ROI on a biomass pellet plant is driven by three numbers: feedstock cost, pellet selling price and utilisation. Each of the three has a sensitivity coefficient on the IRR, and small changes compound quickly. The model below works for a 2 TPH Punjab plant on paddy-straw feedstock.
Throughput: 2 TPH continuous, 80% utilisation = ~14,000 tonnes per year. Feedstock cost: ₹2–4 per kg field edge, ₹2,800–5,600 per tonne all-in (with collection, baling and transport). Annual feedstock cost: ₹3.9–7.8 crore.
Pellet selling price: ₹6–11 per kg depending on calorific grade, ash content and offtake channel. NTPC tender prices have been firmer; rice-mill cofiring contracts more variable. Annual gross revenue: ₹8.4–15.4 crore.
Operating cost stack: power (8–10% of revenue at typical Punjab tariff), labour (3–5%), dies and wear parts (4–6%), finance (varies). Net operating margin lands at 15–25% under base-case assumptions. Payback against typical 2 TPH plant capex (financed) typically falls in 30–48 months.
Caveats: feedstock cost is the single biggest sensitivity. A 50 paise per kg movement on field-edge straw shifts annual feedstock cost by ~₹70 lakh and IRR by 4–6 percentage points. Get the aggregator contracts right before you sign the equipment PO.
About the author
D Sharma is the proprietor of Shri Balaji Biomass Solutions, manufacturer of the 8th-Generation Centrifugal Pellet Machine, the complete biomass pellet plant line and a 96-SKU OEM spare-parts catalogue. Based at the Sardulgarh works, Distt. Mansa, Punjab.