Biomass Pellet Pricing in India: A Comprehensive Analysis

Overview of Biomass Pellet Pricing in India

This report provides a comprehensive analysis of the price per ton of biomass pellets in India. The market displays a wide range of prices, influenced by several factors.

• Price range: ₹ 5,000 to ₹ 16,000 per tonne
• Variation based on biomass type, pellet quality, location, and purchase volume
• Government policies and subsidies significantly impact the market
• Strong market growth driven by renewable energy focus and agricultural residue availability
• Challenges include seasonal raw material supply and need for quality standardization

Introduction to Biomass Pellets

Biomass pellets have become a key renewable energy source in India, contributing to reduced fossil fuel dependence and environmental impact. These pellets are made from compressed organic materials such as wood waste or agricultural residues and are used in various sectors.

• Applications include power generation (co-firing with coal), industrial and commercial heating, and residential heating
• Offer a cleaner burning alternative to conventional fuels

Key Factors Affecting Biomass Pellet Prices

• Type of biomass feedstock used
• Quality and certification of pellets
• Geographical location and transportation costs
• Purchase volume (bulk vs. small quantities)

Role of Government Policies and Subsidies

Government interventions play a crucial role in shaping the biomass pellet market.

• Benchmark pricing established for co-firing in thermal power plants
• Substantial subsidies available for manufacturing units
• Policies encourage adoption and help stabilize the market

Market Trends and Growth Drivers

• Increasing emphasis on renewable energy sources
• Abundant supply of agricultural residues for pellet production
• Growing demand from power and industrial sectors

Challenges in the Biomass Pellet Sector

• Seasonal availability of raw materials
• Need for quality standardization across the industry
• Logistical and supply chain constraints in certain regions

Intended Audience and Report Structure

This analysis is intended for buyers, manufacturers, and policymakers involved in the biomass pellet sector in India. The report covers:

• Average price overview
• Price breakdown by pellet type
• Regional price variations
• Influencing factors
• Government policies and subsidies
• Market trends and future outlook
• Comparison of bulk versus small quantity pricing

Average Price of Biomass Pellets in India

Biomass pellet prices in India show significant variability depending on factors such as pellet type, quality, region, and market conditions. Prices are influenced by both production costs and market demand.

Typical Price Ranges by Region and Type

• Nagpur, Maharashtra:
  • Brown Biomass Energy Pellets: ₹6,000 per tonne
  • Biomass Wood Pellets: ₹6,500 to ₹9,000 per tonne
  • Brown Wood Pellets: ₹16,000 per tonne
• Across India:
  • 16MM Agrobest Biomass Pellets: ₹7,000 per tonne
  • High Grade/10MM Biomass Pellets: ₹11,500 per tonne
  • Pine Wood Biomass Pellets: ₹10,500 per tonne
  • Commercial Biomass Pellets: ₹9,000 per tonne
  • Low Moisture Biomass Pellets: ₹6,200 per tonne
  • Brown Biomass Pelette (16mm): ₹8,200 per tonne
  • Brown Sawdust Biomass Pallets: ₹8,000 per tonne
  • Biomass Wood Pellets: around ₹12,000 per tonne
  • Agro Residue/Crop Residue Biomass Pellets: ₹12,000 to ₹14,000 per tonne
• Mumbai:
  • General price range: ₹5,000 to ₹13,000 per tonne

Production Cost Estimates

• Techno-economic assessments estimate production cost at approximately ₹4,473 per tonne.
• This figure reflects manufacturer costs and may differ from market selling prices.

Factors Affecting Price Variation

• Type of biomass used (wood, agro residue, sawdust, etc.)
• Quality grade (ash content, calorific value, moisture content)
• Geographical region and local demand
• Source of price data (production cost vs. market price)

Summary of Observed Price Range

The reported prices for biomass pellets in India range from around ₹4,473 per tonne (production cost) to ₹16,000 per tonne (market price), depending on the above factors. Understanding the distinction between production costs and market prices is important for both manufacturers and end-users.

Biomass Pellet Price Per Ton by Pellet Type

Wood Pellets

The pricing of wood pellets in India varies based on factors such as wood type, quality, and intended application. Price differences are also observed across regions.

