The project was announced at a televised event in November with N Chandrababu Naidu, the Chief Minister of the regional political Telugu Desam Party (TDP), present.

‘This groundbreaking initiative will revitalise the vast tracts of wasteland, transforming them into hubs of sustainable energy production,’ said Executive Director of Reliance Industries PMS Prasad at the event.

The location of this project is of special significance as Naidu is a crucial ally of Prime Minister Narendra Modi’s BJP-led central government coalition.

Currently there are only 106 operational CBG plants across India, compared to the government’s stated target of 5,000, under the government’s Sustainable Alternative Towards Affordable Transportation (SATAT) initiative.

‘A lot of investment in CBG plants by many Indian companies is on hold, as the technology and the gas markets are yet to fully develop,’ says Anil Dhussa, Chief Advisor to Gruner Renewable Energy, and a former Director of the central government’s Ministry of New and Renewable Energy biofuel, biogas and waste-to-energy programmes. The Uttar Pradesh-based engineering, procurement and construction (EPC) company is already building 10 CBG plants for Reliance. ‘Reliance’s entry is likely to change all that and bring in much needed confidence in the industry,’ he continues.

What kind of biogas plants are being planned?  
A source with knowledge of the new project says it would focus on micro plants serving local communities, and the company was working with the state government to identify the locations, anticipating that biogas would become more affordable as supply grows, including for farmers.

The state government has assured Reliance of its support and cooperation for the project.

According to Dhussa, such plants usually have a capacity to generate 10–20 tonnes of CBG per day. ‘The projects have to be smaller and spread out to minimise the cost of feedstock transportation,’ he says.

Reliance has already set up two CBG demo units in Jamnagar, Gujarat, and commissioned a commercial-scale CBG plant in Barabanki, Uttar Pradesh. Larger-capacity projects could be sustained with captive energy feedstock plantations, Dhussa adds.

In its last annual general meeting in August 2024, Reliance had announced plantation projects for ‘energy crops’ on wastelands to ensure assured supply of feedstock for its CBG plants. At the time, Chairman and Managing Director Mukesh Ambani said: ‘We have initiated an energy plantation pilot on 1,000 acres of arid wasteland to establish a first-of-its kind integrated CBG plant. This initiative will create a self-sustaining ecosystem by transforming India’s large wastelands into productive lands through the cultivation of energy crops.’

Dhussa explains that some CBG projects are based on captive plantations of Napier grass, [also called elephant grass], as feedstock. Reliance plans to use agricultural residue, cattle dung, sugarcane press mud and organic municipal solid waste for its CBG plants.

Reliance has a scale advantage over most other CBG companies, as large corporations can move more quickly into new energy segments due to their market power and access to large-scale capital investment. So says Monish Ahuja, Chairman of the Confederation of Biomass Energy Industry of India, and the Managing Director of Mumbai-based Punjab Renewable Energy Systems (PRESPL), with operations across 21 Indian states.

However, the way these investments are distributed between the biomass supply chain management and other operations is crucial for determining success, Ahuja says. He adds: ‘Most of the [business] failures in the biomass energy segment have been caused by [deficient] biomass supply chain management. But still I don’t see the focus and capital allocation [by the industry] in that direction.

‘Our new energy business will be truly unique – delivering cash flows that are less cyclical and more predictable.’ – Mukesh Ambani, Reliance Industries Chairman and Managing Director 

How much biomass is available for energy in India? 
India produces a large amount of agricultural waste, but commercially-available waste is limited. Also, its supply chain is quite small. ‘The Reliance project would require thousands of tonnes [of biomass] per day, but [most] providers are supplying only 20–30 tonnes a day,’ says Narasimhan Santhanam, Co-Founder and Director of Energy Alternatives India, a Chennai-based research and consultancy firm.

The upstream segment of CBG production not only has to be developed but also needs to be defined, says Ahuja. ‘It is not only about collecting biomass but includes aggregation, storage, warehousing, transportation, material management, fire-fighting, insurance and making working capital available,’ he adds.

There is also a good deal of uncertainty in the market about the actual cost of agri residue-based CBG, which is more expensive than sewage or food waste due to the pre-treatment required for the woody content, says Santhanam. ‘Pre-treatment costs are coming down, but it would take four to five years to be competitive,’ says the consultant.

