Compressed Biogas: A lucrative opportunity for sugar factories

Compressed Biogas (CBG) is emerging as a game-changer for the sugar industry in India. By converting agricultural waste and byproducts into valuable biogas, sugar factories can generate a significant additional income stream. This not only stabilizes their financial health but also contributes to environmental sustainability.

The Potential of CBG
India’s sugar industry produces vast amounts of byproducts such as press mud, bagasse, and spent wash. These can be effectively utilized to produce CBG through anaerobic digestion. The Indian government has recognized this potential and is supporting the sector through various initiatives and policies.

Benefits of CBG for Sugar Factories

1) New Revenue Stream:
Selling CBG as a clean fuel provides a reliable income source, helping to stabilize finances and mitigate market volatility1.
Waste Management: CBG production transforms waste products into valuable resources, reducing disposal burdens and environmental impact.

2) Sustainability:
Aligning with national bioenergy goals, sugar mills can enhance their green credentials and contribute to a sustainable future.

3) Rural Development:
Biomass collection for CBG production creates employment opportunities for farmers, boosting their income and contributing to rural development1.

4) Soil Fertility:
The digestate, a byproduct of CBG production, serves as an organic fertilizer, enriching soil health and boosting crop yields.

Important Tips for Implementing CBG Projects

1) Government Support:
Leverage government schemes like SATAT (Sustainable Alternative Towards Affordable Transportation) which provide financial assistance and policy support for CBG projects.

2) Efficient Biomass Collection:
Invest in machinery and infrastructure for efficient biomass collection to ensure a steady supply of raw materials.

3) Technology Adoption:
Utilise advanced anaerobic digestion technologies to maximize CBG production and ensure high-quality output.

4) Market Integration:
Establish partnerships with natural gas marketers and other stakeholders to ensure a stable market for CBG.

5) Community Engagement:
Engage with local communities and farmers to create a reliable supply chain for biomass and promote the benefits of CBG production.
CBG presents a promising opportunity for sugar factories in India to diversify their income streams and contribute to a greener future. By adopting CBG production, sugar mills can not only enhance their financial stability but also play a pivotal role in India’s bioenergy landscape.

TENTATIVE STATISTICS FOR ESTABLISHING CBG PLANT AT THE FACTORY HAVING CRUSHING CAPACITY OF 5000 TONNES PER DAY :

1) Land Requirement: 8 to 9 Acres
2) Project Cost: ₹ 20 Crores
3) Press mud production 4%: 200 MT
4) CBG Production: 8 MT
(25 MT Press mud=1 MT CBG)
5) Manpower Required: 25
6) Cost of Production per day:(₹ in Lakhs)
a) Raw material (Pressmud/Biomass/Agro Waste
200X1500). 3.00
b) Processing Cost -(₹6000 Tonne). 0.48
c) Salary & Wages. 0.30
d) Admin. Charges 0.20
e) Interest charges 0.60
d) Depreciation. 0.35
Total: 4.93
Say ₹ 5.00 Lakhs per day
(NB: Cost of operation may very dependent on availability of H2S in Raw Gas)
7) Total Income :
a) Income from CBG
(8MTX60000). 4.80
b) Income from Fertiliser (Sulphur+FOM 30% of 200MT=60)
60X₹5000: 3.00
Total Income: 7.80
8) Net Income per day: (Total income. 7.80 minus Total cost. 5.00)- 2.80
9) Total working days :250
10) Annual Profit :
(250X2.80). 7.00 Crs
11) Payback period : 3 years.

BENEFITS TO FARMERS FROM PRODUCTION OF CBG:

The production of Compressed Biogas (CBG) offers several economic benefits for farmers, making it an attractive option for those looking to diversify their income sources. Here are some key economic advantages:

1) Additional Income Stream:

Biomass Sales:
Farmers can earn extra income by selling agricultural residues and other organic waste to CBG plants. This provides a steady revenue stream, especially during off-seasons.

Revenue from Byproducts:
The digestate produced during CBG production can be sold as a high-quality organic fertilizer, providing another source of income.

2) Cost Savings:

Reduced Waste Disposal Costs:
By supplying biomass to CBG plants, farmers can reduce the costs associated with waste disposal and management.

Lower Fertilizer Costs:
Using digestate as a fertilizer can reduce the need for chemical fertilizers, leading to significant cost savings.

