How to Start a Compressed Biogas (CBG) Plant in India | Business Model, Cost & Subsidy Explained

Thinking about setting up a Compressed Biogas (CBG) Plant in India? This video is your complete guide to entering the future of green energy and building a successful biofuel business from the ground up!

India is fast-tracking its transition to sustainable energy, and Compressed Biogas (CBG) has emerged as a high-potential sector under the SATAT Initiative, MNRE schemes, and various state-level biofuel policies. In this in-depth episode, we explore everything you need to know before starting a CBG plant—from concept to commissioning.
🎯 In this video, we’ll cover:
✅ What is a Compressed Biogas (CBG) Plant?
✅ CBG vs CNG – What's the difference?
✅ Step-by-step guide to start a CBG plant in India
✅ TPD-wise investment & CBG production capacity
✅ Revenue streams from CBG, slurry & carbon credits
✅ Who can invest? Farmers, industrialists, entrepreneurs
✅ Machinery and Infrastructure needed
✅ Subsidy available under MNRE, GOBARdhan & State Policies
✅ Detailed subsidy structure from Gujarat Government
✅ Term loan & interest subsidy details
✅ Income Tax, Electricity Duty & EPF incentives
✅ Licensing, LOI from OMCs, pollution & land approvals
✅ Profitability and payback period analysis
✅ Tips for preparing a DPR and securing project finance

📊 Investment & Capacity Snapshot:
Plant Size Investment (₹) Feedstock Capacity CBG Output (kg/day)
Small (2–5 TPD) ₹2–5 Cr 2–5 Tons/Day 150–300 kg/day
Medium (5–20 TPD) ₹10–25 Cr 5–20 Tons/Day 500–2000 kg/day
Large (20+ TPD) ₹25–50 Cr 20+ Tons/Day 2500+ kg/day

Key Benefits of Setting Up a CBG Plant in Gujarat
✅ Subsidies Reduce Capital Costs – With up to ₹40 Cr for small projects and ₹200 Cr for mega projects, investment risks are minimized.
✅ Operational Support Boosts Profitability – Government assistance reduces running costs for CBG entrepreneurs.
✅ Favorable Business Environment – Gujarat offers a strong industrial ecosystem with easy access to raw materials and logistics.
✅ Growing Market Demand – Rising demand for green fuels in transport, industries, and power generation ensures profitability.

Step-by-Step Guide to Start a CBG Plant in India
Step 1: Conduct a Feasibility Study

Before investing, conduct a feasibility study to evaluate:

Feedstock availability (agriculture waste, animal dung, municipal waste, etc.).
Potential buyers (OMCs, industries, transport companies).
Government subsidies & incentives.
Land requirement (based on plant capacity).
Capital investment & funding options.

Step 2: Choose a Suitable Location
Select land close to feedstock sources to minimize transport costs.
Ensure good road connectivity for CBG distribution.
Check for regulatory permissions and environmental approvals.

Step 3: Obtain Necessary Licenses and Approvals
Pollution Control Board (PCB) Clearance: Approval from the State Pollution Control Board (SPCB).

Industry Registration: Register as an MSME or startup for additional benefits.

Fire & Safety Clearance: Ensure compliance with safety regulations.
Oil Marketing Company (OMC) Agreement: Secure a Letter of Intent (LOI) for CBG sale to OMCs like IOCL, BPCL, HPCL.
Power & Water Connections: Essential utilities for plant operation.

Step 4: Secure Funding and Apply for Subsidies
Starting a CBG plant requires significant investment. Explore the following options:

A. Government Subsidies & Incentives

GOBAR-Dhan Yojana: ₹37,000 per unit for biogas plants.

MNRE Biogas Programme: ₹35,000-45,000 per kW for power generation projects.

State-Specific Subsidies: Check respective state government policies.

B. Bank Loans

SBI, SIDBI, NABARD, Bank of Baroda offer project loans for CBG plants.
Interest rates typically range from 8-12%, with government backing available.

C. Private Investment & VC Funding

Approach venture capitalists, renewable energy investors, or impact funds for financing.

Step 5: Design and Construct the CBG Plant
A. Procure Machinery and Equipment

Anaerobic digesters
Biogas purification & upgrading unit
Gas storage tanks & compression unit
Pipeline & dispensing system
Power backup & monitoring system

B. Build Infrastructure
Construct digestion tanks, storage units, and processing facilities.
Set up electrical, water, and safety systems.

Step 6: Establish Supply Chain & Market CBG
Tie up with Oil Marketing Companies (OMCs) for long-term supply agreements.
Partner with industries, transport companies, and gas distributors for bulk sales.
Sell by-products like organic fertilizer (bio-slurry) to farmers.

Step 7: Begin Production & Optimize Operations
Ensure regular feedstock supply for continuous production.
Monitor plant efficiency and optimize operations.
Conduct quality control to maintain high methane content in CBG.

Setting up a CBG plant in India is a profitable and sustainable business opportunity. With government support, abundant biomass, and rising demand for clean energy, now is the best time to invest in CBG production.

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