An Overview
Presented by: Indian Biomass Power Association
Indian Power Scenario
Date
31.03.1990
31.03.1992
31.03.2002
31.03.2007
31.03.2008
31.03.2009
31.03.2010
31.03.2011
31.03.2012
31.03.2017 **
Renewable
Total Power Power
Generation Generation
63636
18
69065
32
105046
1658
132329
7761
143061
11125
147965
13242
159398
15521
173626
18455
199877
24503
318414
54503
** Projection
%
0.03%
0.05%
1.58%
5.86%
7.78%
8.95%
9.74%
10.63%
12.26%
17.12%
Indian Power Sector Today

Predominantly dependent on depleting fossil fuel and driven by imports of Coal

Raising prices internationally affects balance of Trade in India

State utilities under going difficult times financially affecting down stream
generators

Renewable Energy Sector affected by higher cost of funding and infrastructure
costs

Capacity additions behind plans --resulting in demand – supply gap
Need For Renewable Energy
Carbon dioxide emissions (CO2), thousand metric tons of CO2 in India
1990
1995
2000
2005
2006
2007
2008
690577
920047
1186663
1411128
1504365
1612384
1742698
Source : Global Climate Change Initiative
To mitigate the above increase in the CO2 Emissions ,
there is an urgent need to increase the renewable power
Potential comparison Biomass and Wind as on 30-09-2012
Particulars
POTENTIAL
(MW)
INSTALLED CAPACITY
(MW)
Biomass
18000
1210
WIND
102000
17967
Biomass as RE Power– The Advantages
Plants are mostly be located even in the remote rural areas- close to agri waste source
 All investments are done in backward rural areas and meets the power requirement of rural area
 The only FIRM Power amongst all Renewable source of energy that can generate over 80% PLF.
 Current potential of 18000 MW in India – Commissioned only 1210 Mw till 30th Sep.’12
 Apart from the up liftment of rural economy, it also saves transmission and distribution losses
 70% of biomass tariff goes into the rural communities who are the suppliers of Fuel .
 Only Renewable energy that supports Agriculture by:
 Direct Local employment 50000 people
 Indirect employment – 400000 people
 Generates additional income to the farmers by the sale of Agri waste and waste wood to the
Biomass industry to use as fuel. Can put to use Arid land for Energy Plantations which will
provide additional income to Farmers
 All Plant and Machineries are indigenous - hence unlike other RE technologies the entire
investment supports domestic industries

Sector – Current Status & difficulties
Current Status

The sector is on the brink of closure simply
because of inadequate support from the
policy makers and regulatory commissions

70% of the biomass tariff spent for fuel
only , which is purchased from the rural
systems & Farmers.
The feed stock- biomass cost increased



significantly in the past 3 years due to
inflation and significant raise in other fuel
costs
Biomass sector apart from generating green
power, meets the hopes and aspiration of
rural population and rural India.
Out of 1210 Mw, 70% have closed and balance
running in losses.
Difficulties




Biomass is the only RE sector, for which the
fuel is not natural or free for operation
though it is
said to be abundantly
available
The cost of fuel is not correlated properly
with the tariff .
Unrealistic tariff makes the projects
unviable and need for annual reset based
on biomass fuel cost can mitigate the same
In the absence of definite national policy ,
the sector is desperately seeking for
lifeline and solution to its problem for
survival
Why the Low Growth , despite the advantages ?

Higher cost of Finance to the Industry almost at almost 15-17% interest

Inadequate Government Support on Policies

Increasing Fuel, Capital & O&M Costs

Lack of attractive Capital Subsidy

Challenges in sourcing of raw material in spite of current availability of
biomass, say about 500 million tons equivalent to 18000 MW – after
adjusting for other usage/collectability.

