MoP Mandates Biomass and MSW Co-Firing in Coal-Based Thermal Power Plants

The Union Ministry of Power (MoP) has issued a new Comprehensive Policy for the Utilisation of Biomass and Torrefied Charcoal made from Municipal Solid Waste (MSW) in coal-based thermal power plants, replacing all earlier guidelines released in 2021 and 2023.

The policy, approved by the Minister of Power and Housing & Urban Affairs, formally brings MSW-based torrefied charcoal under the co-firing framework and has been circulated to state power departments, the Central Electricity Authority (CEA), and heads of central generating stations and independent power producers.

According to the detailed annexure, India generates close to 750 million tonnes of biomass every year, including nearly 230 million tonnes of surplus agricultural residues. Urban centres produce about 1.5 lakh tonnes of municipal solid waste per day, of which roughly a quarter, about 14 million tonnes annually, remains unmanaged. The ministry said blending this surplus biomass and unprocessed waste with coal would cut greenhouse gas emissions, reduce stubble burning, and support the Swachh Bharat Mission while strengthening the supply chain for biomass pellets.

Under the revised framework, all coal-based thermal power plants in the National Capital Region will be required from FY 2025–26 to use a 5 percent blend of biomass pellets along with an additional 2 percent blend of biomass pellets and torrefied MSW charcoal on an annual basis. Plants outside the NCR must co-fire a 5% blend of biomass pellets and/or torrefied MSW charcoal during the same period. Pellet types may vary from non-torrefied to semi-torrefied and fully torrefied material depending on plant compatibility, and NCR-region plants must ensure that at least half of the raw material used for pellet production is sourced from paddy straw and crop residue collected within the NCR and adjoining districts.

Thermal power plants seeking exemptions may apply for case-by-case consideration, with applications reviewed by a committee chaired by the Chief Engineer (TE&TD) of the CEA and including representatives from the Commission for Air Quality Management, NTPC, BHEL, CPRI, the Ministry of Agriculture, and the SAMARTH Mission. The policy also clarifies tariff treatment.

Plants governed by Section 62 of the Electricity Act will receive a pass-through of additional biomass-related fuel costs in the Energy Charge Rate, while those operating under Section 63 may claim the higher cost under Change in Law provisions, including projects where fuel cost pass-through is already provided in the PPA. However, any increase in ECR arising from co-firing will not be considered while determining Merit Order Despatch. Discoms will also be able to meet their Renewable Consumption Obligations by purchasing power generated from biomass and MSW co-firing.

The ministry reiterated that the previously issued Model Contract for biomass procurement remains applicable and may be amended as needed. It added that benchmark prices for biomass pellets may continue to be announced for different regions to support expansion of the pellet manufacturing ecosystem in the country.