Govt to benchmark prices of biomass pellets used for co-firing in thermal power plants

New Delhi: The Ministry of Power (MoP) has decided to benchmark the prices of biomass pellets used for co-firing in Thermal Power Plants (TPPs). The decision comes in view of evolving market conditions for biomass pellets and requests received from stakeholders, including thermal power plants, pellet manufactures, farmers, bankers etc. The benchmarked price shall take into account the business viability, impact on electricity tariff and efficient and faster pellet procurement by power utilities, said the Power Ministry in a statement on Tuesday.

Benchmarked price for biomass pellets to be effective from Jan 1, 2024

“Price benchmarking of pellets will enable the TPPs as well as Pellet Vendors to establish a sustainable supply mechanism for co-firing of pellets. The benchmarked price, as finalised by the committee under CEA, will be effective from 1st January, 2024,” said the Power Ministry.

Till the time the recommendations of the committee are implemented, the power utilities shall go for short-term tenders for meeting the immediate requirement of biomass pellets for their TPPs.

Torrefied biomass pellets to be procured by power utilities only for now

In another modification of the policy, it has been directed that since the availability of torrefied biomass pellets is presently limited in the country, torrefied pellets shall only be procured by utilities for which it is technically unavoidable and utilities which can use non-torrefied pellets should utilise the same only.

Union Power Minister RK Singh said that co-firing of biomass in coal-based power plants is a key policy of the government towards energy security, reduced use of fossil fuels and at the same time to increase income of farmers. The revised policy shall help in achieving these goals faster.

Explaining the decision, Power Secretary Alok Kumar said that the decision would encourage farmers, entrepreneurs as well as thermal power utilities to strive to establish a sustainable biomass ecosystem, achieve the targets for co-firing, reduce stubble burning and help to ensure a cleaner and greener future for the citizens of India.

Co-firing of biomass pellets

In line with the Biomass policy, which mandates cofiring of biomass with coal in thermal power plants, so far around 1.80 lakh MT of biomass fuel has been co-fired in 47 thermal power plants in the country, totalling a capacity of 64,350 MW. Out of this, more than 50,000 MT has been cofired during the first two months of FY23-24, which has also surpassed the previous highest-ever annual quantity. Further, about 114 Million MT of biomass pellets are at various stages of tendering. The purchase order has been placed for approximately 69 lakh MT of biomass pellets by thermal power plants. With the enabling policies in place and with thrust from the Ministry of Power through the SAMARTH mission, a substantial growth of Biomass cofiring in TPPs across the country is envisaged, said the Power Ministry.

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