India’s compressed biogas (CBG) sector has emerged as one of the country’s most promising clean energy segments, driven by the twin objectives of reducing fossil fuel dependence and improving waste management. Backed by increasing policy support, the industry has witnessed growing interest from developers, engineering, procurement and construction companies, investors and technology providers. More projects are entering the construction pipeline and several commercial-scale plants are now operational across the country. However, the industry is facing several challenges that need to be solved going forward. At the 3rd edition of the “Compressed Biogas in India” conference, organised by Renewable Watch, a panel discussion on “Industry Perspectives”, moderated by Sarthak Takyar, Associate Director, Renewable Watch, brought together Shashank Adlakha, chief executive officer, REnergy Dynamics; Abhirup Bhattacharya, president, Gruner Renewable Energy; Manas Khaire, founder and director, Envirogen; Kalpesh Kumar, managing director (MD), Refex Renewables & Infrastructure; Ashish Kumar, MD, Verbio India; and Sankalp Pathak, head, Bio-Process, GPS Renewables ARYA. The panellists shared their experiences in project development, securing financing, and enhancing the bankability of projects, while also providing policy recommendations.
Challenges in feedstock management
Among all the issues discussed, feedstock management emerged as the most critical challenge for developers. The industry has gradually moved away from designing plants around a single feedstock. Seasonal variations, inconsistent availability and changing quality have made multi-feedstock capability a necessity rather than an option.
Agricultural residue such as paddy straw, press mud and napier grass, along with municipal solid waste (MSW), cattle dung and other organic waste streams, are all being used across projects. However, each feedstock requires different handling and processing techniques. Successful projects are increasingly being designed with flexible input systems capable of handling multiple feedstocks throughout the year, reducing dependence on a single biomass source.
Different feedstock procurement models are being used. While some developers procure feedstock independently, others rely on third-party operators and municipal bodies. In several cases, assumptions made during project planning do not match actual operating conditions. The municipal waste supplied may be lower than contracted quantities or inadequately segregated, directly affecting gas production and plant utilisation. Project locations should increasingly be determined by feedstock availability and logistics rather than land availability alone. The panellists identified reliable long-term supply agreements and robust biomass aggregation networks as essential for improving project performance.
Technology is evolving with operational experience
Technology in the CBG sector has matured significantly over the past few years. Earlier challenges associated with feedstock processing and plant performance are gradually being addressed through continuous innovation and operational learning.
Pretreatment technologies, including shredders and extruders, have undergone multiple improvements to better handle Indian biomass characteristics. Equipment originally designed for international markets often requires modification because Indian feedstocks differ significantly in composition, particularly MSW, which frequently contains mixed impurities despite segregation efforts. There is now increased adoption of improved biological processes, membrane-based gas upgrading systems, hydrogen sulphide removal technologies and digital monitoring tools. Greater emphasis is also being placed on process analytics, automation and preventive maintenance to maximise methane recovery and improve plant efficiency.
Operational excellence has become equally important. Operations and maintenance teams are now becoming involved much earlier in the project life cycle, contributing to technology selection, equipment planning and quality supervision during construction. This integrated approach has helped improve plant reliability while enabling existing facilities to increase output through debottlenecking rather than major capital expansion.
Financing continues to slow project deployment
While technology has improved, financing remains one of the most significant barriers to rapid industry growth. Banks have become increasingly cautious after financing several early projects that have struggled to achieve projected returns. As a result, lenders are placing greater emphasis on the financial strength of promoters and corporate guarantees rather than relying solely on project cash flows. Delayed execution of gas offtake agreements has further complicated project financing. Although thousands of letters of award have already been issued by oil marketing companies, many developers are still awaiting definitive gas purchase agreements. Without confirmed revenue contracts, financial closure remains difficult for many projects. Feedstock uncertainty further increases lender concerns. Assumptions regarding biomass availability, gas yield and transportation costs often differ considerably from actual operating conditions. Lower-than-expected yields, inconsistent waste quality and logistical challenges directly affect project revenues and repayment capacity. Improving lender confidence will require stronger operational track records, predictable revenue streams and greater policy certainty.
Project economics need strengthening
The discussion also focused extensively on project economics and long-term commercial viability. The panellists argued that current pricing mechanisms do not adequately reflect the environmental and energy security benefits of CBG. Selling biofuel at a discount to compressed natural gas limits project profitability and discourages investment. Long-term viability will increasingly depend on diversified revenue streams rather than gas sales alone. Organic manure, fermented organic manure (FOM), liquid FOM and carbon credits were identified as important supplementary income sources capable of improving overall project returns.
However, these additional revenue streams alone may not be sufficient. Stable product pricing, faster implementation of supportive policies and predictable regulatory frameworks are essential for improving bankability and attracting larger private investment. All in all, strengthening recurring revenues would have a greater long-term impact than expanding capital subsidies alone.
Execution capabilities have improved
Unlike financing, project execution was not viewed as a major bottleneck. Domestic manufacturing capabilities have improved significantly across the value chain. Digesters, gas handling systems, purification equipment and associated components are now increasingly available from Indian manufacturers, reducing dependence on imported technologies. The developers further indicated that project execution timelines have become relatively predictable once financing is secured. The primary long-lead equipment continues to be compressors, but even here domestic manufacturing capacity is improving.
The panellists also emphasised the importance of designing downstream infrastructure, including compression systems, cascades, metering equipment, fire safety systems and PESO-compliant facilities – with long-term operation and maintenance costs in mind. Proper equipment selection and adherence to regulatory standards were identified as essential for reducing life cycle costs as well as ensuring plant reliability.
The way forward
Policy support will continue to play an important role in accelerating industry growth. The panellists acknowledged the positive role played by initiatives such as SATAT in creating market confidence. However, they also suggested that future policy interventions should increasingly focus on improving commercial viability rather than relying primarily on capital incentives. Stable pricing frameworks, timely execution of offtake agreements, stronger state-level support and improved financing mechanisms were identified as areas where policy intervention could significantly accelerate project development.
India’s CBG industry has entered a more mature phase of development. The sector has largely moved beyond proving the technology and is now focused on improving commercial viability and operational performance. Going forward, success will depend on integrating robust feedstock supply chains with flexible plant designs, efficient pretreatment technologies and strong operational practices. Greater digitalisation, process optimisation and preventive maintenance will further improve plant performance while reducing operating costs.
As India advances towards its clean energy, waste management and circular economy goals, CBG has the potential to become an increasingly important component of the country’s renewable energy mix