• Biomass Wood Pellets (Nagpur): ₹ 6,500 - ₹ 9,500 per tonne
• Brown Wood Pellets: ₹ 16,000 per tonne
• Pine Wood Biomass Pellets: ₹ 10,500 per tonne
• Soft Wood Biomass Energy Pellets: ₹ 14,000 per tonne
• Hardwood Biofuel Pellets: ₹ 14,000 per tonne
• Pine Wood Pellets for boilers: ₹ 11,500 per tonne
• 6mm Pinewood Pellets (superior heating): ₹ 14,400 per tonne
• Biomass Wood Pellets: ₹ 12,000 per tonne
• Softwood Biomass Energy Pellets: ₹ 14,000 per tonne
• Biomass Pine Wood Pellets (Mumbai): ₹ 10,000 per tonne
• Biomass Wood Pellets (Mumbai): ₹ 13,500 and ₹ 13,000 per tonne
• Sawdust-based 6mm Biomass Pellets: ₹ 16,000 per tonne

The price range for wood pellets is approximately ₹ 6,500 to ₹ 16,000 per tonne. Factors influencing the price include:

• Type of wood (hardwood, softwood, pine)
• Density and calorific value (hardwood is generally more expensive)
• Specialized processing for superior heating
• Geographical location (e.g., Nagpur vs. Mumbai)

Agricultural Residue Pellets

Agricultural residue pellets are made from materials such as straw, husk, stalks, and shells. Their prices are influenced by the type of residue, energy content, and processing requirements.

• Industrial Biomass Pellets: ₹ 6,000 per tonne
• Agrobest Biomass Pellets: ₹ 7,000 per tonne
• Rice Straw (NTPC rate): ₹ 7,264 per tonne
• Peanut Shell (NTPC rate): ₹ 11,616 per tonne
• 8mm Biomass Pellets (100% Mustard Husk): ₹ 5.9 per tonne (likely erroneous)
• 6mm Bio Mass Paddy Pellets: ₹ 7,500 per tonne
• Agro Residue/Crop Residue Biomass Pellets: ₹ 12,000 - ₹ 14,000 per tonne
• Mustard Husk Pellets (16mm): ₹ 5,500 per tonne
• Raw Mustard Husk Pellets (12-15mm, bulk): ₹ 9,000 per tonne
• Groundnut Shell Biomass Pellets: ₹ 9,000 per tonne

Key factors affecting the price of agricultural residue pellets include:

• Type of feedstock (rice straw, peanut shell, mustard husk, etc.)
• Gross calorific value and energy content
• Processing and availability
• Quality, purchase volume, supplier, and location

Torrefied Biomass Pellets

Torrefied biomass pellets undergo thermal pre-treatment to enhance fuel properties, resulting in higher prices compared to non-torrefied pellets.

• Biomass Torrefied Pellets (wood, 6mm): ₹ 12,000 per tonne

The premium pricing is due to:

• Higher energy density
• Lower moisture content
• Additional processing costs
• Government subsidies for production

Other Biomass Pellets

The Indian market offers a variety of other biomass pellets, with prices influenced by composition and intended use.

• Biomass Wooden Pellets: ₹ 9,500 per tonne
• Biomass Fuel Wooden Pellets: ₹ 9,500 per tonne
• Biomass Charcoal Pellets: ₹ 13,000 per tonne
• Sawdust-based Biomass Pellets (10mm): ₹ 10,000 per tonne
• Paddy Biomass Pellets: ₹ 8,000 per tonne

The diversity in raw materials and processing methods allows the market to meet different energy needs and applications.

Regional Price Variations Overview

The price of biomass pellets in India varies significantly across different regions due to factors such as raw material availability, transportation infrastructure, local demand, and state-specific policies.

• Prices in Nagpur, Maharashtra: ₹ 6,000 to ₹ 16,000 per tonne
• NTPC's biomass rates are set per region, causing price differences for various biomass types

Government Benchmark Prices for Co-Firing

Government benchmark prices for co-firing in thermal power plants highlight these regional differences.

• National Capital Region (NCR): Rs. 2.32 per 1000 kcal (from September 1, 2023)
• Northern Region (excluding NCR): Rs. 2.27 per 1000 kcal (from November 8, 2023)
• Western Region: Rs. 2.24 per 1000 kcal (from November 8, 2023)
• Prices exclude GST and transportation at the pellet manufacturing plant site

Local Market Dynamics

Local market conditions further influence price ranges in specific cities and regions.

