“Waste Agricultural Biomass for Energy:Resource conservation and GHG Emission Reduction”
CONTENTS
1 / Introduction and Background / 6
2 / Workshop coverage / 8
2.1 / Government Policy / 8
2.1.1 / The national scenario -- Biomass related Policies and Programmes / 8
2.1.2 / Current status of Policies to promote biomass power in India / 8
2.1.3 / Biomass power and cogeneration programme / 9
2.2 / Incentives / 10
2.2.1 / Central Financial Assistance (CFA) and fiscal incentives / 11
2.2.2 / Fiscal Incentives for Biomass Power Generation / 13
2.3 / Institutional framework – Ministry of New and Renewable Energy / 13
2.4 / Analysis of climate change related policies / 14
2.4.1 / National Action Plan on Climate Change (NAPCC) / 14
2.4.2 / Market based mechanism / 15
2.4.3 / Accelerated shift to energy efficient appliances / 15
2.4.4 / Mechanism to finance Demand Side Management (DSM) / 15
2.4.5 / Fiscal instruments to promote energy efficiency / 15
2.5 / Goals of National Action Plan on Climate Change / 16
2.6 / Analysis of renewable energy related policy development / 16
2.6.1 / Early Policy Perspective / 16
2.6.2 / Multi-pronged approach / 17
2.6.3 / Shift in Policy Perspective / 17
2.6.4 / Major programmes of MNRE / 18
2.6.4.1 / National Biomass Cookstoves Programme / 18
2.6.4.2 / Programmes for Biomass based Electric Power / 18
2.6.4.3 / National biomass gasifier programme / 19
2.6.4.4 / Programmes for building research institutions / 20
2.6.4.5 / Programmes for Biomass based Energy in rural areas / 20
2.6.4.6 / Policies by state governments / 21
2.6.4.7 / Incentives for investing in Renewable Energy Technologies / 21
2.7 / Analysis of Foreign Investment Policy / 23
2.8 / Gaps/inadequacies in current policy framework / 23
2.8.1 / Uncertain economic viability of biomass to energy projects / 24
2.8.2 / Irrational incentive schemes for biomass to energy projects / 24
2.8.3 / Preference to large size biomass to energy projects / 24
2.8.4 / Application of same environmental and land use related regulations / 25
2.8.5 / Lack of emphasis on technology research and development / 25
2.8.6 / Location of biomass to energy plants / 25
2.9 / Policy drivers to promote enhanced conversion of waste agricultural biomass into energy / 26
2.10 / Challenges for enhancing conversion of waste agricultural biomass into energy / 26
3 / Proposed National Strategy for enhancing conversion of waste agricultural biomass into energy / 29
3.1 / Vision / 29
3.2 / Objectives / 29
3.3 / Targets / 29
3.3.1 / Scope and Timing / 30
3.4 / Relation to other strategies / 30
3.5 / Specific elements of the strategy / 30
3.5.1 / Comprehensive data base on availability of waste agricultural biomass / 30
3.5.2 / Enable sustainable and affordable supply of waste agricultural biomass to points of application / 30
3.5.3 / Technology modernisation / 30
3.5.4 / Price regulation of waste agricultural biomass / 31
3.5.5 / Fiscal Incentives / 32
3.5.6 / Financial subsidies / 32
3.5.7 / Awareness raising / 33
3.5.8 / Capacity building / 33
3.6 / Implementation and delivery mechanism / 34
4 / Next steps / 37
4.1 / Organise similar workshops for mass awareness raising. / 37
4.1.1 / Phase I workshops / 37
4.1.2 / Phase II workshops / 37
4.1.3 / Phase III workshops / 37
List of Pictures
Picture-1 / The workshop backdrop Welcoming address / 6Picture-2 / Conduct of the workshop / 7
Picture-3 / Conduct of the workshop / 7
List of Tables
Table-2.2 / Summary of biomass power cogeneration tariff across states / 10Table-2.2.1-a / Financial assistance and categories of biomass power projects / 11
Table-2.2.1-b / CFA provisions for Bagasse Cogeneration Project in through BOOT/BOLT model / 12
Table-2.2.1-c / CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications / 12
Table-2.2.2 / Fiscal Incentives for Biomass Power Generation / 13
List of Annexures
Annexure-1 / Schedule of Training Workshop on “Awareness raising about Policies for converting waste agricultural biomass into energy”” / 38Annexure-2 / List of participants / 39
