Cogeneration Potential: Policy impetus needed to drive growth

Policy impetus needed to drive growth

As of August 31, 2017, India’s installed biopower capacity (grid-connected biomass, gasification and bagasse cogeneration) stood at 8,181 MW and off-grid/captive power at 661 MW, according to the Ministry of New and Renewable Energy (MNRE). This total includes 4,760 MW of biomass-based/cogeneration power, from approximately 500 biomass power and cogeneration projects. Besides, around 30 biomass power plants of 350 MW and 70 cogeneration projects of 800 MW are at various stages of implementation, according to Thermax.

The country remains one of the largest sugar producers in the world and the second largest sugarcane producer, and this agricultural produce still drives the cogeneration industry in India. Data from the MNRE shows that currently, the available biomass is estimated at 500 million metric tonnes per annum (mmtpa). There is, an additional availability of 120-150 mmtpa from agricultural and forestry residues, which puts the potential of cogeneration power at around 18,000 MW.

Further, the success of bagasse-based spent wash-fired boilers has been proven in distilleries. The combustion of spent wash with supporting fuels such as bagasse, rice husk, wood chips and coal has been established, leading to the generation of additional power at low operating costs – now a source of additional revenue for the distillery, with reduced pollution. Balrampur Chini Mills (ISGEC Heavy Engineering), for example, has been operating a spent wash-fired boiler since December 2015, with substantial savings of bagasse (support fuel) reported, and additional revenue earned through boiler fly ash (as fertiliser).

Since only 30 per cent of the biopower potential in India has been tapped, it is absolutely essential to harness the remaining 70 per cent. The following technical and policy measures are needed to give an impetus to this segment:

  • Upgrade/Modernise – for example, install high pressure/temperature boilers to improve efficiency and the steam-fuel ratio. Waste heat recovery of flue gases and installation of bagasse driers are other measures for improving efficiency and saving fuel
  • Cogeneration plants should be encouraged to operate during the offseason by the government offering a suitable generation-based incentive.
  • In view of the huge resources available under the Compensatory Afforestation Fund Management Planning Authority Fund, 20 per cent should be earmarked for bioenergy tree plantations.
  • The cost of the transmission line from the sugar factory to the substation should be borne by the state government/electricity board.
  • Gasification of bagasse and its use in gas turbines may be explored for cogeneration projects.
  • The MNRE’s draft Renewable Energy Act and Integrated Bio-Energy Mission are other positive steps. The indicative outlay for the mission is Rs 100 billion from 2017-18 to 2021-22, and is expected to promote the segment further.
  • Major financial incentives are required for fuel linkage, which is the key to improving the operating performance and financial viability of projects. Debt restructuring by the sugar industry is another option (as per the S4A and 5:25 schemes of the Reserve Bank of India).
  • The MNRE should suitably modify policies so that trading of renewable energy certificates improves for the cogeneration industry to get the benefits.
  • The tariff for exporting power to the grid should be rational and uniform across all states.


A stakeholders’ consultation related to the development of bioenergy-based projects is being held in October 2017 under the chairmanship of the secretary, MNRE. As per S.C. Natu, member secretary, Cogeneration Association of India, who is a stakeholder at this consultation, bagasse cogeneration at sugar mills or independent biomass power projects provide 650 kW-900 kW of exportable surplus to the grid from 1 MW of installed capacity (for an investment of Rs 55 million-Rs 70 million, which is almost similar to the investment for solar power), against only 180 kW-200 kW from solar power projects. Considering its other benefits, this calls for a shift in focus by the ministry to this segment.

The immediate concerns relate to the signing of power purchase agreements by electricity distribution companies; provision of lending support from financial institutions and banks at attractive terms; continuation of capital subsidy support and release of sanctions over 25 pending cases by the MNRE; devising subsidy/other schemes for this segment for promoting the usage of high efficiency and energy-saving equipment; enhancing support for the build-own-operate-transfer  model; and finally, financial support from the MNRE for capacity building and information dissemination initiatives.

It is now necessary to lobby for continued policy and financial support. The concerned association – Cogeneration Association of India – proposes to take the leadership role for this purpose, along with other related associations and industry experts.

Anita Khuller, with inputs from the Cogeneration Association of India and the National Federation of Cooperative Sugar Factories