What are the key challenges that the biogas sector faces? Let’s find out here!
In spite of the substantial subsidies, availability of feedstock and a demand for energy provision especially in rural areas, biogas has largely been an unsuccessful technology. What are the key challenges that the biogas industry faces?
Each segment or model in the sector has a unique set of challenges pertaining to that segment (Read previous blog post). We shall start with the market sized segment.
The market sized segment has not witnessed any major growth since the start of the sector. The major reason as to why developers are not willing to invest or own any biogas plants is – ‘Security’.
Let’s discuss our first challenge here –
Agriculture accounts for a large part of our economy and agricultural residues make a considerable feedstock option. We also have a large cattle population which provides a substantial input for biogas plants. Additionally, Agricultural Produce Market Committee (APMCs), Gaushalas or Panjrapoles, municipal corporations etc. are also reliable sources of feedstock for biogas plants. In the past, there have been cases where, as soon as the value of the waste is discerned, the supplier increases the price of the feedstock. In order to ensure constant availability and prices, the government needs to de-risk the supply chain.
This can be achieved through a few strategies by the government. For example, the waste from government based organisations or agencies like gaushalas or municipal corporations should reach the developer at an acceptable rate through processes like auctions. In case of private waste aggregators, the price may be dependent on market dynamics.
Another strategy which is widely accepted is that the changes in the feedstock prices may be passed on to the consumer as an adjustment charge. This is commonly done in thermal power plants. This ensures de-risking of the feedstock prices which in turn assures the developer of calculated returns.
In the next post, we shall discuss the importance of the gas, power and bio-fertilizer offtake and its challenges, so stay tuned!