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New Delhi: Private firms looking for guaranteed returns from micro-power plants have set sights on projects to generate electricity from municipal refuse.

As many as 24 waste-to-energy projects to produce 233MW are currently in different stages of construction and five projects of 79MW have already been tendered, adding up to a total of 312 MW. Once all this capacity comes on stream, India’s waste-to-energy capacity will go up by six-fold from the current 53MW produced from five such projects.

As per estimates by the urban development ministry, about 65,000 crore of public and private investments will flow into city waste management, cleanliness and waste-to energy projects over the next three years.

The central government’s recently revised tariff policy that mandates power distributors to buy all the electricity from waste-to-energy plants in a state and the remunerative tariff set for it by the Central Electricity Regulatory Commission (CERC) has helped raise investor interest in this segment, said Praveen Prakash, Swachh Bharat Mission director and joint secretary in the urban development ministry.

CERC in October fixed a tariff of 7.9 per kilowatt hour of electricity sold by waste-to-energy plants, compared to about 2.5 applicable for many thermal power plants.

“Cleaning the city and processing waste material makes the environment healthy. Yes, there is an additional cost to electricity from waste-to-energy projects, but these generators help in preventing groundwater contamination. So, the society should be happy to bear a small extra cost," said Prakash.

Experts said the revival of interest now seen in waste-to-energy projects has the potential to change the size and scale of this segment considering that 10 gigawatt (GW) of electricity generation capacity out of the 175GW renewable energy that India wants to have by 2022, is to come from bio-power. The rest is to come from solar, wind and small hydroelectric projects. At present, the country has a renewable energy generation capacity of 37 GW. About 70% of the country’s total 289 GW power capacity is now fired by fossil fuels such as coal, gas and oil.

The central government is giving 15,000 crore to municipal corporations over the next three years under the Swachh Bharat Mission for cleanliness, waste-management and waste-to-energy projects. It has also requested these bodies to give priority to these projects while utilising the cash transfers that they get from central government as mandated by the 14th Finance Commission. These allocations, together with private partnerships, could result in an investment of about 65,000 crore in these projects, said Prakash.

New waste-to-energy capacity is coming up in places like Nalgonda district and Greater Hyderabad Municipal Corporation in Telangana, Bawana and Kidwai Nagar in Delhi, Jabalpur and Indore in Madhya Pradesh, Pune and Kolhapur in Maharashtra, Pallavaram in Chennai, Allahabad and Agra in Uttar Pradesh and Bathinda and Jalandhar in Punjab.

Hyderabad, Pune, Indore and Rajkot have floated tenders for new projects which are to be completed early in 2018.

“We see a revival of interest in the waste-to-energy business. This arises from the revised tariff policy supporting rate determination on regulated basis, and attractive feed-in tariff levels in some states. However, investors also need more clarity on resource (solid waste) quality and availability, which can be improved by reforming solid waste management programmes at city and municipal level," said Kameswara Rao, leader of the energy, utilities and mining practice at PricewaterhouseCoopers India.

To aid fresh investments into renewable energy, the government is also setting up a $1.25 billion fund, backed by state-owned Power Finance Corp. Ltd and Rural Electrification Corp. Ltd along with some private institutions.

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