Annexure-3 / Participants feed back / 40
1Introduction and Background
The United Nations Environment Programme (UNEP), DTI-IETC, has assigned a project to Birla Institue of Management Technology, (BIMTECH) under the project code MOD# 12-29-11013, titled “Waste Agricultural Biomass for Energy: Resource conservation and GHG Emission Reduction”
As a part of the SSFA terms, it was felt necessary that an awareness workshop should be conducted for a group comprising people from different walks of life. Accordingly, a one day training workshop was planned to be conducted on “Awareness raising about technologies for conversion of agricultural biomass to energy”. A training workshop was designed by the BIMTECH-UNEP team and was conducted on the 19th September 2013 at BIMTECH – Delhi NCR.
The workshop was organized for the professionals working in the energy generation and utilization activity. A total of 25 members attended the workshop. The complete deliberations of workshop were mainly conducted by Professor K. R. Chari, supported by the team members. The schedule of the workshop is provided in Annexure-1.
Picture-1 through 4 show various stages of the workshop.
Picture-1: The workshop backdrop with Prof. K. R. Chari welcoming the gathering
Picture-2: Conduct of the workshop
Picture-3: Conduct of the workshop
Annexure-2 provides the list of participants.
2Workshop coverage
Power generation through renewable energy sources (Biomass and Co-generation)
2.1Government Policy[1]
2.1.1The national scenario -- Biomass relatedPoliciesandProgrammes
A rural energycrisis started getting faced during the mid-1970s decade. Increasedoilprice, increasedhouseholdenergydemandduetohighpopulationgrowth, anddepletionoflocalwoodresourcesduetounsustainableuse were found to be the three most important reasons and causes for this situation.
Thenationalpolicy makersneededtofindeconomically viableandsustainableenergy resourcetomeetrural energy needs.Although,importofkeroseneandLPGforcookinganddieselforirrigation pumping remained a possible short-term supply-side solution, this was not viable in the long runduemacroaswellasmicroeconomicconstraints. While at macro-economic level the high proportion of POL (Fuel Oil and Lubricants) in the total imports of India was a matter of concern to the policy makers, at microeconomy level,a majority of the poorersectionofruralhouseholds was facing the problem of very low disposableincometo spendoncommercialfuels.With a view to meet these challenges of ruralenergy crisis,theprogrammesforrenewableenergy technologies(RETs)weredevelopedinthe1970s.Biomass,being alocal,widely accessibleandrenewableresource,waspotentially themostsuitabletoalleviatebothmacro and micro concerns.
Despiterapidgrowthofcommercialenergy,biomassremainsprincipleenergysourceinrural andtraditionalsectorsand is estimated to contributea third of India's energy[2]. The national biomass policy of India has few decadesofhistory,emanatingwiththeruralenergy policies.The GOIstrategy wasmulti dimensional and was focusedonimprovingefficiency of conventional technologies,enhancingsupply chain of biomass, stressing on introduction of modernbiomasstechnologiesto providereliableenergy atcompetitivepricesandestablishinginstitutionalsupport.
2.1.2Current status of Policies to promote biomass power in India
During the past four decades, Government of India, through it’s earstwhile Department of Nonconventional Energy Sources (DNES), currently the Ministry of Renewable Energy (MNRE), has been supporting many projects for development of various renewable energy sources, such as use of waste biomass through the Biogas plants, biomass gasifiers and small and medium sized Biomass power plants. In addition, various other developments like (i) Technology for alcohol (ethanol) production from crop residues, (ii) Production of bio-diesel from non-edible oils and plants like Pongamia also have been developed.
