“For the last 18 months, not even one project had come to the state. But, after the tariff for biomass power procurement was increased to Rs 4.50 per unit from Rs3.15 by the Tamil Nadu Electricity Regulatory Commission, the state has started attracting investments,” said PR Muralidharan, deputy general manager of bio-mass, Tamil Nadu Energy Development Agency (TEDA). Apart from this, these projects are given permission to to sell their produce to third parties.

Tamil Nadu has the potential to produce 500 MW of power through biomass, of which production of around 200 MW has already started. TEDA has received 10 proposals, said R Christodas Gandhi, principal secretary and chairman and managing director of TEDA.

While two projects totalling to 17.5 MW are almost complete at Tiruvanamalai and Krishnagiri, four projects with 40 MW are under way in public-private partnership. Nine projects of 99 MW have got the recommendation of TEDA and are yet to approach the Tamil Nadu Electricity Board. “In all, around 156 MW of projects are likely to come up in the state, entailing an investment of Rs 5 crore per MW,” he added.

Gandhi said, “Producers of tea and dal and other farmers are using biomass-based captive power for their irrigation purposes. This had led to 100% liberalisation from the power grids.”

Tamil Nadu accounts for 147 MW, of India’s total installed biomass power capacity of 683 MW. But over the last two years, capacity utilisation had declined sharply due to a steep increase in the cost of biomass fuels, a recent TNEB release said.

“The capacity utilisation, which ranged from 5% to 70% during 2007-08, declined to 3% to 48% during 2008-09. Other users of biomass fuel have been procuring biofuels at a much higher price, making it unviable for biomass-based power plants. This deficiency has been addressed by fixing the fuel cost at double the present rate of around Rs 2,000 per tonne.”