Biomass Power/Cogen

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Biomass has always been an important energy source for the country considering the benefits it offers.  It is renewable, widely available, carbon-neutral and has the potential to provide significant employment in the rural areas.  Biomass is also capable of providing firm energy.  About 32% of the total primary energy use in the country is still derived from biomass and more than 70% of the country’s population depends upon it for its energy needs.  Ministry of New and Renewable Energy has realised the potential and role of biomass energy in the Indian context and hence has initiated a number of programmes for promotion of efficient technologies for its use in various sectors of the economy to ensure derivation of maximum benefits   Biomass power generation in India is an industry that attracts investments of over Rs.600 crores every year, generating more than 5000 million units of electricity and yearly employment of more than 10 million man-days in the rural areas.  For efficient utilization of biomass, bagasse based cogeneration in sugar mills and biomass power generation have been taken up under biomass power and cogeneration programme.

Biomass power & cogeneration programme is implemented with the main objective of promoting technologies for optimum use of country’s biomass resources for grid power generation.  Biomass materials  used for power generation include bagasse, rice husk, straw, cotton stalk, coconut shells, soya husk, de-oiled cakes, coffee waste, jute wastes, groundnut shells, saw dust etc. 


The current availability of biomass in India is estimated at about 500 millions metric tones per year.    Studies sponsored by the Ministry has estimated surplus biomass availability at about 120 – 150 million metric tones per annum covering agricultural and forestry residues corresponding to a potential of about 18,000 MW.  This apart, about  5000 MW additional power could be generated through bagasse based cogeneration in the country’s 550 Sugar mills, if these sugar mills were to adopt technically and economically optimal levels of cogeneration for extracting power from the bagasse produced by them


3.1 Combustion

The thermo chemical processes for conversion of biomass to useful products  involve combustion, gasification or pyrolysis. The most commonly used route is combustion. The advantage is that the technology used is similar to that of a thermal plant based on coal, except for the boiler.  The cycle used is the conventional ranking cycle with biomass being burnt in high pressure boiler to generate steam and operating a turbine with generated steam.  The net power cycle efficiencies that can be achieved are about 23-25%. The exhaust of the steam turbine can either be fully condensed to produce power, or used partly or fully for another useful heating activity. The latter mode is called cogeneration. In India, cogeneration route finds application mainly in industries.

10 MW Biomass Power Project, Gadchiroli Distt. (Maharashtra State)

3.2 Cogeneration In Sugar Mills

Sugar industry has been traditionally practicing cogeneration by using bagasse as a fuel.  With the advancement in the technology for generation and utilization of steam at high temperature and pressure, sugar industry can  produce electricity and steam for their own requirements.  It can also produce significant surplus electricity for sale to the grid using same quantity of bagasse.  For example, if steam generation temperature/pressure is raised from 400oC/33 bar to 485oC/66 bar, more than 80 KWh of additional electricity can be produced for each ton of cane crushed.  The sale of surplus power generated through optimum cogeneration would help a sugar mill to improve its viability, apart from adding to the power generation capacity of the country.  

30 MW Bagasse Cogen project at a Sugar Mill in Maharashtra


The Ministry has been implementing biomass power/co-generation programme since mid nineties.  A total of   288 biomass power and cogeneration projects aggregating to 2665 MW capacity have been installed in the country for feeding power to the grid consisting of 130 biomass power projects aggregating to 999.0 MW and 158 bagasse cogeneration projects in sugar mills with surplus capacity aggregating to 1666.0 MW. In addition, around 30 biomass power projects aggregating to about 350 MW are under various stages of implementation.    Around 70 Cogeneration projects are under implementation with surplus capacity aggregating to 800 MW.  States which have taken  leadership position in implementation of bagasse cogeneration projects are Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Uttar Pradesh. The leading States for biomass power projects are Andhra Pradesh, Chattisgarh, Maharashtra, Madhya Pradesh, Gujarat  and Tamil Nadu.  


Manufacturing capability exists in the country for the equipment/machinery required for setting up Biomass Projects.  Except for some critical control equipment, most of the equipments can be procured from indigenous sources. 

5.1 Boilers

A number of large manufacturers  have established capabilities for manufacturing spreader stoker fired, traveling grate/dumping grate boilers; atmospheric pressure fluidized bed boilers and circulating fluidized bed boilers. 

