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Indian Government Support for Urban Waste to Energy Projects

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Government Support for Municipal Solid Waste to Energy Projects

The Ministry of New and Renewable Energy (MNRE) offers financial incentives to a proponent who plans to set up a waste-to-energy project as per the prevailing policies of the ministry. The incentives are given to both private as well as public sector entrepreneurs and investors having technical and managerial capabilities MNES gets the detailed project reports appraised by the financial institutions to ensure that the project is feasible, viable and sustainable. The incentives offered are:

  • For commercial projects, financial assistance is provided by way of interest subsidy in order to reduce the rate of interest to 7.5%, capitalized with an annual discount rate of 12 %. The assistance is routed through financial institutions (FIs)/ Lead FI of the project, etc.


Type of Projects

Maximum Eligible Interest Subsidy to Reduce the Interest Rate to 7.5% (Rs. in Crore/ MWh)


Urban and Municipal Wastes 

Industrial Waste

Waste to power 



Waste to fuel  



Fuel to power   




  • For demonstration projects comprising innovative projects for generation of power from municipal solid wastes and selected industrial wastes, financial assistance up to 50% of capital cost of the project limited to Rs. 3.00 crore per MW is provided to the project proponent.
  • For power generation through Sewage Treatment Plants (STPs), financial assistance up to 50% of the incremental capital cost for generation of power from biogas being generated at STPs is provided.
  • In addition to the above, financial incentive at the rate of Rs. 15.00 lakh per MWe is given to Municipal Corporations/ Urban Local Bodies, for supplying the garbage free of cost at the project site and providing land on a long-term lease, viz. 30 years and above, at a nominal rent.
  • State Nodal Agencies are given an incentive @ Rs.5.00 lakh per MWe of power for promotion, co-ordination and monitoring of projects.
  • For financial institutions, a service charge of 2% of the actual subsidy channeled through them to the promoter or other FIs is allowed, subject to a maximum of Rs.2.00 lakh per project.
  • There is also a provision for giving 50% of the cost of preparation of Detailed Project Reports (DPR) or Techno-economic Feasibility Reports, subject to a maximum of Rs.2.00 lakh per report to the project proponent.
  • If considered necessary by MNES, financial assistance may also be provided towards full cost of carrying out studies for assessment of resources for setting up waste-to-energy projects.
  • For promotional activities, assistance is available for organizing of training courses, workshops and seminars, awareness generation and publicity.


Incentives under the National Program on Energy Recovery

S. No

Project Description



Power generation from MSW involving RDF

Rs. 15 million per MW


Power generation on high-rate biomethanation

Rs. 20 million per MW


Power from MSW on gasification-pyrolysis & plasma arc

Rs. 39 million per MW


Biomethanation technology for power generation from vegetable market waste, slaughterhouse waste above 250KW capacity

50% of project cost; max Rs 30 million per MW


Project development assistance per project

Up to Rs. 1 million


Capacity building initiatives

Rs 0.3 million per event

Source: MNRE

Carbon Credit Benefits from MSW to Energy

Solid waste management practices release high quantities of green house gases in the atmosphere. This sector therefore creates significant opportunities for carbon mitigation, which could eventually become tradable carbon credits. Some waste to energy projects in India have already started earning carbon credits.

As of 2011, there is a total of 10 registered projects fetching about 889,358 CERs /annum (Corresponding to a revenue potential of 0.5 billion INR). Presently 32 CDM projects are under validation stage seeking for registration. These projects can generate more than 10 million CER’s/annum (Corresponding to a revenue potential of around 6 billion INR) (Data as on Feb 2011).

Examples for Carbon Credits Projects by the Indian Waste Management Industry


Average Annual Emission Reduction


Bundled Waste Processing Facilities in India


Gorai Landfill closure and Gas Capture Project, Mumbai, India


Installation of Bundled Composting Project in the state of Tamil Nadu


Upgradation and expansion of APMC compost plant at Tikri, Delhi


Establishment of compost production unit of 100TPD at Lalganj


Upgradation, operation and maintenance of 200TPD composting facility at Okhla, New Delhi


Avoidance of methane emissions from MSW and food waste through composting


MSW based composting at Kolhapur, Maharashtra


The Timarpur-Okhla Waste Management Company Pvt Ltd’s (TOWMCL) integrated waste to energy project in Delhi 


SESL 6MW MSW based power project at Vijayawada & Guntur, Andhra Pradesh


*Certified Emission Reduction


Government Support for Sewage to Energy Projects

Projects based on high rate biomethanation technology

Financial assistance of Rs. 2.0 crore / MW will be provided for projects based on power generation from MSW through high rate biomethanation technology.

Power generation at sewage treatment plants

Financial assistance @ 40% of the project cost subject to a maximum of Rs 2.0 crore/MW shall be provided for projects for generation of power from biogas being produced at Sewage Treatment Plants.  Project cost will include the cost of engine-genset, H2S removal plant and other related equipment.

Carbon Credit Benefits of Sewage to Energy

Projects based on generation of electric power from biogas, which is being produced as a result of digestion of sludge in STPs, are eligible for CDM (Clean Development Mechanism), as it will help in reducing and stabilizing the emissions due to methane which is a green house gas.  Based on the potential of biogas/power generation from STPs, expenditure on O&M can be offset by earning ‘carbon credits’ on recurring basis. Some sewage treatment plants in India are on the verge of getting the carbon credits for its efforts for reducing the carbon-dioxide emission in their sewage treatment plants.


Carbon Credits for Sewage Treatment Plants in India

Sewage Treatment Project

Sewage Treatment Plant



Annual Revenue Estimated

( INR)*

Chennai Sewage Treatment Plant with a capacity of 250 MLD

250 MLD


45.75 million

Surat Municipal Corporaation(SMC)

600 MLD


37.5 million

Delhi Jal Board ( DJB)

2500 MLD


87 million

Wastewater treatment for  1500 villages in  Punjab with a average population

360 MLD


140 million








* EAI assumes that 1 CER to be approximately equal to USD 15 while the claims from each of these case studies below  have taken the value of 1 CER to be USD 20 – 25.


Indian Government Support for Waste to Energy Projects 

Government Support for Urban Waste to Energy

Government Support for Industrial Waste to Energy


India Waste to Energy