MNRE Amends Policy for Biomass-Based Cogeneration Projects in India

The MNRE program provides financial support to companies in order to support the promotion of biomass-based cogeneration projects


The Ministry of New and Renewable Energy (MNRE) has amended two clauses in the policy to support the promotion of biomass-based cogeneration projects in sugar mills and other industries in the country up to March 2020. MNRE had announced the program in May 2018.

The policy provides central financial assistance (CFA) for projects utilizing biomass like bagasse, agriculture based industrial residue, crop residues, wood produced through energy plantations, weeds and wood waste produced in industrial operations.

Registered companies, partnership firms, proprietorship firms, cooperatives, public sector companies and government-owned firms are eligible for financial support under the program. To avail financial support, the applicant must have availed term loan from any financial institution like public sector banks, NBFC, private sector banks, central or state cooperative banks.

Under the policy, CFA will be provided at the rate of ₹2.5 million (~$35,477.7)/MW for bagasse cogeneration projects and ₹5 million (~$70,955.5)/MW for non-bagasse cogeneration projects.

MNRE has made two amendments to the policy document. In Clause 5, regarding the existing projects involving capacity addition, MNRE has inserted a new provision which states that “Applications already received for capacity addition (expansionary) projects before notification of this program will not be eligible for CFA.”

In Clause 6, regarding the sanction of proposals, MNRE has inserted two new provisions: Firstly, now all applications which are received by June 30, September 30, December 31 and March 31 will be considered in the next quarter. Secondly, applications received and sanctioned before the notification of this program will be processed per the prevalent extant guidelines and projects that have been set up prior to grant of MNRE will not be eligible for CFA.

When the program was launched, Clause 6 had a provision that said that applications received before the notification of this program will be processed as per the extant guidelines prevailing during the period.

Recently, MNRE also issued a memorandum regarding the continuation of issue of concessional custom duty certificate (CCDC) to set up projects for generation of power using non-conventional materials. Non-conventional materials include, agricultural, forestry, agri-industrial, industrial, municipal and urban waste, bio-waste and or poultry litter.

In August 2018, MNRE invited Expression of Interest (EOI) to assess the potential of biomass power and bagasse cogeneration in India.

Image credit: MNRE