Due to recent upsurge of interest in co-generation for surplus power, leading manufacturers are further upgrading their capabilities for high efficiency boilers. 

5.2 Steam Turbines

Almost all combinations – condensing, single extraction/double extraction condensing, back pressure, etc. are now being manufactured in the country with full after sales services.  The efficiencies of turbines now being offered are comparable to the best in the world. 

5.3 Other Equipment

Apart from the main equipment, there is a well established capability and capacity for manufacture of  related equipment for use of biomass for energy including  harvesters, balers, briquetting equipment, handling and firing equipment, pollution control systems etc.    Many multinational companies have set up manufacturing facilities in the country for such equipment.   


Besides the Central Financial Assistance mentioned in para 8, fiscal incentives such as 80% accelerated depreciation, concessional import duty, excise duty, tax holiday for 10 years etc., are available for Biomass power projects. The benefit of concessional custom duty and excise duty exemption are available on equipments required for initial setting up of biomass projects based on certification by Ministry.  In addition,  State Electricity Regulatory Commissions have determined preferential tariffs and Renewable Purchase Standards (RPS). Indian Renewable Energy Development Agency (IREDA) provides loan for setting up biomass power and bagasse cogeneration projects. 


                                                                                                                                                             (AS ON 31.03.2011)

State Tariff fixed by Commissions RP0 %  
Andhra Pradesh @Rs.4.28/kWh, (2010-11)  (BM)   Rs.3.48/kWh                  (Cogen) Min. 3.75%
Chattishgarh  @Rs.3.93/Unit (2010-11)   (BM) 5%
Gujarat @ Rs.4.40/unit (with accelerated depre.)                                                      (BM)@ Rs.4.55/unit (with accelerated depre.)    for 1st 10 yrs(Cogen) 10%
Haryana @ Rs.4.00/unit                   (BM) @ Rs.3.74/unit                  (Cogen)    3%escalation (base year 2007-08) 1%
Karnataka @Rs.3.66 per unit (PPA signing date)    Rs.4.13 (10th year)          (BM)@ Rs.3.59/unit,  (PPA signing date)    Rs.4.14/unit (10th  Year) (Cogen) Min.10%
Kerala @ Rs.2.80/unit                   (BM) escalated at  5% for five years (2000-01) 3%
Maharashtra @ Rs. 4.98         (2010-11)  (BM)@Rs.4.79/unit (Comm  yr.) (Cogen) 6%
Madhya Pradesh @ Rs.3.33 to 5.14 /unit paise for 20 yrs. With escl of 3- 8paise 0.8%
Punjab  @Rs.5.05 /unit, (2010-11)   (BM) @Rs.4.57/unit   (2010-11)   (Cogen)escalated at 5% -cogen, & 5%-BM  Min. 3%
Rajasthan  @ Rs.4.72 / unit-water cooled (2010-11)- & Rs.5.17-air cooled(2010-11)-(BM) 1.75%
Tamil Nadu @ Rs.4.50-4.74/unit(2010-11) –  (BM)@ Rs.4.37-4.49/unit (2010-11)- (Cogen)(Escalation 2%) Min. 13%
Uttaranchal @ Rs.3.06/unit. (2010-11) - BM@Rs.3.12/unit (2010-11)- (Cogen) (new projects)   9%
U.P. @ Rs.4.29 / unit, for existing and 4.38 for new with  escalated at  4 paise/year, base year (2006) 4%
West Bengal Rs. 4.36/unit fixed for 10 years-BIOMASS 4%
Bihar Rs. 4.17/unit (2010-11)–BIOMASSRs.4.25/unit (2010-11) – existing  (Cogen)Rs.4.46/unit (2010-11) – new (Cogen) 1.5%
Orissa Rs.4.09/unit  

O.A.. - Open Access terms & conditions as for CERC and SERC’s order
(kindly contact concerned Regulatory Commissions for details)


8.1  CFA for Biomass Power Project and Bagasse Cogeneration Projects by Private/Joint/Coop./Public Sector Sugar Mills

  Special Category States(NE Region, Sikkim, J&K, HP & Uttaranchal) Other States
Project Type Capital Subsidy Capital Subsidy
Biomass Power projects Rs.25 lakh X(C MW)^0.646 Rs.20 lakh X (C MW)^0.646
Bagasse Co-generation by Private sugar mills Rs.18 lakh X(C MW)^0.646 Rs.15 lakh X (C MW)^0.646
Bagasse Co-generation projects by cooperative/ public sector sugar mills 40 bar & above
60 bar & above
80 bar & above


