India sets first benchmark price for biomass pellets

India has rolled out its first benchmark price for biomass pellets to promote capacity additions and encourage co-firing with coal.

India's power ministry has announced a benchmark price of 2.27 rupees/1,000 kcal ($0.027/1,000 kcal) for non-torrefied biomass pellets applicable to northern India excluding the national capital region.

The pellets should have moisture content below 14pc and a gross calorific value between 2,800-4,000 kcal/kg. The price excludes goods and services tax and transportation costs, the ministry said recently. The price, set up on the recommendations of a price benchmarking committee, is set for a year effective 8 November. Thermal power plants in the region are advised to adhere to this benchmark price.

The ministry amended a policy for the country's utilities to co-fire biomass with coal in June, by delaying the start date and announcing the setting up of a committee to implement price benchmarking and biomass purchases.

Indian utilities in the original policy, announced in October 2021, were told to co-fire 5pc biomass from October 2022, in a move aimed at reducing coal consumption and curbing pollution. Co-firing was originally set to increase to 7pc from October 2023 for two categories of power plants — those with a bowl mill or with a ball and race mill.

The revised policy, announced by the power ministry on 16 June, requires all coal-based thermal power plants with bowl mills to use a minimum 5pc blend of biomass pellets made primarily from agricultural residue with effect from the start of India's 2024-25 fiscal year from 1 April, increasing to 7pc from the start of 2025-26. Plants with ball and race mills should co-fire the same percentages of torrefied biomass pellets made from agricultural residue during the same timeframe.

The policy for co-firing will be valid for 25 years or until the useful life of a power plant, whichever is earlier, the power ministry previously said. The extent of co-firing will be reviewed periodically.

India has surplus biomass supplies of about 230mn t/yr, largely from agricultural residue, the power ministry previously said. The surplus has prompted the country to look at the potential for exporting biomass. The government amended its trade policy in February this year to allow exports of biomass, as the country eyes more investment in biomass manufacturing capacity and technology.

By Ajay Modi