Globally, India is best placed for CBG: Varun Karad, REnergy Dynamics (RED)

1. What makes you enter the CBG or waste management space at such a young age when the sector looks dicey?

Varun Karad: I entered the CBG sector in 2017-18. I come from a pharma business background but I went to Australia to start doing something there. It was the time when the scientific waste management concept was gaining pace. I met my past friend & founder of GPS Renewables, Mainak Chakraborthy, who introduced me to the concept of CBG. I joined GPS as a consultant and that is how I got into the CBG. After working for 3-4 years, I realised there is scope for more companies in this sector. The idea was to start developing projects as I believed that the time of the sector had come. We are addressing all gaps for the last 5 years. We are in a space where the solar sector was in 2010-11. The CBG will start picking up very quickly now and you will see a robust growth.

2. RED was launched just a year ago. So, how many projects do you have at the moment?

Varun Karad: REnergy Dynamics started operations in December 2023. We are constructing three CBG plants right now. All of them are for Reliance located in Nagothane, Prayagraj and  Navsari. Output wise all of them are 21-TPD capacity. These plants will not work at low capacities. They have intricate processes which require lots of trained manpower. We don’t make small plants and only construct plants that are of 20 TPD or above. Nagothane is our first project and it will be based on Napier grass where we will be feeding in 370 tonnes per day of Napier and 50 tonnes of straw/fibrous material. This plant is unique because for the first time, such a large scale Napier will be grown in the country that too on wasteland. Several technologies & machines used in the CBG plant are deployed for the first time in India. The mechanical completion of this plant is scheduled in March, well on track.

3. What’s the cost of these projects and how does RED make a difference here?

Varun Karad: A 21-TPD project costs in the range of 120-135 crores including taxes. We have won these competitive bids against other companies but this is only for EPC. These will be world class CBG plants. RED brings in some of the most advanced technologies into India. We are exclusive partners with tech majors like Emerson for bringing the automation technology in the country. We help them in bringing the most sophisticated solutions into India.

4. How do you assess the future of CBG industry in India?

Varun Karad: Everyone in our country has learnt about ‘gobargas.’ It was the technology of India which Europe mastered & built it at a scale. I think the time of India and Indian markets have come back. We are in the best position in the world for this sector to grow. There are a couple of examples. First, we have immense agricultural waste in our country of which only 40% is used by farmers for fodder & storage. We have access to the remaining agri-waste for aggregation. Second, we also have a large market. India is transitioning from fuel based economy to gas based economy. Government is giving many incentives for setting up CBG plants. By December this year, you will have 50 large scale plants commissioned and this will give fillip to lots of small companies. Reliance, has invested Rs 5,000 crore in the last year & half to set up the sector. This has a stimulating effect. There are lots of vendors in the market, new tech coming up, innovations happening and a strong spill-over effect. We have been speaking to investors like Adani, Reliance and others and I believe the SATAT’s target of 15 MMT of CBG will be met in less than three years from today.

5. The industry also speaks about scores of challenges. What do you think impedes the growth of CBG in India?

Varun Karad: For any project, you need three things in this sector. Feedstock – which is a challenge. Technology – not a challenge any more. Third one is the offtake of gas. The government has already mandated the offtake of biogas. I can confirm that the price of the gas is also about to increase I am a part of a committee that has requested the Govt to raise the price of CBG. We do not see many challenges with technology right now. Smaller teething issues of ramping up the plants will be solved. The largest and the remaining challenge is aggregation of feedstock. RED started its journey from feed stock aggregation through hundreds of farmers from Punjab collecting agri-waste in Uttar Pradesh. The farmers were against any burning of agri-waste and wanted to sell if there was a purchaser. As Reliance has committed 500 plants, IOCL 200 plants, Adani has got some – we see a large market of aggregation. In the next three years, I see the aggregation market of Rs 5000 crore in India opening investment avenues. We are helping farmers to aggregate. This year we have already aggregated 1 lakh tonnes and next year we have a target of 2.5 lakh tonnes. We will be investing 200 more machines in feedstock aggregation in the coming year.

6. Do you import technologies or take India manufactured ones?

Varun Karad: We are buying technologies & equipment in bulk. We are pushing all the manufacturers to set their shops in India because we require services here.

7. Let’s discuss your other business streams and how do you look at the future?

Varun Karad: We also have a products business wherein we are manufacturing certain goods as our second revenue stream. We make products in partnership with companies and we have manufacturing facilities in Maharashtra and Greater Noida.

Our third revenue stream is EPC. We work with only large players right now. I actively tell people not to set up small scale plants right now. Let the large scale plants run successfully for a long time and then start setting up small ones.

Our last business is project development where we’ll have project ownership. So we will be announcing our own projects in the coming financial year as we are on the cusp of financial closure for that. Business wise, we are right on the track. By 2029, we expect to do a cumulative business of Rs 5000 crore. This year we have already done a business of Rs 160 cr and expect to close at Rs 200 cr by the end of March.

8. What policy support do you think is necessary for the growth of CBG in India?

Varun Karad: The government has come up with several support measures. They have given the floor price & market price which is great for the CBG industry. Over the years, we have been pushing the government to give us some minimum offtake guarantee which they have agreed to. They are coming up with a policy where they would allow at least 50% offtake guarantee. There is one certain challenge that we face right now is regarding taxes. There is confusion as gas or CNG comes under VAT but CBG comes under GST. We are working with the industry & the government to end the confusion and we will have clarity by the end of this month on this. We are also trying to tell the government to subsidize the fermented organic manure (FOM). If the urea can be subsidized then why not the organic fertilizers!