What is the biomass co-firing requirement for Indian thermal power plants?

The number most sources get wrong

If you search for India’s biomass co-firing requirement you will repeatedly find the figure 7 per cent, stated flatly and without qualification. Anyone planning a pellet business on that number is sizing their market wrong.

Here is where it came from. The Ministry of Power revised its biomass policy in June 2023, mandating 5 per cent co-firing from FY 2024-25 and rising to 7 per cent from FY 2025-26. That is the source of the figure, and at the time it was correct.

The Ministry then notified a comprehensive new policy with effect from 2025-26, which supersedes both the 2021 and the 2023 guidelines. Under it, the structure changed. All coal based thermal power plants in India are required to co-fire 5 per cent biomass pellets. Plants in the National Capital Region carry an additional 2 per cent, and that additional portion is specifically torrefied charcoal made from municipal solid waste rather than agricultural biomass. Only for those NCR plants does the total blend reach 7 per cent.

So the honest statement of the requirement is: 5 per cent nationally, 7 per cent in the NCR, and the extra two points in the NCR are a different product entirely.

Why the distinction matters commercially

If you are supplying agricultural biomass pellets, your addressable requirement is the 5 per cent, everywhere, including in the NCR. The extra 2 per cent in the NCR is not available to you unless you are producing torrefied MSW charcoal, which is a different feedstock, a different process and a different business.

Sizing a pellet operation on 7 per cent of national coal consumption therefore overstates the mandated demand substantially. The market is still large, and there is a genuine structural shortage of supply against it, but a business plan built on the wrong figure will misjudge both the volume and the location of demand.

The local sourcing condition

There is a second provision that matters more than its length suggests. For thermal power plants in the NCR and adjoining areas, 50 per cent of the biomass used must be paddy straw sourced locally.

The purpose is straightforward. Paddy stubble burning in the states around Delhi is a major contributor to winter air pollution, and giving that stubble a paying buyer is a more durable fix than prohibiting the burning. The commercial consequence is that proximity to those paddy growing districts carries a value in the NCR that it does not carry elsewhere, because half the requirement cannot be met by hauling pellets in from somewhere cheaper.

What counts as biomass

The Ministry has indicated a broad range of agricultural residues: straw, stalk and husk from crops including paddy, soya and arhar, along with groundnut shell, coconut shell, castor seed shell, bamboo and its by products, and horticulture waste.

For a land restoration operation this list is worth reading closely, because several entries are things a restored block produces anyway. Bamboo and its by products are explicitly included, and horticulture waste covers the pruning and residue that arid horticulture generates every season.

What this does not tell you

Three things a pellet business needs that the policy does not settle, and that decide whether the requirement translates into revenue for you.

Price. The Ministry has issued a revised model contract for biomass use in thermal plants and may notify benchmark pellet prices. Until a benchmark applies to the plants you intend to supply, your realisation is a negotiation, not a given.

Haulage economics. A requirement in a plant four hundred kilometres away is not your market. Biomass is bulky and low in value per tonne, so the economic radius is short, and the plants within your radius are the only ones that matter. Map them before anything else.

Enforcement. A requirement is only as real as the consequence of missing it. Compliance across the plant fleet has been uneven, and penalties have been imposed on plants in the NCR for missing targets. Before committing capital, check the recent compliance record of the specific plants you plan to supply rather than assuming the national policy translates evenly to every one of them.

The practical takeaway

The requirement is real, it is national, and it creates a genuine buyer who is not purchasing out of goodwill. That is exactly the kind of payer worth building on, and it is why biomass sits in our own land restoration model as an early revenue line rather than as a hope.

But build the plan on 5 per cent, on the plants inside your haulage radius, and on those plants’ actual compliance behaviour. The widely quoted 7 per cent describes the National Capital Region, and two of those seven points are a product most pellet producers do not make.

Policy changes. This page reflects the position as published in the sources listed below and should be rechecked against the current Ministry of Power notification before it is relied on commercially.

Related questions

Is the biomass co-firing requirement 5 per cent or 7 per cent?

It is 5 per cent biomass pellets for coal based thermal power plants across India. The 7 per cent figure applies to plants in the National Capital Region, which carry an additional 2 per cent requirement met with torrefied charcoal made from municipal solid waste rather than with agricultural biomass.

What counts as eligible biomass for co-firing?

The Ministry of Power has indicated agricultural residues including straw, stalk and husk from crops such as paddy, soya and arhar, along with groundnut shell, coconut shell, castor seed shell, bamboo and its by products, and horticulture waste.

Is there a local sourcing condition?

Yes, for the National Capital Region. The policy requires that 50 per cent of the biomass used by thermal power plants in the NCR and adjoining areas be paddy straw sourced locally, which is aimed at reducing the stubble burning that contributes to winter air pollution.