High potential of wealth from waste

The total waste generated in India is projected to touch 165 million tonnes by 2031. To tackle the challenge, the government is implementing a strategy to convert waste to energy, drawing heightened interest from global players

August 27, 2018

The potential for power generation from waste in India has been touted at 2.5 GW, this is an easy solution for India’s rising power consumption and waste generation

The nation’s waste collection and management industry is expected to reach a valuation of around US$14 billion by 2025 with an annual growth of around 7 per cent

48 municipal solid waste-based power plants with an aggregate capacity of 412.5 MW are at various stages of construction under the Swachh Bharat Mission (SBM)

KKR, a USA-based leading global investment firm, has acquired a 60 per cent stake in Ramky Enviro Engineers (REEL), a waste to energy company, for US$530 million

Fuelled by the Government’s Swachh Bharat Mission (SBM) and the subsequent modifications in solid waste management (SWM) regulations, investment interest has peaked in India’s waste collection and management industry. Recently, KKR, a leading global investment firm, acquired a 60 per cent stake in Ramky Enviro Engineers (REEL) for US$530 million. The Ramky group runs a 24 MW waste-to-energy power plant at Narela-Bawana, near Delhi. Currently there are six waste-to-energy plants in India with combined power generation capacity of 66 MW. However, the potential for power generation from India’s sewage and municipal solid waste sector has been estimated at around 2.5 GW, thus leaving behind a vast space for development.

Last year, two UK-based firms – GJ Nature Care and GJ Eco Power – had announced plans to invest about US$214 million over a period of five years in waste-to-energy projects in South India. Similarly, Nexus Novus, an urban waste solution company, is setting up a US$51.6 million waste-to-energy project in Bengaluru backed by UAE based billionaire BR Shetty and the Netherlands government. Given India’s soaring power consumption, waste to energy projects offer dual benefits of meeting power requirement while tackling the nation’s waste management concerns. This explains the rising investment interest in the space that has targeted everything, from asset acquisition to technology development, involving both private and state-run enterprises.

To understand the importance of all these investments, we need to understand the enormity of the challenge on hand and the opportunity it presents. According to a study by Enincon, a market research firm, in May 2018, India produces up to 65 million tonnes of solid waste annually, 80 per cent of which end up untreated and polluting the atmosphere. The nation’s waste collection and management industry is expected to reach a valuation of around US$14 billion by 2025 with an annual growth of around 7 per cent. With per capita waste generation in cities currently ranging from 200 grams to 600 grams per day, India’s total annual waste generation will rise to 80 million tonnes by 2030, offering a business case of around US$20 Billion.

New waste management rules

As if on cue, Government of India, through the Ministry of Housing and Urban Affairs and the Ministry of Environment, Forest and Climate Change, has gone about implementing a strategy that would hasten the process of converting waste to energy or to compost. The efforts are timely as the solid waste management sector in India is projected to see capital and capacity requirement of close to US$65 Billion by 2030. To facilitate this, in April 2016, the government announced a revision to the Solid Waste (Management and Handling) Rules making it applicable to areas beyond municipalities, including agglomerations, census towns, industrial townships, special economic zones, pilgrimage centres, and places of religious and historical importance.

The Ministry of New and Renewable Energy (MNRE) has stated that 48 municipal solid waste-based power plants with an aggregate capacity of 412.5 MW are at various stages of construction under the Swachh Bharat Mission (SBM)

Some key components of the solid waste management rules are: 1) Waste segregation into wet, dry and hazardous categories has to be done at source; 2) User has to pay a fee for waste collection; 3) Rag pickers are to be integrated into the formal sector; 4) Waste processing facilities will have to be set up by local bodies for areas with a population of 1 million or more. A ready reckoner prepared by the Government has been made available with several case studies and details of technologies and best practices in use across the country. Biomethanation, microbial, vermi composting for wet degradable waste, incineration, gasification for dry high value combustible wastes are some of the appropriate technologies that have been suggested.

Waste-to-energy projects

Additionally, the Ministry of New and Renewable Energy (MNRE) has stated that 48 municipal solid waste-based power plants with an aggregate capacity of 412.5 MW are at various stages of construction under the Swachh Bharat Mission (SBM). SBM provides an incentive of a maximum of 35 per cent of the project cost of solid waste management plants. In a bid to encourage private capital in this space, the Government has opened the doors to public-private partnerships which would lead to more efficiency in the delivery of urban services, operations and maintenance. As of now, India has six power plants run by private enterprises that convert municipal solid waste to energy with a total capacity of around 66 MW.

These plants include – 1) The Ramky Group-run 24 MW Narela-Bawana plant near Delhi; 2) JITF Urban Infrastructure Services-run the 16 MW Okhla plant near Delhi; 3) IL&FS Environmental Infrastructure & Services (IEISL)-run 12 MW plant at Ghazipur near Delhi; 4) Essel Infraprojects-run 9 MW plant in Jabalpur, Madhya Pradesh; 5) Solapur Bio-Energy Systems-runs 3 MW plant in Maharashtra; and 6) Elephant Energy runs the 1.75 MW plant at Shimla, Himachal Pradesh. Apart from these projects, the SBM initiative has opened up avenues of waste collection and management with waste to energy projects generating over 88 MW of power as well as waste to compost plants producing nearly 165,000 tonnes of compost.

At another level, the National Thermal Power Corporation (NTPC) has invited national and global players to set up waste to energy plants across India. As per a preliminary agreement signed with the Noida Development Authority, NTPC will be using treated sewage water from Noida at its 2.7 GW Dadri Power. The Noida authority will supply 80 million litres of treated sewage water per day to the power producer. It has also invited bids for supply of 1,000 metric tonnes per day of agro residue based fuel for the Dadri plant. This will provide farmers with an alternative to burning crop residues at the end of harvest season and reduce air pollution. India’s installed capacity of biomass power projects is 8.2 GW and the target set is to reach 10 GW by 2022.

Challenges and opportunities

According to MNRE, India has the potential to set up 500 MW of waste-to-energy plants in the immediate future. Typically, waste-to-energy projects are capital intensive and require long gestation periods, unlike fossil fuel or renewable energy projects. To ease some of the hurdles that companies may face on the capital and revenue sides, the Government has evolved various scales for subsidising the industry to cover part of the capital costs. Preferential tariffs have been evolved and state utilities have been told to buy from waste-to-energy plants at prices three times higher than that offered for solar energy. It is expected that with a rise in power generation, costs would come down. However, what is for sure is that waste-to-energy plants will be a reliable power source in future.