Material Insights · Understanding the Material World

Waste-to-energy: Economics and contracts

Why the power is costly and disposal is the real product

What this tab covers Economics and commercial structures: levelised cost of the recovered energy against the fuel it avoids, host-site risk, and service models such as heat-as-a-service.

Incineration in India only works with gate fees, capital subsidy and a premium power tariff; co-processing and re-refining are closer to commercial because they displace costly fuels and base oil.

Levelised cost of heat or avoided cost

Unfavourable

In 2019 CSE reported Indian WtE power selling at about Rs 7/kWh, roughly double coal or solar at Rs 3 to 4/kWh, with subsidies of about 40% of capital cost. That makes electricity the wrong yardstick: the real service is waste disposal, and the economics stand or fall on tipping fees and municipal payment discipline. Co-processing saves the kiln coal or petcoke, so its avoided cost tracks imported fuel prices. A fully sourced levelised cost per MWh for Indian plants was not found.1

WtE power tariff (India) about Rs 7/kWh1 Coal or solar tariff Rs 3-4/kWh1 Capital subsidy about 40% of project cost1

Host factory credit risk

Unfavourable

For incinerators the counterparty is a municipal corporation, and late payment and unreliable waste delivery are the main stranding risks. By 2019 half of the 14 plants built after Timarpur had closed, and CPCB counted only 13 operational plants in FY2021-22 and 21 in April 2025, against 26 states and union territories with none. For co-processing, the risk sits with the waste supplier rather than the cement firm, which is usually the stronger credit.1515

Operational MSW incineration plants 13 (FY2021-22); 21 in 10 states and UTs (April 2025)515 Capacity of operating plants (FY2021-22) about 127 MW, excluding Uttar Pradesh5

Heat-as-a-service and ESCO models

Mixed

Indian WtE projects are mostly public-private partnerships in which a private operator builds and runs the plant under a long concession, receives waste from the municipality and sells power to the state utility under a long-term agreement, as with the Okhla plant in Delhi (reported in 2019 as expanding from 16 MW to 40 MW). In cement, the kiln owner usually runs the co-processing itself, as JSW Cement does. Used-oil EPR creates a credit market in which lubricant producers must buy re-refined content; a lubricants consultant estimated about USD 2 billion of investment would be needed.18

Okhla capacity 16 MW expanding to 40 MW1 Used-oil EPR investment need (Kline estimate) about USD 2 billion8

Sources

  1. Trash-fired power plants wasted in India Down To Earth (Centre for Science and Environment), 2019
  2. Annual Report 2021-22 on implementation of Solid Waste Management Rules 2016 Central Pollution Control Board, 2023
  3. India's RRBO EPR targets: feasibility concerns raised (Kline presentation at ALIA seminar) Fuels & Lubes, 2023
  4. Report filed by the Central Pollution Control Board on waste to energy plants, 15 April 2025 India Environment Portal (CSE), reproducing CPCB filing to NGT, 2025