India’s Nascent Crop Residue Supply Industry

In India, crop residue has not been able to achieve the economic potential it possesses, primarily owing to the lack of a reliable supply chain mechanism for its collection and processing,
By Aru Mangla | September 06, 2019

Crop residue-based biomass, such as paddy straw and sugarcane trash, are some of the best sources of biomass available for any industrial or energy generation use, since unlike maize and coconut, they do not fall in the purview of the food versus fuel debate, and unlike woody biomass, there is no argument of forest ecology deterioration.

Punjab and Haryana, the two major agrarian states adjacent to New Delhi, the capital city of India, generate about 25 million to 30 million metric tons of crop residue each year, which makes its availability abundant in relation to its demand by industries. Thus, it is a very low-cost fuel with moderate to high calorific value in comparison with coal, the price of which is increasing rapidly, and carries an obvious tag of being a nongreen fuel.

In India, these crop residues have not been able to achieve the economic potential they possess, primarily owing to the lack of a reliable supply chain mechanism for its collection and processing, which is quintessential for any biobased industry to succeed. As reported by Task Force on Biomass Management, set up by the government of India's think tank NITI Ayog, power plants and industries are unable to utilize this residue due to a fragmented and mismanaged biomass supply chain. As a result, several biomass plants across Punjab and Haryana have been discontinued, or are not operating, due to viability issues arising from the biomass supply end.

In addition, challenges faced by biomass power plants in securing favorable power purchase agreements from the concerned state electricity regulatory commissions—which give preference to other renewable sources of power such as solar, wind and hydro from Himalayan rivers, as they are cheaper than power generated using biomass—have further made the case against such plants.

The industry and government are now encouraging the setting up of a large number of bio-compressed natural gas (bio-CNG), biofuel plants and industries of straw board, paper pulp, building construction material, furniture, etc., to utilize the vast amount of crop residue available. The push from public sector undertaking oil marketing companies such as Hindustan Petroleum Corporation Ltd. and Indian Oil Corp. in the bioethanol and bio-CNG sectors, is also fueled by concerns arising from the high oil and gas import dependency of India.

Moreover, cogeneration plants operated by Indian sugar mills are dependent on their milling byproduct, bagasse, a relatively inferior biomass because of its near 50 percent moisture content. There is huge potential, however, to utilize sugarcane trash (dry leaves of sugarcane crop) in an appropriate proportionate mix with bagasse, which will expand the operational period of such cogeneration plants to off-season as well, and thus increase their revenue.

Despite the favorable economic and regulatory environment for all these emboldened plants and industries, procurement of biomass remains the most difficult challenge. The biomass supply sector in India has largely remained dependent on unorganized and unprofessional local players who operate with very low degree of reliability,  and supply inexpertly processed biomass that negatively impacts its quality and reduces the energy output of plants. This has caused viability issues for several major plants and resulted in subsequent shut downs.

There is a ray of hope for upcoming bioplants and industries, however, as the biomass supply chain industry has begun turning professional and organized with the entry of companies like RY Energies and others, which provide professional and reliable supply services. These companies assume the responsibility of establishing the supply chain infrastructure in the vicinity of the plants and enable them to conveniently procure biomass at sustainable prices, with zero capital investment and zero down time. This assured biomass availability leads to an increase in profits and enables them to fulfill their renewable purchase obligations.

The supply chain companies work in close collaboration with farmers and regional agricultural departments to procure biomass in a timely manner, preventing open burning of crop residue. Owing to its low cost, good properties and significant positive environmental impact, crop residue is the fuel of today and future for India and other developing agrarian economies.

Author: Aru Mangla
Cofounder and Director, ReneYou Greentech Private Ltd.