How to Start Biomass Pellet Manufacturing Business?

calendar29 Apr, 2023
timeReading Time: 6 Minutes
How to Start Biomass Pellet Manufacturing Business?

Densified Biomass, also called biomass pellets, is an emerging form of biomass fuel that can be made fromagricultural Biomass, wood wastes, commercial grasses and residues from farms, yards or forests. These biomass pellet manufacturing businesses are in huge demand afterthe ‘National Mission on use of Biomass in coal-based thermal power plants’ that was launched on 12th July 2021, mandating all thermal power plants (TPP) in the country to use 5% of biomass pellets for co-firing with coal. Co-firing is an option for converting agricultural waste to electricity by adding agricultural biomass as a partial replacement fuel in coal-based boilers. Biomass co-firing is globally recognised as a cost-effective method for decarbonising a coal fleet. Biomass is likely to become an important fuel in the sustainable energy approach of India in the future. As per some reports, using agricultural biomass to produce fuels will account for more than 40% of all renewable fuels being used in the near future.

Government’s Vision towards The Use Of Biomass Fuel

The Biomass policy of the country was revised in October 2021, according to which a 5-10 % co-firing in power plants was made mandatory weight. In the Union Budget of 2022, the Ministry of Power made co-processing mandatory throughout the country to address the issue of air pollution in India, particularly in the North Indian regions of Delhi NCR. The government has also taken the following steps in aiding the setup of the biomass pellet manufacturing business.

  • A customised window has been designed in the form of Government e-marketplace (GeM) portal for biomass pellet procurement.
  • Biomass has been notified as a priority sector lending item by the RBI. This enables for easier and faster availability of bank loans to Biomass pellet manufacturing business setup. The SBI has launched a dedicated scheme to provide long-term loans to pellet manufacturers.

Pelletisation Business using Biomass

Pellets and briquettes are two different products commonly used as a convenient and usable form of Biomass-derived fuel. Pelletisation and torrefaction are two popular techniques that can be used to produce biomass pellets. Pelletisation is a process in which Biomass is compressed into small pellets of uniform size and shape. The biomass pellet manufacturing business involves grinding and drying the raw biomass material, which is then compressed using a pellet press. Biomass pellets have no contamination, are cheaper than coal, diesel and natural gas, and the raw material for its production is abundantly present in almost any corner of the country. Therefore, it is increasingly being accepted as a replacement for conventional fuels and gaining the attention of entrepreneurs who want to base their business in and around agricultural waste processing.

Advantages of Setting up a Biomass Pellet Manufacturing Business

Biomass demand in many industries escalated since the Commission for Air Quality Management (CAQM) in NCR and adjoining areas directed the industries in Delhi-NCR to switch to cleaner fuels by September 2022. Following are some of the advantages of starting a biomass pellet plant in India.

  • Biomass pellets have broad applications and can be used as fuel for homes and industrial facilities. They are renewable and have a very low carbon footprint. Bio pellets are efficient and have a high energy density too.
  • No external binder is required in the pelletisation process, which makes the pellets more environmentally friendly. The pellets have a high energy density, making them more efficient to transport and store.
  • Biomass co-firing helps to minimise greenhouse gases emission because this process reduces net CO2, CH4, SOX, and often NOX emissions, compared to the combustion of coal.
  • In contrast to other renewable energy sources, biomass is widely available in the country.

How to Start a Biomass Pellet Manufacturing Business?

There are a few essential factors that must be kept in mind when starting a biomass pellet manufacturing plant. Let’s see the crucial stagers in setting up a manufacturing unit

  • Step1: Formulating Business Plan

A detailed business plan and market survey is important for any business setup. In case of Biomass pellet manufacturing Business, it is essential to have a reliable source of bio-waste supply for a continuous supply of raw material. At the same time, finding customers for the pellets is also important. The following points must be considered in a business planning

Raw Material: Raw material is sourced from agriculture fields and wood processing units like the paper and pulp industry. It may include

  • Straws from crops like rice, wheat, jowar, ragi, millet, barley, gram, khesari etc.
  • Stalks from bajra, castor, arhar, cotton, jute, maise, sunflower, mustard etc.
  • Spent cobs from corn, maise, ragi, bajra etc.
  • Other agricultural waste like cane tops, tea plant wastes, cane trash, wood waste, leaves, needles and husk etc.

Space: for a small biomass pellet manufacturing plant, a decent area will be required for storing raw materials, installing the machinery and storing finished products. This can be done in a 500 to 1000 sq. ft. space in case of a small biomass pellet manufacturing unit. For a large-scale business, the space requirement can be anywhere around 5 to 10 times that of the space requirement for a small setup.

Location and utilities: the location of the biomass manufacturing plant must be decided by careful examination of the source of the raw material to reduce the transportation cost. As pellets are dries and compact, the weight is significantly reduced and can be transported easily. Therefore, a good connectivity through the road is also desired while finalising the location. Apart from this uninterrupted supply of electricity is also important as the process is largely automated.