3) Employment Opportunities:

Job Creation:
The establishment of CBG plants and the associated supply chain can create local employment opportunities, benefiting the rural economy.

Skill Development:
Farmers and local workers can gain new skills related to biomass collection, transportation, and biogas production, enhancing their employability.

4) Energy Security:

Access to Clean Energy:
Farmers can use CBG for their own energy needs, reducing reliance on conventional fuels and lowering energy costs.

Stable Energy Prices:
Producing and using CBG locally can protect farmers from fluctuations in energy prices, providing more predictable energy costs.

5) Government Incentives:

Subsidies and Grants:
Farmers can benefit from government subsidies and grants aimed at promoting renewable energy and sustainable agricultural practices.

Tax Benefits:
Participation in CBG projects may qualify farmers for tax incentives, further enhancing their economic benefits.

6) Market Opportunities:

Diversified Markets:
By engaging in CBG production, farmers can tap into new markets for renewable energy and organic fertilizers, expanding their business opportunities.

7) Partnerships and Collaborations:
Collaborating with CBG plants and other stakeholders can open up additional business opportunities and partnerships.
Environmental Benefits:

8) Improved Soil Health:
Using digestate as a fertilizer can improve soil health and fertility, leading to better crop yields and higher agricultural productivity.

9) Sustainable Practices:
Engaging in sustainable practices can enhance the reputation of farmers, potentially leading to premium prices for their products.
By participating in CBG production, farmers can not only enhance their economic stability but also contribute to a more sustainable and resilient agricultural sector.

UNION GOVERNMENTS SUBSIDIES & INCENTIVES:

The Indian government has introduced several subsidies and incentives to promote the production of Compressed Biogas (CBG) as part of its efforts to enhance renewable energy sources and reduce dependence on fossil fuels. Here are some key government initiatives and subsidies for CBG projects:

A) SATAT Initiative:

Sustainable Alternative Towards Affordable Transportation (SATAT):
Launched by the Ministry of Petroleum and Natural Gas, this initiative aims to promote the use of CBG as a clean fuel. Under SATAT, the government provides financial support for setting up CBG plants and ensures a market for the produced biogas by facilitating its sale to oil marketing companies.

2) Capital Subsidy:

Subsidies for Plant Setup:
The government offers capital subsidies to reduce the initial investment required for setting up CBG plants. These subsidies can cover a significant portion of the project cost, making it more financially viable for investors and entrepreneurs.

3) Viability Gap Funding (VGF):

Financial Assistance:
VGF is provided to bridge the gap between the project cost and the financial viability of CBG projects. This funding helps in making projects more attractive to investors by ensuring a reasonable return on investment.

4)!Tax Incentives:

Tax Holidays and Exemptions:
CBG projects may qualify for tax holidays and exemptions under various renewable energy policies. These incentives can significantly reduce the tax burden on CBG producers, enhancing profitability.
Interest Subsidy:

5) Low-Interest Loans:
The government, in collaboration with financial institutions, offers low-interest loans and interest subsidies for CBG projects. This reduces the cost of borrowing and makes it easier for entrepreneurs to finance their projects.

6) Feed-in Tariffs:

Guaranteed Purchase Prices:
The government may offer feed-in tariffs, which guarantee a fixed purchase price for the biogas produced. This ensures a stable revenue stream for CBG producers and encourages investment in the sector.

7) Infrastructure Support:

Support for Infrastructure Development:
The government provides support for the development of necessary infrastructure, such as pipelines and storage facilities, to facilitate the distribution and sale of CBG.

8) Research and Development Grants:

Funding for Innovation:
Grants are available for research and development in the field of biogas production and utilization. These grants support technological advancements and improve the efficiency and sustainability of CBG projects.

These subsidies and incentives are designed to make CBG production more economically viable and attractive, encouraging more sugar factories and other stakeholders to invest in this renewable energy source. By leveraging these government supports, the CBG sector can significantly contribute to India’s energy security and environmental sustainability.

CHALLENGES IN PRODUCING CBG:

Producing Compressed Biogas (CBG) offers many benefits, but it also comes with several challenges. Here are some of the key hurdles:

1) Feedstock Availability:
Ensuring a consistent and adequate supply of biomass feedstock can be difficult, especially during off-seasons or in regions with less agricultural activity.

