Ministry of Power Issues Comprehensive Policy on Biomass & MSW-based Co-firing in Thermal Power Plants

Introduction

In November 2025, the Ministry of Power (MoP) released a Comprehensive Policy on Co-firing of Biomass Pellets and Torrefied Charcoal derived from Municipal Solid Waste (MSW). This policy supersedes all prior circulars and advisories on biomass utilisation in thermal power plants (TPPs). The stated objectives are threefold: (i) reduction of greenhouse gas emissions, (ii) mitigation of stubble burning in agrarian regions, and (iii) advancement of India’s waste-to-energy initiatives within coal-based generation.

Key Provisions

The policy introduces binding obligations on coal-based TPPs, differentiated by geography and technology.

National Capital Region (NCR) Plants

Mandatory blending of 5% biomass pellets and 2% MSW-based torrefied charcoal beginning FY 2025–26. At least 50% of paddy-straw residue must be sourced from within the NCR, thereby addressing the region’s acute stubble burning problem.

Other Thermal Power Plants

Required to co-fire a minimum of 5% biomass pellets or torrefied charcoal, with flexibility to choose between non-torrefied, semi-torrefied, or torrefied forms depending on plant suitability.

Regulatory Oversight

A multi-agency committee under the Central Electricity Authority (CEA) is empowered to grant case-specific relaxations, ensuring operational feasibility while maintaining compliance.

Legal and Commercial Implications

Change in Law Relief

For tariff-based competitive bidding under Section 63 of the Electricity Act, 2003, incremental costs attributable to biomass/MSW co-firing will qualify as “change in law” events.

Such costs, however, will be excluded from merit order dispatch calculations, thereby preventing distortion of dispatch priorities.

Expanded Raw Material Recognition

The policy broadens the list of permissible agricultural residues and MSW-derived secondary raw materials eligible for conversion into re-carbonized biomass pellets and torrefied charcoal.

Conclusion

The MoP’s comprehensive framework provides long-awaited clarity on the operational, regulatory, and commercial dimensions of biomass and MSW co-firing. By sequencing uniform blending requirements with cost recovery mechanisms, the policy establishes a legally robust pathway for integrating renewable substitutes into conventional coal-fired generation.

For stakeholders including generating companies, distribution licensees, and regulators, the policy represents a significant step toward reconciling environmental imperatives with statutory obligations under the Electricity Act. Its implementation is expected to enhance biomass-based generation capacity, reduce local pollution, and strengthen India’s transition toward sustainable thermal power practices.