However, considerable amounts of waste agricultural waste is still not utilised and is being wasted, primarily through burning in the fields or left to rot. A substantial amount of crop residues is burnt by the farmers after harvesting of main crop like wheat and paddy.
The Ministry of New and Renewable Energy (MNRE) has initiated a detailed study and creation of national database on the available and surplus biomass. The project has been assigned to the esteemed Indian Institute of Science, Bangalore (IISc). However, due to the difficulties in collecting the huge amounts of data, the database is not being kept up to date, with a result that detailed data is available only till the period 2004.
Biomass power plants in India are based mostly on agricultural waste. Gasifier-based power plants are providing a great solution for off-grid decentralized power. While for providing grid-based power 8-15 MW thermal biomass power plants are suitable for Indian conditions, they stand nowhere when compared to power plants being set up in Europe which are at least 20 times larger.[3]
Government policy is the biggest factor behind lack of investment in biopower sector in states with high biomass potential. Defragmented nature of agricultural lands do not allow high mechanization which results in reduction of efficiency and increase in procurement cost.
2.1.3Biomass power and cogeneration programme
Traditionally and historically, biomass has always been considered as an important source of energy in India. The favourable factors are the renewability, easy and local availabilit, carbon-neutrality and it’s potential to provide significant employment in the rural areas. It is estimated that about 32% of the total primary energy use in India is 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.[4]
The “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.
2.2Incentives
The Ministry of New and Renewable Energy (MNRE) has been implementing biomass power/co-generation programme since mid nineties. A total of288 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. 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.
Besides the Central Financial Assistance, 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 exemptionare 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.
Table-2.2 provides a summary of such provisions in different states.
Table-2.2: Summary of biomass power cogeneration tariff across states(As on 31.03.2011)
State / Tariff fixed by Commissions / RP0 %Andhra Pradesh / Biomass power / Rs.4.28/kWh, (2010-11) / Min. 3.75%
Cogeneration / Rs.3.48/kWh
Chattishgarh / Biomass power / @Rs.3.93/Unit (2010-11) / 5%
Gujarat / Biomass power / Rs.4.40/unit (with accelerated depre.) / 10%
Cogeneration / Rs.4.55/unit (with accelerated depre.) for 1st 10 yrs
Haryana / Biomass power / Rs.4.00/unit: 3%escalation (base year 2007-08) / 1%
Cogeneration / Rs.3.74/unit: 3%escalation (base year 2007-08)
Karnataka / Biomass power / Rs.3.66 per unit (PPA signing date) Rs.4.13 (10th year) / Min.10%
Cogeneration / Rs.3.59/unit, (PPA signing date) Rs.4.14/unit (10th Year)
Kerala / Rs.2.80/unit Biomass power escalated at 5% for five years (2000-01) / 3%
Maharashtra / Biomass power / Rs. 4.98(2010-11) / 6%
Cogeneration / @Rs.4.79/unit (Comm yr.)
