CEA Issues New Guidelines To Accelerate Waste-To-Energy Projects Amid India’s Rising Urban Waste

India is struggling to manage the growing volumes of municipal solid waste generated by its expanding cities. In 2021-2022, urban areas produced nearly 70 million tonnes of waste, which amounts to about 1.7 lakh tonnes each day. This number is expected to rise further as incomes grow and cities continue to expand. The need for strong waste processing systems has become urgent, and one of the key solutions being promoted is converting waste into electricity through Waste to Energy plants. These plants aim to reduce the pressure on landfills while creating a useful source of power.

To support this approach, the government has issued new guidelines under Section 63 of the Electricity Act, 2003, which focus on the competitive procurement of power from Waste to Energy projects. The purpose of these guidelines is to make Waste to Energy power generation more viable and to help local bodies such as Municipal Corporations and Urban Local Bodies conduct fair and transparent bidding processes. The guidelines are technology-neutral, allowing any proven method approved by the Ministry of Housing and Urban Affairs to be used. The only requirement is that the technology must be commercially established, must use municipal solid waste-derived fuel, and must follow mandatory segregation and pre-processing standards.

The guidelines specify responsibilities for three key entities involved in the development of these projects. The first is the Implementing Agency, usually the Urban Local Body, which has the primary role of planning and managing the entire bid process. This agency must prepare a pre-feasibility report that provides clear details on the quantity of waste collected per day, the calorific value of the waste, and the potential capacity of power that can be generated. It must also secure clear land for setting up the Waste to Energy plant and the required engineered sanitary landfill, where ash and process rejects can be safely disposed of. Another important responsibility of the Implementing Agency is to ensure payment of a tipping fee to the selected developer. In many cases, the project also requires Viability Gap Funding to make up for the 30 to 50 percent shortfall between estimated costs and revenues.

The Waste to Energy Developer is chosen through a competitive bidding process and is responsible for completing the project according to the terms of the contract. The developer must obtain all required permits, construct the plant within the agreed timeline, and operate it efficiently for the entire concession period. The Procurer, usually the distribution company or end consumer, must sign a long-term Power Purchase Agreement with the developer and commit to buying electricity at the tariff determined through bidding for a minimum period of twenty years. The Procurer is also required to arrange adequate payment security.

The bidding process is based on either a single levelized tariff with a pre-decided viability funding support or on the amount of viability funding a bidder requires for a fixed tariff. The process follows a single stage with two parts, where technical bids are reviewed first and financial bids of qualified bidders are opened afterward. With these guidelines, the government aims to create a transparent and sustainable model that encourages investment in Waste to Energy projects and provides a reliable way to manage India’s growing urban waste.