  • Step 2: Sourcing of Machinery

There are a number of domestic manufacturers that manufacture semi-automatic to fully automatic and different capacities. The prices of pelletising mills start from 85,000 and can go up to 35 lakhs per piece or even more, depending on the production capacity features and technical capabilities. Other required machines will include

  • Wood Chipper
  • Hammer Mill
  • Dryer and Cooler
  • Screening and Packaging Machine
  • Step 3: Applying for Licences and Permits

Trade Licence from the local municipal Corporation: Trade license is a certificate/ document that permits an entity to carry on the business or trade activities in a particular municipal limit for which it is issued. The provision of a trade license is mandated by the respective State government to regulate and monitor various trade activities.

Factory’s Licence: The Factory Act of 1948[1] requires all establishments falling under the definition of Factory to register the manufacturing unit with the municipal authorities.

Fire NOC: Fire safety NOC, also called Fire NOC, is issued by the Fire department after verifying and auditing the resistance of the building to fire and other installation of fire safety mechanisms. This is also to ensure that the design of the facility is at par with the fire safety standards stated by The Bureau of Indian Standards (BIS).

Pollution NOC:  A biomass pellet manufacturing business that manufactures biomass briquettes through sun drying, without using toxic hazardous chemicals, is categorised under the green category and will require Pollution NOC in the same category. The documents required for this NOC will include the following.

  • Duly filled Application Form on the OCCMS portal
  • Undertaking in prescribed format
  • Site or layout plan with a roadmap
  • Manufacturing process including a list of machinery, the capital cost of land, building, and machinery, water balance, its requirement
  • Detailed Project Report with details of effluent, emission of air discharge, solid waste management plan, raw materials usage, list of finished products
  • Proof of land ownership/rent Agreement (rent receipt, land deed, lease document, etc.)
  • Industry Registration Documents
  • Consent Fee
  • Any other Document specified in the Application Form

Other Licences Approvals Required For Biomass Pellet Manufacturing Business

Cost of Setting up A Biomass Pellet Plant in India

For a small state biomass pellet manufacturing business that is only making wood pellets, the investment required can be anywhere from 5 lakhs to 15 lakhs. But for an ideal output that is around of 500 kgs per hour, including the cost of plant & machinery, that will include the cost of the shed (for dry storage), running cost (cost of labour and transportation) of power, and working capital for a land size of 1000 sq. feet., a minimum investment of around INR 30 lakh will be required. For a state of art biomass pellet manufacturing business that can perform pelletising, briquetting of Biomass etc., and the estimated cost will be around five crores or more.

Government Assistance for setting up Biomass Pellets Plants

The GOI is stressing on increasing the capacity of pellet manufacturers. Several trainings for biomass pellet manufacturing have been conducted by the National Power Training Institute (NPTI) all over the country. More than 36 gigawatts of coal-based thermal power capacity has successfully co-fired Biomass in the country. Following are some financial subsidy schemes issued by the CPCB and Ministry of New & Renewable Energy to encourage new entrepreneurs to set up biomass pellet manufacturing businesses:

 “Biomass Programme” towards assistance in setting up the biomass plant

MNRE Bio Energy Schemes in which Biomass Pellet Manufacturing businesses will be provided with an assistance of Rs. 9 Lakhs per Metric Ton Per Hour (Mtph) upto Rs. 45 Lakhs per plant

“One-time financial assistance for setting up pellets plant in NCR”

Under Environment Protection Charge funds for Non-torrefied plant set up, CPCB announced to provide financial support of Rs. 14 Lakhs per ton of production capacity per hour subject upto Rs. 70 Lakhs and for Torrefied plant set up and one-time assistance of Rs. 28 Lakhs per ton of production capacity per hour upto Rs. 1.40 Crores. A corpus of Rs. fifty crores have been earmarked for utilisation through the guidelines.

Market Opportunities in Biomass Pellet Manufacturing Business

The demand for biomass wood pellet industry is expected to grow substantially in the coming years. According to some reports, the global pellet market was valued at USD 8.23 billion in 2022 and is expected to grow at a CAGR of 6.75 per cent during 2022-2023


The surge in demand for biomass pellets has created an immediate requirement for the biomass pellet manufacturing business. Biomass pellet suppliers can also cater to industries like textile, metal-based, food processing or in the open market. The demand from thermal power plants is also expected to rise exponentially after the remaining plants complete their trial runs. According to the power ministry’s policy on biomass utilisation, nearly 0.25-0.3 million tonnes of biomass pellets can generate 1 GW of electricity at 7 per cent co-firing in thermal power plants, which is a hint at the immense future demand for these pellets in the future and therefore, biomass pellet manufacturing businesses, in every region of the country.

Read Our Article: An Overview Of Mineral Beneficiation, Including Pelletisation

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