India’s effort to increase biomass co-firing in thermal power plants is facing a supply-side challenge, with installed pellet capacity still significantly below the volume required to meet current blending requirements. While India has sufficient agricultural residue overall, speakers said converting that resource into affordable, quality-assured pellets remains constrained by aggregation, transportation, storage, procurement and policy implementation.
Pellet Capacity Lags Demand
The issue came up during a session on ‘India’s Biomass Co-firing Policy Ecosystem’ at the Third Edition of India Bioenergy & Tech Expo. T Venkateswarlu, Member-Thermal, Central Electricity Authority (CEA), said co-firing had increased from around 1.6 million metric tonne in 2024-25 to around 3 million metric tonne in 2025-26. However, the supply base needs to expand substantially.
According to Venkateswarlu, installed pellet capacity outside the National Capital Region (NCR) is around 38,000 tonne per day, with effective capacity of about 30,000 tonne per day, against a requirement of around 130,000 tonne per day. “The pellet industry has to develop, and the pellet industry needs raw biomass,” he said, adding that the geographical distribution of available biomass remains a consideration.
Ravi Prakash Agrawal, Mission Director, Sustainable Agrifood Management and Renewable Technologies for Energy (SAMARTH), said India has around 206 million tonnes of surplus agricultural residue, according to a 2025 study. However, converting this available biomass into usable feedstock remains a challenge, with gaps in collection and aggregation limiting its supply to pellet and other bioenergy plants.
“The first thing that comes is aggregation,” Agrawal said, adding that agricultural aggregation needs to be recognised and developed as a formal industry. He suggested that professional aggregators should have access to land, machinery and support so that the collection process can operate at scale rather than remain fragmented among individual farmers.
Alok Sinha, former Additional Chief Secretary, Government of Uttar Pradesh and Advisor, Indian Federation of Green Energy (IFGE): Bharat Biomass & Pellets Forum, said that although India has a large surplus of biomass, less than 1 per cent is currently being converted into pellets or briquettes. This highlights the gap between the availability of agricultural residue and its conversion into usable fuel for thermal power plants.
Economics Remain A Constraint
The availability of biomass does not automatically translate into affordable pellets, as costs vary significantly across regions and transportation can add to the overall expense. Sinha said biomass costs depend on the location, while the distance between pellet production facilities and power plants can further affect transportation costs.
Niraj Kumar, President, Farmwatt Innovations, highlighted the limited policy support available to aggregators. “We haven't seen a single incentive that has been offered to aggregators,” he said, adding that aggregators currently bear their own capital and operating costs, which eventually affect the price paid by downstream users.
For power procurers, the higher cost of biomass-based generation also remains a concern. Deepak Raizada, Director, Corporate Planning, Uttar Pradesh Power Corporation Limited (UPPCL), said the additional cost could affect the scheduling of power under the merit-order system, even as the State utility continues to support biomass procurement.
For the pellet industry, the challenge extends beyond production capacity to securing reliable offtake. Gaurav Mishra, Scientist-F and Mission Director, Ministry of New and Renewable Energy (MNRE), pointed to CEA estimates that biomass co-firing could increase power costs by around 12 paise or 25 paise, depending on the type of pellet used. He added that a pass-through mechanism for the additional cost could encourage more players to enter the market.
Policy Needs Consistent Execution
India’s co-firing policy has evolved from an advisory framework introduced in 2017 to mandatory blending requirements, with the prescribed levels changing over time. Under the current comprehensive policy, thermal power plants in the National Capital Region (NCR) are required to use a 5 per cent biomass blend, along with an additional 2 per cent blend.
Plants in other regions are required to use a 5 per cent biomass blend. The requirements apply from FY2025-26, while the policy allows the co-firing percentage to be reviewed based on biomass availability.
Policy consistency is another concern for the biomass supply chain. Sinha said enforcement is stronger in NCR, while implementation remains less uniform elsewhere, creating uncertainty for pellet producers that have already invested in capacity and need greater visibility on future procurement.
Amit Kulshreshtha, General Manager, NTPC Energy Technology Research Alliance (NETRA), said technology development could help address some of the cost and operational constraints as co-firing expands. Testing at NTPC has examined higher levels of co-firing, while the industry is also assessing torrefied biomass as an alternative that could improve fuel characteristics and handling. “Up to 10 per cent we can safely fire in the power plants,” Kulshreshtha said, referring to NTPC’s testing.
The challenge for India is not just the availability of agricultural residue, but building a supply chain that can consistently deliver it to thermal power plants at a viable cost. Bridging this gap will require stronger aggregation networks and pellet capacity closer to biomass sources and power plants. Better storage and transportation infrastructure, along with greater certainty around procurement and cost recovery, will also be needed.