How to Start a Compressed Biogas (CBG) Plant in India

Selling the gas is now the easy part of a compressed biogas (CBG) plant. Keeping the digesters full is not.

Since the Union Cabinet approved GOBARdhan on 6 August 2026, the central government pays part of the build cost, fixes a gas price for at least ten years and requires city gas companies to buy rising shares of CBG. Yet only 217 of 1,908 registered plants had been commissioned by that date.

A CBG plant digests farm and city organic waste, cleans the gas to vehicle-grade methane and sells it to those companies. The size most first-time developers price is 5 tonnes of gas a day, which the Centre for Science and Environment's cost benchmark puts at ₹25 crore to ₹35 crore depending on feedstock. Choose the feedstock first: it sets cost, land and supplier risk.

Which feedstock should you build a CBG plant around?

The table is from the same Centre for Science and Environment (CSE) report. Straw needs the least tonnage but costs more to build because the fibre needs extra pre-treatment.

Do not buy land until a sugar mill, dairy, farmer group or municipality signs a multi-year supply contract. Lenders ask for it.

NPCS project report profiles give lower costs. For 6 tonnes a day, plant and machinery is ₹1.72 crore and the project ₹5.22 crore, with a 27% return on investment and 46% break-even. For 7.2 tonnes a day, machinery is ₹5.19 crore and the project ₹14 crore, with a 28% return and 49% break-even. They differ about threefold, so ask what each covers (land, feedstock yard, pre-treatment).

What does GOBARdhan pay a new CBG plant?

GOBARdhan, the National Circular Bioenergy Scheme, runs from FY 2026-27 to FY 2035-36 (outlay ₹23,731 crore). September 2026 guidelines folded the older SATAT purchase scheme into it, so pages quoting a fixed SATAT price are out of date. As of October 2026:

For a 5-tonne plant, ₹2 crore per tonne a day is at most ₹10 crore, roughly 30% to 40% of the CSE range.

How does a CBG plant turn waste into vehicle fuel?

Raw biogas is roughly 55% to 60% methane, 40% to 45% carbon dioxide. The Indian standard for CBG, IS 16087:2016, asks for at least 90% methane and at most 4% carbon dioxide. The plant closes that gap:

1. Weigh the feedstock, shred it and remove metal and grit.
2. Feed airtight digesters, where microbes break it down without oxygen into raw biogas.
3. Remove hydrogen sulphide and moisture with water scrubbing, activated carbon or iron-based media.
4. Strip out carbon dioxide by pressure swing adsorption, water scrubbing, membranes or amine scrubbing.
5. Compress to 250 bar and fill cascades (banks of high-pressure cylinders) for trucking, or inject into a pipeline.
6. Press the leftover digestate into solid and liquid manure.

A farm unit that skips steps 3 to 5 is a different project: see the biogas plant project guide.

Which machines does a CBG plant need?

Odisha's feasibility report for a 25-tonne-a-day plant lists these items.

Which approvals does a compressed biogas plant need first?

HPCL's CBG compendium for SATAT bidders calls its clearance list non-exhaustive, so confirm each with your state.

• Commercial land: HPCL says farmland needs land-use change first.
• State pollution control board consent to establish and later to operate.
• Fire, health and safety clearances and local plan approval.
• A PESO (Petroleum and Explosives Safety Organisation) licence for compression and cylinders, ideally covering 250 bar.
• Registration on the GOBARdhan Unified Registration Portal, then the offtake agreement.
• Authorisation to sell manure; the Fertiliser Control Order has covered fermented organic manure since July 2020.

CSE reports clearances sometimes take 8 to 10 months, with no single window in most states.

Why have only 217 of 1,908 registered CBG plants been commissioned?

PIB's figures are as of 6 August 2026, with another 339 plants under construction. CSE's fieldwork points to:

• Feedstock: contaminated dung and press mud, and a 30 to 40 day straw season.
• Transport: trucked cascades add ₹8 to ₹10 per kg, leaving 15% to 40% less net earnings than pipeline sales.
• Manure: farmers still mix in about 30% chemical fertiliser out of habit.

Returns were thin at the old price. Odisha's report for a 25-tonne-a-day straw plant costing about ₹200 crore showed an internal rate of return near 11% at the ₹54 per kg SATAT price. The new price is nearly double on PIB's per-kg figure, but feedstock cost still decides.

How do lenders read a CBG project?

IREDA's CBG loan page, updated 16 October 2026, shows what a government lender wants. It is still written under SATAT, so confirm current terms.

• A signed contract to sell CBG with 100% offtake and a binding feedstock contract, both longer than the loan.
• Debt to equity of 70:30, with at least half the promoters' share paid upfront as pure equity.
• Tenure up to 10 years, excluding a moratorium of up to one year.
• Debt service coverage of at least 1.0 each year and 1.10 on average, counting no uncontracted by-product revenue.

Lenders read all this against a project report. NPCS has prepared project reports since 1994, and its research process is ISO 9001:2015 certified.

What should you do in the first three months?

1. Sign a feedstock contract for the tonnage in the table, running longer than your loan.
2. Register on the GOBARdhan portal and ask the city gas company for your area for an offtake agreement.
3. File land-use, pollution board and PESO applications early.
4. Get several quotes for digesters and upgrading, and ask what each includes.
5. Have a project report prepared before approaching a lender. An NPCS project report for CBG covers the market survey, process, machinery, raw materials, land, manpower and financials (project cost, working capital, break-even, cash flow), in the format banks and schemes typically ask for. The detailed project report guide shows how lenders use it.

If CBG is too large for your budget, see smaller renewable energy business ideas.

Frequently asked questions about CBG plants

Can CBG be filled in a CNG car?

Yes. CBG that meets the Indian standard has properties similar to CNG, and a 2015 gazette notification (No. 395) permits bio-CNG as an alternative to CNG in motor vehicles. It reaches cars through outlets like those in the CNG station guide.

Is CBG the same as gobar gas?

No. Gobar gas is raw biogas from dung, roughly 55% to 60% methane. CBG is that gas cleaned to at least 90% methane and compressed. GOBARdhan is also the scheme that now supports CBG plants, using feedstock such as agricultural residue, press mud and municipal organic waste as well as dung.

Can a small entrepreneur or farmer start a CBG plant?

Yes. The GOBARdhan credit guarantee targets MSME projects, women entrepreneurs and first-time developers. Capital assistance is paid against milestones, so you still need funds to build. Pipeline support, separately, needs a plant of at least 2 tonnes a day with a firm offtake agreement.

Can I sell the leftover slurry?

Yes, as fermented organic manure (FOM; see the organic fertilizer guide). Support is ₹1,500 per tonne of FOM for registered plants, though only about 100 of 188 operating plants could sell in bulk. The plants CSE studied sold solid manure at ₹2.5 to ₹3 per kg.