 "Representative Image of Biogas Plant (Source: Wikipedia)")
Two of India’s large conglomerates – Adani Group and Reliance Industries Ltd (RIL) — are planning to set up compressed biogas (CBG) plants over the next five years. With their entry, industry executives across the biogas value chain are hoping for a streamlined supply chain of feedstock, better finance, and higher offtake.
The early signs have been promising, as large players tie up for long-term sourcing.
A few months ago, Adani TotalEnergies invited expressions of interest (EoIs) from feedstock suppliers for a five-year contract to supply napier grass to its planned CBG plant in Uttar Pradesh. At 600 tonnes per day, this would be the largest in the country, the company claims.
Adani TotalEnergies plans to set up five CBG units across India, and RIL 100 plants, in the next five years.
Under the Sustainable alternative towards affordable transportation (Satat) scheme, the government is looking at adding 5,000 CBG plants and a production capacity of 15 million tonnes. The Satat scheme is promoted by state-backed firms such as Indian Oil, Bharat Petroleum, and GAIL.
According to GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) data, there are 58 functional CBG/Bio CNG plants in India.
Gaurav Kedia, chairman for Indian Biogas Association, points out India’s feedstock potential is higher than the envisaged capacities.
“Under the government scheme, we are talking about 15 million tonnes (mt) of CBG. In terms of feedstock available, there is scope to produce up to 60 mt of CBG and, given its nature of substituting other fossil-fuel-based gases, there is definitely potential demand,” Kedia said. “What stand between 15 mt and 60 mt are challenges like unavailability of finance, and need to streamline the feedstock supply chain.”
Kedia and others are hopeful that the entry of bigger companies will address these challenges. RIL expects consume 5.5 mt of agro-residue and organic waste through CBG, while Adani TotalEnergies pegs this at 250-500 tonnes per day for each of its five planned units.
“The compressed biogas ecosystem and landscape is definitely changing with bigger players entering and the government's push. Some of it was seen in the last six to eight months. The sector is slowly maturing, and it will take some more years,” said Pramod Chaudhari, executive chairman of Praj Industries.
Company executives from Praj Industries, during a call in July, informed analysts that the company had started witnessing constructive movement in terms of orders from the CBG space, with business confirmation for five projects from a leading business conglomerate to be set over the next 15 to 18 months with an option for five more plants.
“Not only the ESG (environment, social and governance) aspect but low carbon, clean and renewable fuel with blending opportunities are some of the drivers making the entire value chain viable, be it offtake or feedstock availability,” Chaudhari added.
Feedstock aggregators are another segment reporting growth. “Aggregators’ job is to formulate village-level entrepreneurs. And they procure it from village-level entrepreneurs, who can in turn be farmers as well," Kedia said. These aggregator companies then supply to the bigger firms.
Reveille Energy LLP is one such aggregator operating in the biogas segment. Its managing director Rohit Dev said: “These conglomerates have made investments in developing the supply chain, through offtake tie-ups with aggregators and are also extending finance to vendors for machinery requirements. The number of channel partners for such companies is also increasing.”
Dev and others from the industries hope with conglomerates proving the financial viability of biogas in India, willingness of banks to lend to related projects will also increase. “The conglomerates have managed to get the financial machinery to follow their lead,” he said.
The government’s push for CBG under Satat has seen a rather sedate start. According to Satat data, there are 2,189 active letters of intent (LoI) to set up CBG plants and 48 such plants have been commissioned so far.
The government initiatives, however, have lent further boost to farm-level entrepreneurs. Surendra Choudhary from Rajasthan is one of them. He said: “I have shared interest with the government to set up a CBG plant. I have the land and a farm with access to agricultural waste. I will consider the plant if government incentives are offered and the returns are higher than bank fixed deposits.”