• Hyderabad: Prices range from ₹ 5,500 to ₹ 21,000 per tonne
• Wide price ranges reflect local market dynamics and variations in pellet quality and type

Factors Influencing Regional Price Differences

Several factors contribute to the observed regional price variations.

• Cost of sourcing and transporting biomass to different regions
• Supply and demand balance within each area
• Higher benchmark prices in regions like NCR may be due to increased demand or higher transportation costs

Factors Influencing Biomass Pellet Prices

The price of biomass pellets in India is shaped by several important factors. These include the cost and availability of raw materials, production expenses, market demand and supply, government policies, transportation logistics, and the quality of the pellets.

Raw Material Costs and Availability

• Raw material costs: A major component of the total production cost, influenced by type of feedstock and location.
• Availability: Fluctuates with agricultural cycles and regional supply, affecting local prices.
• Type of feedstock: Different materials such as pine wood, rice straw, or mustard husk have varying collection, transportation, and processing costs.
• Seasonal impact: Prices are influenced by harvest seasons and regional abundance or scarcity.

Production Costs

• Labor costs: Vary by region due to differences in minimum wages, living standards, and skilled labor availability.
• Energy costs: Regional electricity tariffs affect the cost of running pellet plant machinery.
• Equipment investment: Capital required for manufacturing equipment and ongoing maintenance adds to production costs.

Market Demand and Supply Dynamics

• Rising demand: Increased adoption of renewable energy sources boosts demand for biomass pellets.
• Seasonal demand: Demand for biomass briquettes and pellets is typically higher during the monsoon season.
• Sectoral demand: Power generation, industrial heating, and residential use are key demand drivers.
• Market equilibrium: The balance between supply from manufacturers and demand from various sectors determines the price.

Government Policies and Regulations

• Benchmark prices: Government-set prices for biomass pellets used in co-firing serve as market reference points.
• Policy support: Initiatives like the biomass-coal co-firing policy encourage demand and market stability.
• Renewable energy promotion: Policies aim to increase the use of biomass as a renewable fuel source.

Transportation and Logistics

• Transport costs: Significant due to the rural location of raw material sources and production plants.
• Distribution expenses: Costs of moving bulky feedstock to facilities and finished pellets to end-users contribute to regional price differences.

Pellet Quality and Specifications

• Calorific value: Higher energy content can lead to premium pricing.
• Moisture and ash content: Lower levels improve performance and reduce maintenance, justifying higher prices.
• Performance: Superior quality pellets offer better fuel characteristics and efficiency.

Price Comparison: Bulk vs. Small Quantity Biomass Pellets in India

Comparing the prices of biomass pellets when purchased in bulk (per tonne) versus small quantities (per kg) reveals trends and variations in the Indian market. While there is evidence of discounts for larger volume purchases, the pricing is not always consistent across all types and suppliers.

Examples of Price Differences

• Sawdust biomass pellets:
  • Small quantity: ₹ 12 per kg
  • Bulk (per tonne): ₹ 6 per kg (₹ 6,000 per tonne)
• Biomass charcoal pellets:
  • Small quantity: ₹ 13 per kg
  • Commercial bulk: ₹ 9 per kg (₹ 9,000 per tonne)
• Premium biomass pellets: ₹ 17 per kg
• Softwood biomass energy pellets: ₹ 14 per kg (₹ 14,000 per tonne)
• Pine wood pellets for boiler: ₹ 11.5 per kg (₹ 11,500 per tonne)
• Raw mustard husk pellets (bulk supply): ₹ 9 per kg (₹ 9,000 per tonne)

Recommendations for Buyers

• Bulk purchases often provide lower per-unit prices.
• Buyers should directly inquire with suppliers about bulk discounts.
• Consider the type and quality of pellets when comparing prices.
• Evaluate multiple suppliers to find the best deal for large quantity needs.

Government Subsidies and Financial Assistance

The Government of India offers a range of subsidies and financial assistance programs to promote the establishment and operation of biomass pellet manufacturing units. These initiatives are designed to encourage the production and use of biomass as a renewable energy source.

