CFA and fiscal incentives available for biomass power generation and bagasse cogeneration projects


Power and New and Renewable Energy Minister, Raj Kumar Singh, is confident about achieving the target of 175 GW of renewable energy capacity by 2022, reported PTI earlier this year. He mentioned that 80 GW had already been installed, work on the installation of 24 GW was underway and bidding for the installation of another 42 GW was being carried out in different stages. Of the total target, 10 GW renewable energy capacity is set to be achieved from bioenergy.

The use of biomass for producing energy is one of the most ancient practices in the field of renewable energy. But innovation in the field and adoption of bio-power has largely been impeded after the discovery of fossil fuels. Though easy to harness, the pollution caused by conventional fossil fuels has led to large-scale environmental degradation worldwide. To mitigate the risks of environmental pollution, governments across the globe have been taking initiatives to promote the use of alternative, clean energy sources, since decades.

Biomass is widely used in the rural areas of India for the production of power. The Ministry of New and Renewable Energy (MNRE) has been taking measures to increase its use for energy production since mid-nineties. The Ministry states that the biomass power generation industry attracts investments amounting to Rs 600 crore every year, more than 500 million units of electricity are produced from biomass and the industry generates more than 10 million man-days of employment in the rural areas of the country each year. 130 biomass power projects generating 999 MW and 158 bagasse cogeneration (simultaneous production of electricity and thermal energy in sugar mills) projects generating 1666 MW of surplus energy to feed to the grid have been installed with the efforts of the Ministry.

The government also provides central financial assistance (CFA) and fiscal incentives to facilitate the development of biomass power generation projects and bagasse cogeneration projects. Described below are the various components and eligibility criteria of these schemes.

READ  Starbucks sticks to the classics for its holiday menu after misstep two years ago

1. CFA for bioenergy projects developed by private/joint/cooperative/public entities in special category states (North-East Region, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttaranchal) would be allotted as per the following norms:

  • Capital subsidy of Rs 25 lakh X (C MW)^0.646 can be availed for biomass power projects
  • Capital subsidy of Rs 18 lakh X (C MW)^0.646 can be availed by private sugar mills for bagasse cogeneration power projects
  • Cooperative/public sector sugar mills with steam pressure 40 bar and above can avail a capital subsidy of Rs 40 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • Cooperative/public sector sugar mills with steam pressure 60 bar and above can avail a capital subsidy of Rs 50 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • Cooperative/public sector sugar mills with steam pressure 80 bar and above can avail a capital subsidy of Rs 60 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • The capital subsidy available for cooperative/public sector sugar mills which haven’t started production yet and sugar mills which use backpressure route/seasonal/incidental cogeneration and feed surplus to the grid would be half the amount mentioned respectively in the above pointers

Reach out to Top Solar & Renewable Energy Products Dealers near you and get free quotes

2. The norms laid down by MNRE for the allotment of CFA to bioenergy projects developed by private/joint/cooperative/public entities located in other states (non-special category states) are as follows:

  • Capital subsidy of Rs 20 lakh X (C MW)^0.646 can be availed for biomass power projects
  • Capital subsidy of Rs 15 lakh X (C MW)^0.646 can be availed by private sugar mills for bagasse cogeneration power projects
  • Cooperative/public sector sugar mills with steam pressure 40 bar and above can avail a capital subsidy of Rs 40 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • Cooperative/public sector sugar mills with steam pressure 60 bar and above can avail a capital subsidy of Rs 50 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • Cooperative/public sector sugar mills with steam pressure 80 bar and above can avail a capital subsidy of Rs 60 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • The capital subsidy available for cooperative/public sector sugar mills which haven’t started production yet and sugar mills which use backpressure route/seasonal/incidental cogeneration and feed surplus to the grid would be half the amount respectively mentioned in the above pointers
READ  100 Unicorns by 2025? TiE Delhi-NCR’s India Internet Day to lay the roadmap

3. Bagasse cogeneration projects in cooperative/public sector sugar mills developed by independent power producers (IPPs)/state government undertakings or state government joint venture companies/special-purpose vehicle (Urja Ankur Trust) using BOOT/BOLT model can avail CFA following the below mentioned regulations:

  • Single cooperative sugar mills developed using BOOT/BOLT model with steam pressure 60 bar and above can avail a capital subsidy of Rs 40 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project
  • Whereas, single cooperative sugar mills developed using BOOT/BOLT model with steam pressure 80 bar and above can avail a capital subsidy of Rs 50 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project

4. Bagasse cogeneration projects in existing cooperative sector sugar mills implementing boiler modifications would be allotted CFA as per the following regulations:

  • Only sugar mills which haven’t received CFA from MNRE under any of its schemes would be eligible for availing CFA under this scheme.
  • A capital subsidy of Rs 20 lakh per MW of surplus power fed to the grid can be availed by existing cooperative sector sugar mills with steam pressure 40 bar and above
  • A capital subsidy of Rs 25 lakh per MW of surplus power fed to the grid can be availed by existing cooperative sector sugar mills with steam pressure 60 bar and above
  • A capital subsidy of Rs 30 lakh per MW of surplus power fed to the grid can be availed by existing cooperative sector sugar mills with steam pressure 80 bar and above
READ  Oil prices fall amid U.S.-China trade impasse

5. The following fiscal incentives have been specified by the Ministry for biomass power generation:

  • Users can claim an accelerated depreciation of 80% in the first year for the equipment used in a cogeneration system mentioned below:

i. Backpressure, pass-out, controlled extraction and extraction-cum-condensing ii. turbines used for cogeneration with pressure boilers

iii. Vapour absorption refrigeration systems

iv. Organic rankine cycle (ORC) power systems

v. Low inlet pressure small steam turbines

  • Project promoters will be provided tax holiday of 10 years
  • Components and machinery used initially while setting up a biomass power project would be exempted from customs and excise duty
  • Additional taxes would also be exempted in certain states as per prevailing GST norms

The regulations for availing CFA and fiscal incentives mentioned above are subject to updation/revision.

Reach out to Top Solar & Renewable Energy Products Dealers near you and get free quotes





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here