New biomass co-firing policy for all coal plants from 2025

The Ministry of Power has approved a new policy that requires every coal-based TPP in India to co-fire biomass pellets from the 2025-26 financial year. The policy replaces earlier guidelines and adds torrefied charcoal made from MSW as an eligible fuel. The aim is to cut emissions and support the management of crop residue and urban waste.

The mandate varies by region. Plants in the NCR must use a 5 per cent blend of biomass pellets and add 2 per cent from biomass or MSW charcoal each year by weight. Plants outside the NCR must meet a 5 per cent blend using either fuel. The ministry notes that India generates about 230 million tonnes of surplus crop residue and about 14 million tonnes of unmanaged MSW each year.

The policy provides a clear cost recovery path. For plants with tariffs set under Section 62 of the Electricity Act, 2003, the extra cost will flow through the ECR. For Section 63 projects, generators can claim the cost under Change in Law or fuel cost pass-through clauses in their PPAs. The added cost will stay outside MOD so that dispatch priority is not affected.

A committee headed by the CEA will assess exemption requests. The policy also lets obligated entities count co-fired power towards their RCO targets. For NCR plants, at least half of the pellet raw material must be paddy stubble from the region and nearby states to address stubble burning.