Madhya Pradesh / Rs.3.33 to 5.14 /unit paise for 20 yrs. With escl of 3- 8paise / 0.8%
Punjab / Biomass power / Rs.5.05 /unit, (2010-11) escalated at 5% -cogen, & 5%-BM / Min. 3%
Cogeneration / Rs.4.57/unit (2010-11)
Rajasthan / Biomass power / Rs.4.72 / unit-water cooled (2010-11)
& Rs.5.17-air cooled (2010-11) / 1.75%
Tamil Nadu / Biomass power / Rs.4.50-4.74/unit(2010-11) / Min. 13%
Cogeneration / Rs.4.37-4.49/unit (2010-11)- (Escalation 2%)
Uttaranchal / BM / Rs.3.06/unit. (2010-11) – / 9%
Cogeneration / Rs.3.12/unit (2010-11)- (new projects)
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 / Biomass Power / Rs. 4.36/unit fixed for 10 years / 4%
Bihar / Biomass Power / Rs. 4.17/unit (2010-11)– / 1.5%
Cogeneration / Rs.4.25/unit (2010-11) – existing plants
New Cogeneration / Rs.4.46/unit (after 2010-11)
Orissa / Rs.4.09/unit
O.A.. - Open Access terms & conditions as for CERC and SERC’s order
(The concerned state Regulatory Commissions provide the details and clarifications)
2.2.1Central Financial Assistance (CFA) and fiscal incentives
The central government has designed various schemes for financial assistance to this sector. Most of these provisions and incentives are on specific application and technology, thereby suiting to the needs of individual type of projects..
Such CFAs for Biomass Power Project and Bagasse Cogeneration Projects by Private/Joint/Coop./Public Sector Sugar Mills are depicted din Table-2.2.1-a.
Table-2.2.1-a: Financial assistance and categories of biomass power projects
Project Type / Capital SubsidySpecial Category States(NE Region, Sikkim, J&K, HP & Uttaranchal) / Other States
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 mills40 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.
Similarly, Table-2.2.1-b and Table-2.2.1-c provide details of CFA provisions 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 and for sector sugar mills employing boiler modifications, respectively.
Table-2.2.1-b: CFA provisions 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
PROJECT TYPE / MINIMUM CONFIGURATION / CAPITAL SUBSIDYSingle 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.
Table-2.2.1-c : CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications
PROJECT TYPE / MINIMUM CONFIGURATION / CAPITAL SUBSIDYExisting 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.
2.2.2Fiscal Incentives for Biomass Power Generation
Various other fiscal incentives have been provided, as shown in Table 2.2.2.
Table-2.2.2: Fiscal Incentives for Biomass Power Generation
Item / DescriptionAccelerated Depreciation / 80% depreciation in the first year can be claimed for the following equipment required for co-generation systems:
Back pressure, pass-out, controlled extraction, extraction–cum-condensing turbine for co-generation with pressure boilers
Vapour absorption refrigeration systems
Organic rankine cycle power systems
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
Despitesomesuccesses,theoverall impact of biomass programmes on the Indian energyscene has been only marginal. The trend of the rural masses has shifted to use of more convenient modes of cooking fuel like the LPG etc. The free markets are not involved in this form of energy supply aswellas conversion. Most of the successful technology implementations have been seen in the government supported projects only, or in those cases where there was considerable financial support from various national and international sources.
2.3Institutional framework – Ministry of New and Renewable Energy
The Government of India, seeing the limited results of the biomass energy related programmes and realising imminent need of new and renewable energy resources that would ensure sustainable development and energy security identified use of various renewable energy resources and efficient use of energy as the two thrust areas of the sustainable development. In order to make concentrated efforts in this sector, the Government of India established a Commission for Additional Sources of Energy (CASE) in the Department of Science and Technology, in 1981. The mandate of CASE was to promote research and development activities in the field of renewable energy. CASE was formally incorporated in 1982, in the newly created Department of Non -conventional Energy Sources (DNES). In 1992 DNES became the Ministry for Non-conventional Energy Sources, commonly known as MNES, and now the Ministry of New and Renewable Energy (MNRE). It has been accorded more importance for working on higher levels of renewable energy technology programmes.The changed emphasis was aimed at promotingmodernization andcommercializationofbiomassproduction,combustion,densification, and electricity generation.
The Ministry continues to support the implementation of a large broad –spectrum programme covering the entire range of new and renewable energies. The Ministry has Regional Offices, three specialised research Institutions and a non -banking financial company –Indian Renewable Energy Development Agency (IREDA) -under its administrative control to promote its policy and programme initiatives.