Empowering India’s Clean Energy Journey with Biogas

Investment sentiment towards biogas in India is positive due to the many promising signals. However, there are also areas that investors need to understand and carefully evaluate to make informed decisions.

This white paper offers a close look at India’s biogas market potential, the policies fuelling its growth, and the challenges that still need to be tackled. It also highlights how Ramboll’s extensive global experience can complement India’s push toward greater energy security and sustainability.

Unleashing India’s Biogas Potential

India’s biogas industry has been gathering momentum for several reasons. The promise of clean, renewable energy draws support from government initiatives like the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, which envisions thousands of new biogas plants in the coming years. On top of that, India’s vast supply of agricultural residues, sugar industry byproducts, urban organic waste, and livestock manure creates a solid foundation for large-scale biogas production.

In 2024, India's biogas market size is approximately USD 1.6 billion and is projected to reach USD 3.5 billion by 2032¹. More optimistic analysts project the market size to reach USD 4.9 billion². The biogas market consists of three major key areas: heating, electricity generation, and transportation. With India's increasing population and industrialization, the demand for biogas in all three areas is expected to increase significantly over the years.

There are currently over 5 million biogas plants (mostly small-scale digesters)¹ in India. According to the Government of India, there are currently 876 operational biogas plants with a minimum capacity of five cubic meters per day, with an additional 350 plants under progress. Furthermore, over 120 large-scale compressed biogas (CBG) plants are operational, and approximately over 500 plants are under development ³.

Where the Feedstock Comes From

One of India’s strong suits in biogas production is its wealth of raw materials. Agricultural residues (such as rice paddy straw), sugar industry waste, urban organic waste, sewage sludge, and livestock manure all serve as prime inputs for biogas. The combined feedstock availability is enormous, offering a clear path to scale. If India can utilise its readily available feedstock, it has the potential to produce up to 62 MMT of bio-CNG per year (~86 billion cubic meters), significantly overshadowing its current production output of 3.2 billion cubic meters of bio-CNG per year¹.

While agricultural regions like Punjab and Haryana yield massive amounts of crop residue, areas such as Uttar Pradesh and Maharashtra contribute significantly thanks to robust sugarcane and dairy industries. Similarly, big cities like Delhi, Mumbai, and Indore produce large quantities of organic municipal waste, which can be diverted from landfills into biogas plants. With such diversity in feedstocks, India has the flexibility to develop region-specific strategies that maximize biogas output.

Biogas “Hotspots” Across India

Because feedstock sources are not uniformly distributed, certain states have turned into biogas “hotspots.” For instance, Punjab and Haryana are prime locations for straw-based digesters, while Uttar Pradesh is a leader in sugarcane-based waste. Gujarat, Rajasthan, and Maharashtra have thriving dairy sectors, generating the manure required for large-scale plants. In metropolitan regions—Bengaluru, Pune, Delhi—urban organic waste is abundant, fuelling a growing network of municipal biogas projects.

Indore stands out with an impressive facility that handles around 550 tons of city waste each day, producing about 17,000 kg of bio-CNG. This model demonstrates how large cities can manage waste effectively while also creating valuable biofuel.

Government Policies Driving the Industry

India’s government has rolled out a range of policies and incentives that support biogas, reflecting its commitment to alternative energy³:

• GOBARdhan Initiative: Encourages biogas development in rural areas, leveraging livestock manure and other local organic materials.
• SATAT Scheme: Focuses on compressed biogas (CBG) production from crop residues and urban waste, aiming to set up retail outlets across the country.
• Blending Mandate: Urges a set percentage of CBG to be mixed into mainstream fuels like CNG and PNG, spurring demand.
• Financial and Market Support: Includes subsidies, support for feedstock procurement, and incentives for the sale of organic fertilizer (digestate).
• Pipeline Infrastructure: Government efforts to create pipeline networks help integrate CBG into local gas grids, enhancing biogas access and simplifying distribution.

