India’s Bioenergy Capacity to Reach 15.5 GW by FY32, Says Study

India’s bioenergy installed capacity is projected to increase to 15.5 GW by FY32 from 11.58 GW in FY25, driven by stronger policy support, rising agricultural residue availability and expanding waste-to-energy projects, according to a report by CARE Analytics and Advisory Pvt Ltd.

The report said that bioenergy accounted for 11.6 GW of India’s renewable energy mix as of March 2025. Bagasse-based cogeneration remained the dominant segment, supported by biomass power and waste-to-energy (WtE) projects. Over the last five years, India added around 868 MW of biomass power and cogeneration capacity and another 693 MW of WtE capacity, reflecting sustained government support for the sector.

India’s total bioenergy installed capacity rose from 10.53 GW in FY21 to 11.58 GW in FY25, representing a compound annual growth rate of 2.24%. Biomass power and bagasse cogeneration increased from 9.37 GW in FY21 to 9.82 GW in FY25, while non-bagasse biomass cogeneration rose from 0.77 GW to 0.92 GW during the same period.

Waste-to-energy capacity emerged as the fastest-growing segment, nearly doubling from 0.17 GW in FY21 to 0.31 GW in FY25. The report said this reflected stronger policy emphasis on converting municipal and agricultural waste into power, while reducing dependence on landfills and improving urban waste management.

According to the report, India generated around 750 million tonnes of agricultural residue in FY24, including wheat straw, rice straw, sugarcane bagasse and other crop waste. Wheat residue accounted for nearly 25 percent of the total, while rice residue contributed about 24 percent.

The country’s surplus biomass availability was estimated at 250 million tonnes in FY24, enough to support nearly 28 GW of energy generation. This surplus is expected to rise to 295 million tonnes in FY25, while total biomass availability is projected to increase by nearly 27 percent to 948 million tonnes. As a result, potential bioenergy generation could rise to 35 GW.

The report highlighted that India’s large agricultural biomass surplus, estimated at more than 230 million tonnes annually, offers a major opportunity to expand biomass-based power generation, pelletisation, cogeneration and co-firing in thermal power plants.

Government programmes such as the National Bioenergy Programme, the Waste-to-Energy Programme Guidelines, the Biomass Co-firing Policy and biofuel blending targets are accelerating project development. These initiatives provide financial assistance, technology standards and long-term offtake mechanisms aimed at improving project viability and investor confidence.

The report also noted that bioenergy projects provide several benefits beyond electricity generation. Use of paddy straw and other agricultural residues can help reduce stubble burning, lower carbon emissions, improve soil fertility and create an additional source of income for farmers. Biomass projects also support decentralised round-the-clock power generation in rural areas and create jobs in collection, baling, transport and processing of agricultural waste.

However, the sector continues to face major challenges, including seasonal biomass availability, fragmented supply chains, high transportation and storage costs and the difficulty of competing with falling solar and wind tariffs. The report called for organised biomass supply networks, digital logistics platforms, long-term procurement contracts and multi-supplier sourcing strategies to address these issues.

The investment requirement for bioenergy-based power projects is expected to continue rising through the decade. Annual investment opportunities are projected to increase from INR 50.6 billion in FY25 to INR 58.7 billion by FY30.

The report said biomass-based projects remain more capital-intensive than solar projects. Biomass plants based on rice straw and juliflora require investments of INR 6.97 crore-7.44 crore per MW, compared with INR 4 crore-4.5 crore per MW for solar projects. However, biomass projects offer a shorter payback period of four to five years, compared with eight to 10 years for solar and wind projects.

Tanvi Shah, Senior Director at Care Analytics and Advisory Pvt. Ltd. said  that reframing agricultural residue from waste into a strategic bioenergy resource could unlock significant social, economic and environmental benefits.

Nitu Singh, Associate Director at Care Analytics and Advisory Pvt. Ltd. said that India would need a coordinated policy approach, supported by biomass mapping and stronger institutional alignment, to fully realise the sector’s long-term potential.