Clarification Issued on Biomass Co-firing Policy for Power Plants

The Ministry of Power (MoP) has issued a clarification regarding its Revised Policy for Biomass Utilization for Power Generation through Co-firing in Coal Based Power Plants. This clarification was published on May 14, 2024.

The revised policy, launched in 8th October 2021, encouraged power plants to utilize biomass for co-firing with coal. It included provisions for determining the tariff for electricity generated through this method.

Certain power plants with “fuel cost pass through” clauses in their Power Purchase Agreements (PPAs) expressed concerns about a specific provision in the policy. This provision stipulated that increases in Energy Charge Rate (ECR) due to biomass co-firing could be claimed under “Change in Law” clauses if they exceeded a specific threshold.

The MoP clarifies that for plants established through competitive bidding the cost of biomass pellets can be directly passed through in the Energy Charge Rate (ECR). This eliminates the need to rely on “Change in Law” clauses and their associated thresholds.

This clarification simplifies the process for power plants utilizing biomass co-firing and ensures they can recover the associated costs.

This can potentially incentivize wider adoption of biomass co-firing, promoting cleaner energy generation in India.