Promotion of Biomass based Cogeneration


Promotion of Biomass based Cogeneration

MNRE has announced a scheme to support promotion of biomass based cogeneration Insugar mills and other industries in the country upto March 2020


The objective of the scheme is to support biomass based cogeneration projects in sugar mills and other industries for power generation in the country.

Biomass resources covered under the programme

The programme will provide CFA (Central Financial Assistance)for projects utilizing biomass like bagasse, agro-based industrial residue, crop residues, wood produced through energy plantations, weeds, wood waste produced in industrial operations, etc.

Municipal Solid Waste is not covered under the programme.


Registered companies, partnership firms, proprietorship firms, cooperatives, public sector companies, government owned firms are eligible for financial support available under the scheme.

To avail financial support the applicant must have availed term loan from any financial institution like public sector banks, NBFCs, private sector banks, central or state cooperative banks etc.

CFA  will not be provided under the scheme to the firms which have not availed term loan.

Central Financial Assistance (CFA)

Central Financial Assistance (CFA) will be provided at the rate of Rs.25 Lakh/MW (for bagasse cogeneration projects) and Rs.50 Lakh/MW (Non-bagasse Cogeneration projects) under the scheme.

The CFA will be back-ended and will be released in one instalment after successful commissioning and commencement of commercial generation and performance testing of the plant. The CFA will be released to the term loan account to reduce the loan component of the promoter. No advance CFA will be released under the scheme.

CFA will be provided only for projects which will be installing new boiler and turbines. CFA will be calculated on surplus exportable power as mentioned in power purchase agreement  / appraisal report in case of bagasse cogeneration projects and on installed capacity in case of non- bagasse cogeneration projects.

Expansionary projects

Biomass based cogeneration projects which intend to add capacity to the existing plants will also be considered for grant of CFA. CFA for such projects will be considered only for enhanced capacity. Applications already received for expansionary projects will be cleared as per guidelines existing at the time of submission of applications. All proposals will be examined by PAC and the recommended proposals will be considered eligible for grant of CFA.

Sanction of proposals

To avail CFA, the developers have to forward a copy of DPR to the Ministry through lead Financial Institution (FI) which is providing loan the project. Applications will be invited every quarter based on availability of funds and will be put up before Project Appraisal Committee (PAC). Further the Financial Institution will give presentation before Project Appraisal Committee (PAC). The sanction letter for grant of CFA will be issued to the promoter with approval of IFD and Secretary. Prior sanction letter from the Ministry is required for availing CFA. Applications received before notification of this scheme will be processed as per the extant guidelines prevailing during the period.

Time line for completion of the project

Promoters have to complete the project within twenty four months from the date of sanction. Another six months extension will be considered without penalty at the level of Secretary MNRE in cases where the reasons for delays are not attributable to the developer.

In case the project is not completed within the stipulated time period, the sanction order for grant of CFA will stand cancelled.

Incentives to State Nodal Agencies

State Nodal Agencies (SNAs) will be provided Rs. 1 Lakh/MW (maximum Rs.10 Lakh per project) as incentive or service charge towards post installation monitoring of the projects and sending periodic reports to the Ministry.


Performance inspection

On receipt of information about the commissioning of the plant, a letter for performance inspection of the plant will be issued to lead FI. The utility where the project is located will carry out the performance testing. The respective SNA will be a part of the performance testing. Any charges for performance testing will be borne by the developer. Performance testing of the project would inter-alia imply operation of the project for three months including at least 72 hours continuous operation at minimum 80% of rated capacity.

Monitoring of the  projects

Periodic monitoring of the projects will be monitoring will be carried out by a team comprising representatives from Utilities, SNAs, experts appointed by MNRE and Ministry officials.


Quality of project and the equipment utilized therein is considered important for reliability and long-term operations. Project developers would be required to follow various national/international standards for equipment utilized in a project.

For biomass based cogeneration projects, equipment should confirm to the following standards. The standards will vary from time to time and modified standards will be incorporated in the programme after due diligence with stake holders.

Table 1: Equipments and their respective Standards

| Article published on 19/06/2018 by Moulin

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