SMEs generate cheap power, and cleanly too

Use agri waste that is available in the vicinity of their factories

Small and medium enterprises (SMEs) in the food processing and paper manufacturing industries in power-deficit Haryana have access to a round-the-clock supply of power. This power is available to them at a price that is cheaper than the state's power tariff, and it has a zero carbon footprint - these SMEs generate steam and power for captive consumption, using agri waste that is available in the vicinity of their factories.

Pradeep Saini, managing director of Sainsons Paper Industries Ltd (SPIL), located near Pehowa in Kurukshetra district, added a 1 Mw cogeneration power plant in 2012-13 to the company's existing 3 Mw plant. Saini is installing new boilers that will run on bird and animal litter, and these are slated to be commissioned in March 2014.

"We use the 4 Mw power generated for captive use. It costs about Rs 3.50 per unit, compared to Rs 7.25 per unit of power purchased from the state power utilities," Saini said.

SPIL's example is not an isolated one - there are quite a few SMEs in Haryana that make use of captive power that they generate from renewable sources, without seeking any support from the state government.

Other companies that are running captive power units based on biomass cogeneration include Sunstar Overseas Limited, Sonepat (1.95 Mw); Shri Vishnu Overseas Private Limited, Kaithal (1.5 Mw); Goel International Pvt Ltd, Taraori, Karnal (3 Mw); and EICL Limited, Yamunanagar (2 Mw).

"Except for the subsidy of Rs 20 lakh per Mw that the Central government gives, no incentive is offered for generating energy from renewable sources. We forayed into this segment because we need steam to dry the paper. The cogeneration of steam and energy makes the investment cost-effective," Saini said. (A biomass cogeneration plants costs Rs 4-5 crore per Mw.)

The example set by the small players is in stark contrast to that of the big companies that had been awarded biomass-based power project by HAREDA (Haryana Renewable Energy Development Authority). In the past few years many of them have shelved their plans. As a result, while Haryana had envisioned the addition of 500 Mw of renewable power generation capacity by the year 2012, it has commissioned projects totalling only 200 Mw so far.

Challenges like regulatory uncertainty, logistics of adequate fuel supply and a competitive tariff in the state led to some projects being deferred, and the escalation in land prices in the past five years was the final blow that upset the companies' plans.

Big players like Gammon Infrastructure and Barmaco Energy Systems have shelved their proposed projects, while New Delhi-based Starwire India Vidyut Private Limited executed only one project of 9.9 Mw at Mohindergarh and called off three other proposed projects.

Despite the procedural hiccups and increase in cost, small players have been adding capacities to match their increasing energy requirements. For example, Mohinder Pal, chairman of Best Food Private Limited, recently added a 3 Mw plant to his existing 3 Mw unit near Karnal.

"The power we purchase from state utilities costs about Rs 5 per unit. There are frequent power cuts and we need generators, which provide power at Rs 16 per unit. We are in the rice processing business and have lots of rice husk. We need steam for parboiling and drying of paddy. So the biomass cogeneration power plant is useful for us," Pal said.

Since the biomass power tariff in Haryana (the price at which a power producer can sell power) is lower than in other states (it is 5.59 per Kwh in Haryana), small players do not want to sell it, preferring to utilise the power themselves.

Sources in HAREDA confirmed that the high cost of agri waste in Haryana as compared to other states and the unviable land cost dissuaded some companies that were awarded projects. However, small players have continued to add renewable power generation capacity.