Unviable Tariff set by the SERC /CERC – not in line with actual costs

Absence of National Level Policy
Expectation from Government
•
Being the Apex body for the development of Renewable energy
in our country .
•
The investment done in the biomass sector is at highest risk and
the sector has been forced to a brink of closure, it requires
support and help from the government for operation and revival.
•
The association request MNRE to take up the matter with
Finance & Power Ministry for approving suitable provisions
enabling the sector to a survival & revival path.
•
The association also request MNRE to initiate and approve within
its policy promotion measures for biomass sector enabling the
sector to survive and revive.
•
The rate of Interest for biomass sector to be limited to 10% or at
Priority Sector levels as current interest rates of 15-17% is making it
extremely difficult for any additional investment .
•
Majority of the biomass investment has either become NPA or
operating in huge losses. A financial restructuring on lending with
interest subvention may be provided for the next 5 years enabling the
sector to climb back. The interest subvention may be linked to prompt
and regular payment of interest.
•
Enhancement of Central Financial Assistance (Capital Subsidy ) - Not
revised for years . To make it on par with Biogasification at Rs.80
lacs/Mw, not exceeding Rs.500 lacs
•
Biomass Mission - to be implemented across the Country with
definite and exclusive
fuel
availability
to this
sector by
prioritizing .
•
Fuel Adjustment Mechanism (FAM) should be formulated yearly
and request MNRE to extend support to CERC in tariff fixation
annually.
•
Allocation of unused/waste land for Captive Energy Plantations
for Fuel Sustainability . Can model it on Rajasthan Policy of 500
Hectares per MW across States
Coordination with Power Ministry
•
MNRE must urgently coordinate with Power Ministry to find
the solution of SERC via forum of regulators to look into the
issues faced by the biomass sector as RE power.
•
Though the electricity act has various provisions laid down
to support RE power, SERC’s are not keen on implementing
those due to their own state related issues. MNRE should
monitor and enforce and address such issues .
•
The Power Ministry and MNRE should work out urgent
solutions for the survival of the biomass sector by framing
a support policy – waiver of Cross Subsidy, Electricity Tax,
adjustment of power import against export and the like
Request to MNRE by Indian Biomass Power Association
•
The ministry must initiate suitable measures for the revival of
investment already done in the biomass sector.
•
The association request clear steps for the revival of the biomass
sector and an opportunity to redeem the losses forced due to
past difficulties by giving them opportunity to recover the past
losses in future generation by approving suitable generation
based incentive.
•
A suitable GBI may be explored through the clean energy fund for
this sector survival.
•
Indexing of biomass REC at 2 times and recommending the same
to CERC considering the cost of fuel and its operation in the rural
sector. Alternatively as separate Floor and Forbearance prices
can be set as in case of Solar RECs
Biomass Mission
The launch of Biomass Mission similar to Solar Mission
by the Ministry, which would specifically look into:
a) Guiding the States to Formulate separate Biomass policy
b) Framing a Suitable policy to promote energy plantation
development for captive use.
c) Enhancing the Current subsidy levels for sustained
operation of the Biomass Power Generation.
d) Revival and operation of existing investment in biomass
sector.
e) Development and promotion of biomass sector
f) A suitable option for meeting the electricity requirement
and hopes and aspiration of rural India.
To Sum up Key Issues needing urgent support are…..
•
Interest subvention on par with Agri/Priority Sector--- since all
Biomass Plants are in rural India supporting the farmers by sourcing
the agri residues
•
Annual tariff adjustment for Fuel Cost increase
•
Separate REC Slab for Biomass RECs like Solar – considering the fact
that this is the only Renewable Energy depending on sourced fuel.
Alternatively indexing with Non-Solar RECs as 2 RECs for 1 MwH of
Biomass Power
•
Effective implementation of RPO/REC Mechanism to ensure
compliance levels envisaged are met. Perhaps use of National Clean
Energy Fund by MNRE for RPO Compliance by State Utilities thru
suitable support for a year or two
•
•
Review of Tariff structure considering inputs given by Industry
Support to develop Energy Plantations & Biomass Mission by MNRE