Biomass Power Cogeneration


  • 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.

  • 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.

Various Tupes of Agro Field/Industrial Residues are as follows:

Type of Agro residues Quantity(Million Tonnes / annum)
Straws of various pulses & cereals 225.5
Bagasse 31
Rice Husk 10
Groundnut Shell 11.1
Stalks 2
Various Oil Stalks 4.5
Others 65.9
Total 350

The estimated potentials of Biomass based renewable energy options in India are as follows:

Biomass Energy 16,000 MW
Bagasse Co-Generation 3,500 MW
Total 19,500 MW

Promotional Policies

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. 


Fiscal Incentives Available for Biomass Power Generation

 Item  Description
 Income Tax
1. Depreciation 100 % depreciation in the first year can be claimed for the following power generation equipment
1. Fluidized Bed Boilers
2. Back pressure, pass-out, controlled extraction, extraction and condensing turbine for Power generation with boilers
3. High efficiency boilers
4. Waste heat recovery equipment
2. Tax Holiday 10 year tax holiday
Customs Duty Duty leviable for NRSE power projects of less than 50 MW capacity (under Project Import Category) is 20 % ad valorum. This covers machinery and equipment components required for generation of electric power.
Central Excise Duty Exempted for renewable energy devices, including raw materials, components and assemblies.
Central Sales Tax -
General Sales Tax Exemption is available in certain States .

An overview of State Government/Utility policies and incentives for Biomass based power generation.

 Item Description
 Power wheeling charges Nil – 20% of the Energy Exported.
 Power Banking charges 2%
 Power Banking Period Nil to 12 Months
 Buy back Rate by SEB / State utility Rs 2.75/- to Rs 3.16/- per unit.
 Third Party sale In some states allowed
 Capital subsidy by State Govts. 1. Some states participate as equity in the project
2. Some states provide capital subsidy of Rs 25 Lakhs / MW

Central Financial Assistance and Fiscal Incentive

FA 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 Rs.40 lakh    * Rs.40 lakh         *
80 bar & above Rs.50 lakh    * Rs.50 lakh         *
  Rs.60 lakh    * Rs.60 lakh         *
  Per MW of surplus power@ Per MW of surplus power@
  (maximum support Rs. 8.0 crore per project)  (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.}

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. CFA will be provided to the sugar mills who have not received CFA earlier from MNRE under any of its scheme.

Source: MNRE & IREDA



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