On the other hand, the low CBG price is holding up the industry’s expansion, states Santhanam. ‘Many experts say that it should be priced the same or above the natural gas price [of $1/kg]. At the current price of INR54 [$0.64] per kg fixed by the government, it would be difficult to break even [for the producers].’

CBG prices in India are indexed to the compressed natural gas prices and are revised periodically under the government’s SATAT initiative, which assumes CBG is purified as per Indian Standard IS 16087:2016, compressed at 250 bar pressure, and delivered to retail outlets up to 25 km from the generation plants. The last revision of CBG prices was in May 2022.

CBG is, however, promoted by the central government, with initial grants made to project developers. India’s Ministry of New and Renewable Energy provides financial assistance of INR40mn ($470,000) per 4,800 kg/d gas production capacity for new CBG plants and INR30mn ($357,000) to existing ones with a maximum amount of INR100mn ($1.84mn).

However, according to Dr Aatma Ram Shukla, President of the Indian Biogas Association, these grants should be replaced with generation-based incentives for successful operation of CBG plants throughout their lifespan: ‘This is because operators may discontinue production in the face of even small difficulties,’ he says.

And there are many challenges, including, according to Dhussa, the inability of many operational CBG plants to be able to sell all the gas they are producing.

However, this may not be the case with Reliance. Not only India’s largest company, with $119.9bn of annual sales in the financial year ending March 2024, Reliance has its own gas stations and several industries where CBG can be consumed, such as petrochemical and fertiliser production. The company is already producing a variety of fertilisers including fermented organic manure, which it sells under the brand name Bhoovedyam.

Dr Shukla says that biogas plant slurry-based fertiliser production at an affordable price is important for the CBG industry to succeed. ‘Ideally CBG plants can sell this fertiliser for the nearby agricultural operations,’ he comments.

Mukesh Ambani said at the Reliance Annual General Meeting that the company’s focus will be on meeting large captive renewable energy-round the clock requirements across the group businesses over the next five to seven years. He added that doing so will ‘drastically’ cut energy bills, that those projects will be backed by firm offtake contracts and will generate positive cash flow.

‘Our new energy business will be truly unique – delivering cash flows that are less cyclical and more predictable,’ Ambani said.

Inside the Chennai biogas plant
Photo: Srinivas Waste Management Services

How mature is the biomass energy production industry in India? 
In the anaerobic digestion process, organic matter is broken down by microorganisms in oxygen-free sealed containers while producing biogas and digestive materials like manure.

The local equipment manufacturing industry has not yet developed to supply CBG. According to Dhussa, pumps, agitators, mixers, feeding systems and feed preparation systems used in these plants are largely imported from Europe, particularly from Germany and Denmark.

Furthermore, research and development efforts are needed in pre-treatment, preprocessing and efficient digestion of biomass, continues Dhussa. ‘Presently it takes 30–40 days to get all the gas extracted from agri residue. It can be quickened to just a few days.’

Most of the current CBG projects are not able to achieve desired efficiency levels due to their unsuitable designs and improper functioning, Dhussa adds. ‘The designs are replicated from the captive biogas plant whose primary aim was to treat industrial waste and therefore they were not robust, [lacking] required redundancies.’ CBG producing companies ‘can survive today only if projects work with at least 90% plant load factor and on a 365-day basis’.

Meanwhile, the Indian government is also making efforts to gather international support for the CBG industry. In September 2023, during the G20 summit in New Delhi, India launched a Global Biofuels Alliance, which now has 25 member countries including the US, Brazil and Japan, in addition to 12 international organisations.

The Indian government is certainly ambitious about the potential of CBG. It thinks an established CBG industry has the potential to bring social transformation, as according to Ahuja, the gas will be generated in the bottom strata of the rural society and move to the urban centres: ‘There will be a reverse migration to the villages where millions of jobs will be created in biomass management including collection, storing, balayage, cutting, warehousing and transportation.’

Projects themselves will create significant employment and support many ancillary industries such as the machinery supply chain. Ahuja concludes: ‘In comparison to the thermal power plants the job creation potential of CBG plants is multifield.’

• Further reading: ‘India boosts biomass by strengthening supply chains’. A $100mn national programme is enabling the use of cattle dung, biomass and urban and industrial biowaste for energy recovery in India. According to the International Energy Agency (IEA), these initiatives by the government may produce about 15% of India’s total energy demand. 
• A faster scale-up of clean technologies could present India with a multi-trillion-dollar decarbonisation opportunity, according to BloombergNEF (BNEF).