Collectively, these measures make it easier for private companies and investors to enter the market while reducing some of the usual risks that come with developing new projects.

SATAT’s Influence and What Lies Ahead

Launched in 2018, the SATAT programme set an ambitious target of establishing 5,000 new biogas plants by 2024. Though only a fraction of that figure has been realised so far, the scheme has definitely sparked interests and conversations in the industry. It provides guaranteed pricing and offtake arrangements, motivating entrepreneurs and financiers to explore biogas ventures with increased confidence. With more than 2,000 letters of intent issued, the stage is set for a major scale-up in the near future.

Looking ahead, the government’s push for higher blending requirements — starting with a 1% mandate for CBG in CNG/PNG — adds another layer of momentum. The plan is to raise this blending level progressively, thereby cementing biogas as a mainstream energy source.

Distribution Network & CBG Prospects

Building out infrastructure for compressed biogas injection into gas pipelines is crucial for India to move beyond small, localised projects. Several Indian states — including Uttar Pradesh, Haryana, Gujarat, and Maharashtra — are already leaders in establishing large-scale CBG plants. By leveraging existing pipeline networks and ongoing expansion projects, these states hope to integrate CBG into local city gas grids (commonly known as PNG), which will greatly expand biogas distribution.

Remaining Challenges and Opportunities

While the outlook is largely positive, the biogas industry in India faces hurdles:

• Feedstock Supply Chain: Aggregating feedstock and agricultural waste at scale from farms across the state and region presents a major hurdle, with significant additional costs required for transport. The quality of the feedstock and impurities also remains a challenge.
• Investment Bottlenecks: Biogas projects are capital intensive with long payback periods, making them very risky for private investment. Even with government incentives, delays in disbursement or cumbersome procedures can strain cash flows, thereby making biogas projects unattractive to private investors.
• Technical & Operational Challenges: Many large-scale biogas technologies and equipment are complex, posing a steep learning curve for engineers who currently operate only small biogas plants in India. Additionally, connecting CBG plants to the gas grid may be technically challenging for rural plants and will require the plants to produce CBG that meets pipeline injection standards, necessitating stringent purification.

Despite these stumbling blocks, the potential rewards are significant:

• Strong Future Outlook: The Indian government remains committed to scaling bioenergy within the nation by incentivising and mandating blending, working towards the goal of achieving a 5% CBG blending mandate by 2028. India is also expected to commission a total of 750 CBG plants by 2028.
• Enhanced Pipeline Network Developments: Facilitating the injection of CBG into the gas grid will make CBG more accessible for consumers and industries. Enhanced pipeline connectivity will expand market reach to more parts of India, reduce transportation costs, and support the country's renewable energy goals.
• Waste-Based Feedstocks: India's focus on using waste rather than dedicated crops aligns with current European practices

How Ramboll Can Help

Ramboll has a long and successful track record in designing and implementing biogas projects around the world, including Europe, the United States, Southeast Asia, Australia, and South America. With our multidisciplinary expertise —c overing engineering, environmental science, financial analysis, and policy advisory — we are positioned to guide clients through every aspect of biogas project development.

Moreover, our experience in India, supported by multiple local offices, gives us a unique understanding of the regional market conditions. We can help project developers, government bodies, and investors navigate feedstock procurement, system design, regulatory compliance, pipeline integration, and more. By combining our deep global knowledge with on-the-ground insights in India, we bring an approach that respects local realities while incorporating global best practices.

^References:

^{1: India Biogas Market Size, Share, Trends | Growth Report [2032]}

^{2: Biogas Market Size & Outlook, 2030}

^{3: https://www.worldbiogasassociation.org/wp-content/uploads/2024/10/WBA-India-Policy-and-Market-Briefing-2024.pdf}

^{4: https://gobardhan.sbm.gov.in}

^{5: India’s giant leap: First gas trading hub launched - ADI Analytics}