Rs.40 lakh    *
Rs.50 lakh    *
Rs.60 lakh    *
Per MW of surplus power@
(maximum support Rs. 8.0 crore per project)



Rs.40 lakh         *
Rs.50 lakh         *
Rs.60 lakh         *
Per MW of surplus power@
 (maximum support Rs. 8.0 crore per project)

  *For new sugar mills, which are yet to start production and existing sugar mills employing backpressure route/seasonal/incidental cogeneration, which exports surplus power to the grid, subsidies shall be one-half of the level mentioned above. 

@ Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill. 

Note:   CFA and Fiscal Incentives are subject to change.

 8.2  CFA for Bagasse Cogeneration Project in cooperative/ public sector sugar mills implemented by IPPs/State Government Undertakings or State Government Joint Venture Company / Special Purpose Vehicle (Urja Ankur Trust) through BOOT/BOLT model

  Single coop. mill through BOOT/BOLT Model  60 bar & above 80 bar & above   Rs.40 L/MW of surplus power *Rs.50 L/MW of surplus power*(maximum support Rs.8.0 crore/ sugar mill) 

* Power generated in a sugar mill (-) power used for captive purpose i.e. Net power fed to the grid during season by a sugar mill.

8.3  CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications

   Existing Cooperative Sugar Mill  40 bar & above   60 bar & above80 bar & above  Rs.20 L/MW of surplus power * Rs.25 L/MW of surplus power* Rs.30 L/MW of surplus power* 
 * Power generated in a sugar mill (-) power used for captive purpose i.e. Net power fed to the grid during season by a sugar mill. CFA will be provided to the sugar mills who have not received CFA earlier from MNRE under any of its scheme. 

Note:   CFA and Fiscal Incentives are subject to change. 

8.4       Fiscal Incentives for Biomass Power Generation 

Item Description
Accelerated Depreciation 80% depreciation in the first year can be claimed for the following  equipment required for co-generation systems:


  1. Back pressure, pass-out, controlled extraction, extraction–cum-condensing turbine for co-generation with pressure boilers
  2. Vapour absorption refrigeration systems
  3. Organic rankine cycle power systems   
  4. Low inlet pressures small steam turbines
Income Tax Holiday Ten years tax holidays.
Customs / Excise Duty  Concessional customs and excise duty exemption for machinery and components for initial setting up of Biomass power projects.
General Sales Tax Exemption is available in certain States
                      (IN MW)
S.No. State Upto 31.03.2003 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Total
1 Andhra Pradesh 160.05 37.70 69.50 12.00 22.00 33.00 9.00 20.00 .. 363.25
2 Bihar   -- -- -- -- -- -- -- 9.50 9.50
3 Chattisgarh 11.00 -- -- 16.50 85.80 33.00 9.80 43.80 32.00 231.90
4 Gujarat 0.50 -- -- -- -- -- -- -- -- 0.50
5 Haryana 4.00 -- 2.00 -- -- -- -- 1.8 28.00 35.80
6 Karnataka 109.38 26.00 16.60 72.50 29.80 8.00 31.90 42.00 29.00 365.18
7 Madhya Pradesh   1.00 -- -- -- -- -- -- -- 1.00
8 Maharashtra 24.50 -- 11.50 -- 40.00 38.00 71.50 33 184.50 403.00
9 Punjab 22.00 -- -- 6.00 -- -- -- 34.50 12.00 74.50
10 Rajasthan   7.80 -- 7.50 8.00 -- 8.00 -- 42.00 73.30
11 Tamil Nadu 106.00 44.50 22.50 -- 42.50 75.00 43.20 62.00 92.50 488.20
12 Uttarakhand -- -- -- -- -- -- -- -- 10.00 10.00
13 Uttar Pradesh 46.50 12.50 14.00 48.50 -- 79.00 172.00 194.50 25.50 592.50
14 West Bengal   -- -- -- -- -- -- 16.00 -- 16.00
  Total 483.93 129.50 136.10 163.00 228.10 266.00 345.40 447.60 465.00 2664.63