Key Government Subsidy Schemes

• Section 80JJA of Income Tax Act, 1961
  • Implementing Agency: Central Government
  • Type of Assistance: Tax Deduction
  • Eligible Projects: Manufacturing of pellets or briquettes from agricultural waste
  • Key Benefits: 100% tax deduction on profits for 5 consecutive assessment years
• MNRE - Biomass Programme (until March 31, 2026)
  • Implementing Agency: Central Government
  • Type of Assistance: Central Financial Assistance (CFA)
  • Eligible Projects: Briquette manufacturing plant
  • Key Benefits: ₹9 lakh per ton of production capacity (maximum ₹45 lakh per project)
• MNRE - Biomass Programme (revised CFA from July 16, 2024)
  • Implementing Agency: Central Government
  • Type of Assistance: Central Financial Assistance (CFA)
  • Eligible Projects: Non-Torrefied Pellet Manufacturing Plant
  • Key Benefits: ₹21 lakh per ton capacity or 30% of plant & machinery cost (whichever is lower, maximum ₹1.05 crore per project)
• MNRE - Biomass Programme (revised CFA from July 16, 2024)
  • Implementing Agency: Central Government
  • Type of Assistance: Central Financial Assistance (CFA)
  • Eligible Projects: Torrefied Pellet Manufacturing Plant
  • Key Benefits: ₹42 lakh per ton capacity or 30% of plant & machinery cost (whichever is lower, maximum ₹2.10 crore per project)
• Uttar Pradesh MSME Promotion Policy – 2022
  • Implementing Agency: State Government (Uttar Pradesh)
  • Type of Assistance: Capital Subsidy, Interest Subsidy, and other incentives
  • Eligible Projects: Biomass pellet plants
  • Key Benefits:
    • Capital subsidy up to ₹4 crore per unit (region-dependent)
    • Interest subsidy for micro units
    • Stamp duty exemption
    • Additional fiscal incentives (such as green audit support)

Impact of Subsidies on Biomass Pellet Manufacturing

The introduction and enhancement of these subsidies, especially under the MNRE's Biomass Programme, reflect the government's commitment to supporting the biomass pellet manufacturing sector. The increased financial assistance for both non-torrefied and torrefied pellet production, effective from July 16, 2024, aims to attract investment and boost the output of renewable fuels. State-level incentives, such as those in Uttar Pradesh, further improve the financial attractiveness of setting up biomass pellet plants in select regions.

Market Trends and Growth Projections

The Indian biomass pellet market is witnessing significant expansion, influenced by global renewable energy trends and supportive national policies. Key market projections include:

• The global biomass pellets market is expected to grow at a CAGR of 7.7% between 2021 and 2031, with a steady increase in selling prices.
• In India, the biomass pellets market was valued at USD 552.0 million in 2023 and is projected to reach USD 1,200.0 million by 2035.
• The Indian wood pellets segment is anticipated to achieve a revenue of US$ 68.2 million by 2030, growing at a CAGR of 7.4% from 2024.
• Another forecast estimates the India wood pellet market will reach USD 722.2 million by 2033, with a CAGR of 5.20% from 2025.
• Power generation is emerging as a highly lucrative and rapidly expanding application segment for wood pellets.

Key Growth Drivers

Several factors are contributing to the robust growth of the biomass pellet market in India:

• Increasing focus on sustainability and renewable energy sources.
• Active government promotion through initiatives such as the National Bioenergy Mission.
• Abundant availability of raw materials due to India's large agricultural sector.
• Implementation of the biomass-coal co-firing policy, ensuring consistent demand from thermal power plants.

Challenges and Opportunities

While the outlook for the biomass pellet market is positive, certain challenges persist:

• Seasonal availability of raw materials, leading to potential supply inconsistencies and price volatility.
• Lack of standardization in pellet quality among different manufacturers.

Despite these challenges, the market is expected to benefit from:

• Ongoing advancements in pellet manufacturing technology.
• Increasing government support and policy initiatives.

Conclusion

Biomass pellet prices in India range from ₹5,000 to ₹16,000 per tonne, influenced by factors like pellet type, quality, and region. Government policies and subsidies play a key role in market growth and adoption.

Key Recommendations

• Buyers:
  • Define pellet requirements and compare suppliers.
  • Check for regional price differences and supplier reliability.
• Manufacturers:
  • Secure quality raw materials and optimize production.
  • Utilize government subsidies and meet quality standards.
• Policymakers:
  • Maintain supportive policies and streamline subsidy processes.
  • Promote quality standards and awareness of biomass energy.

Outlook

With continued policy support and growing demand, India's biomass pellet market can make a strong contribution to renewable energy goals.