2) High Initial Investment:
Setting up CBG plants requires significant capital investment in infrastructure, technology, and machinery, which can be a barrier for many sugar factories.

3) Technological Barriers:
Advanced anaerobic digestion technologies are essential for efficient CBG production. However, these technologies can be complex and require skilled personnel for operation and maintenance.

4) Logistics and Transportation:
Transporting biomass to the CBG plant and distributing the produced biogas can be logistically challenging and costly, particularly in rural areas with poor infrastructure.

5) Regulatory and Policy Issues:
Navigating the regulatory landscape and securing necessary permits can be time-consuming and complicated. Additionally, policy support may vary across regions, affecting the feasibility of projects.

6) Market Uncertainty:
Establishing a stable market for CBG can be challenging. Fluctuations in demand and competition with other energy sources can impact profitability.

7) Quality Control:
Maintaining consistent quality of the produced biogas is crucial for market acceptance. Variations in feedstock composition can affect the quality and energy content of the biogas.

8) Environmental Concerns:
While CBG production is environmentally friendly, improper management of byproducts like digestate can lead to environmental issues such as water pollution.
Addressing these challenges requires a combination of strategic planning, technological innovation, and supportive policies. Collaboration between government, industry, and local communities is essential to overcome these hurdles and fully realize the potential of CBG production.

EXPECTATIONS FROM MAHARASHTRA GOVT. TO STIMULATE CBG PRODUCTION IN SUGAR FACTORIES:

To stimulate the production of Compressed Bio-Gas (CBG) in sugar factories, the Maharashtra Government could consider several measures to support and incentivize this initiative. Here are some detailed expectations and suggestions:

1. Land Allocation (NA upto 10 acres)

Non-Agricultural (NA) Land Conversion:
Simplify the process for converting agricultural land to non-agricultural use for setting up CBG plants. This could involve reducing the paperwork and time required for approvals.

Land Availability:
Ensure that up to 10 acres of land can be allocated for CBG projects without extensive bureaucratic hurdles.

2. Simplification of Licensing (PESO and Local Licenses)

PESO License:
Streamline the process for obtaining Petroleum and Explosives Safety Organization (PESO) licenses. This could include:
Single Window Clearance:
Implement a single window system for all necessary approvals and licenses.
Online Applications:
Facilitate online submission and tracking of applications to reduce delays.
Standardized Procedures:
Develop clear guidelines and standardized procedures for obtaining licenses.

Local Licenses:
Simplify the process for obtaining district and local licenses by:
Reducing Red Tape:
Minimise bureaucratic red tape and unnecessary documentation.
Fast-Track Approvals:
Introduce fast-track approval mechanisms for CBG projects.

3. Exemption of Stamp Duty

Stamp Duty Waiver:
Provide exemptions or significant reductions in stamp duty for land and property transactions related to the establishment of CBG plants. This can lower the initial investment burden on sugar factories.

4. Capital Subsidy

Financial Incentives:
Offer capital subsidies to sugar factories setting up CBG plants. This could include:
Direct Subsidies:
Provide direct financial assistance to cover a portion of the capital costs.
Interest Subsidies:

Offer interest subsidies on loans taken for setting up CBG plants.

Tax Benefits:
Provide tax incentives such as accelerated depreciation and tax holidays for a certain period.

5. Additional Support Measures

Technical Assistance:
Provide technical support and training to sugar factories for setting up and operating CBG plants.
Market Linkages:
Facilitate market linkages for the sale of CBG, ensuring a stable and profitable market for producers.
Research and Development:
Invest in R&D to improve the efficiency and cost-effectiveness of CBG production technologies.
These measures can help create a conducive environment for the growth of CBG production in Maharashtra, benefiting both the sugar industry and the broader energy sector

Conclusion:
In conclusion, the production of Compressed Biogas (CBG) presents a lucrative opportunity for sugar factories to diversify their revenue streams. By converting agricultural waste such as press mud and bagasse into CBG, sugar factories can generate additional income while contributing to environmental sustainability. This not only helps in managing waste more effectively but also aligns with national bioenergy goals, promoting a greener future. Embracing CBG production can thus transform sugar factories into key players in the renewable energy sector, fostering economic stability and rural development.