liability in addition through NON LOAN RECOVERY.

    f). Further, many of these Project Promoters have not PAID the loan and are asking for Support for increased tariff, low cost Working Capital, non functioning of Plants, no job creation despite loss of Rs. 26,800 Crore to Government and NO POWER GENERATION hence, is this not a Crime and why Government is keeping silent on these Project Promoters whose plants are not Functioning….. We are ok with the Project Promoters who are running the plant with the desired load (as per the DPR, few are run with under load and must be punished too)….

    I did write to the Government to create large number of small, new and first generation Entrepreneurs with Mentoring with a learned business plan with financial number and such sample can be seen at for the Benefit of INDIA:

    This can be practised in USA, Europe, Arab Spring Countries, wherein we can use the Youth Energy for the best cause with learned business plan with financial numbers, with FUNDING, Mentoring, Control Stakes till the debt and equity recovery and also to offer low cost renewable energy.

    Yesterday in a TV program called “Right To Be Heard”, Justice Katju (Ex-CJI India, now Chairman of Press Council of INDIA) firmly stated that 90% of INDIANS are FOOLS and they do not care for the country and poor people will never be respected.

    Supreme Court did direct the government to relook in to the 2G policy and made errants to pay back, why not Justice Katju write to the President to rectify these errant policies made by 10% Intellectuals to FOOL 90% Indians??

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