Biomass power plant owners are seeking generation-based incentive along the lines of that extended to wind power projects.
The Indian Biomass Power Association, a newly formed body to represent the cause of this category of renewable energy, has written to the Ministry of New and Renewable Energy to consider extending the incentive which is now available to wind energy sector.
The Government had announced generation-based incentive for wind energy projects in the Budget. The wind power will get Rs 0.50 a unit of electricity as incentive up to a ceiling of Rs 1 crore a MW.
This incentive had been available up to March 2012 and encouraged investments in wind energy. After it was withdrawn in April 2012, investments were down by more than half, according to wind energy representatives.
Biomass-based power projects use agriculture waste and other woody matter as fuel to generate electricity. There are over 1,250 MW of biomass-based power plants but more than half these units are not able to operate because of high fuel costs and low power tariff.
According to an industry representative, biomass fuel now costs around Rs 2,600-3,000 a tonne. The tariff for electricity generated from this source is Rs 4.85 a unit which does not cover the fuel cost which is estimated at Rs 5.20 a unit of electricity.
The units that are in operation manage by selling electricity to private players at a higher cost under the open access system, the representative said.
The sector is not supported by other policy measures like renewable purchase obligation — ensuring that electricity utilities buy a portion of their power requirement from this source — along the lines available to wind and solar power, he said.
balaji.ar@thehindu.co.in