The offtake is the settled part. The feedstock is the deal.
Compressed biogas inverts the structure everyone brings from solar. The buyer is an oil marketing company under a SATAT letter of intent at a price it sets, so the revenue side is settled. The input side, free in solar and wind, is a purchased commodity with a season, a catchment and competitors bidding for it — and lenders read feedstock security exactly the way they read offtake elsewhere. Most files arrive complete on offtake and empty on feedstock, and that is where appraisal stops.
This is also not, in most cases, project finance without recourse. A promoter who spends months looking for a structure the market does not offer has spent the months, not saved the guarantee.
Blending ladder from the Cabinet decision of 6 August 2026 (Prime Minister’s Office release, carried by Business Standard the same day); RBI priority-sector lending classification of 4 September 2020.
How these are funded, and by whom
Two things decide the shape of the file, and neither is the gas: the ticket is small, and the revenue has two lines. Both push it towards a corporate or agriculture-infrastructure desk, where the tools are collateral, promoter net worth and guarantees. So the useful question is not which bank but which desk inside it — that decides the appraisal tools, the timeline, and whether the file is routine or a novelty.
- Recourse
- Expect collateral and personal guarantees. Terms without recourse exist where feedstock is contracted long from a counterparty with a balance sheet, and are rare otherwise.
- Tenor
- Set by the lender’s product more than by the offtake. The letter of intent runs long; the loan frequently does not, and the mismatch is the promoter’s to carry.
- Revenue lines
- Gas at an administered price, and fermented organic manure at whatever it realises. Model both, and know what the file looks like when the second is removed.
- Where to take it
- Public sector banks through agriculture-infrastructure lending; co-operative and regional banks, underrated because they already know the catchment and the mill.
- Priority-sector status
- Credit of up to ₹50 crore to a start-up unit setting up a plant qualifies. It does not make a weak file bankable — it changes which target the branch meets by doing it.
- Where it is thin
- Anything resembling a portfolio. Nobody lends against a pipeline, so a developer building several finds each appraised alone by a different branch.
What kills compressed biogas deals
Every item below is a feedstock question, a logistics question, or an assumption about manure. None is about the gas.
- A feedstock arrangement that is an annual understanding
- A short document with a mill, renewed each year, price to be agreed, sitting behind a long loan. The same defect as an offtake that expires inside the tenor.
- Feedstock priced before the neighbours arrived
- Every plant has a real collection radius. The moment several are announced in one district the supplier reprices — after the debt was sized against the old number.
- A season mistaken for a year
- Press mud arrives with the crushing season, paddy straw with a few weeks. Running year-round on a seasonal input needs storage, haulage, a covered yard and a fire exposure the insurer prices.
- Yield per tonne the plant does not reach
- The design case assumed a moisture and contamination level. What arrives at the gate is whatever the supplier had — and this is the number the whole model rests on.
- Manure counted as revenue
- The promoter’s cover ratio includes it and the appraisal note excludes it. A lender that does count it wants a specification, a named buyer and a way to move the product.
- Aggregation described as security
- Residue from smallholders under no enforceable contract is not feedstock security. The projects that work have an anchor supplier with a balance sheet.
Questions we answer in the first conversation
The scheme documents answer none of these. The plants that reached financial closure answered all of them.
- Which desk inside which lender should this go to, and what does it need to look like when it arrives?
- What does the appraisal note do to the manure line, and what is the cover ratio once it has?
- Is the feedstock arrangement good enough to carry the debt tenor, or is it an annual understanding?
- How does the gas reach the delivery point, and does that cost land as capital or as fleet?
- Which support scheme is this project eligible for, and does claiming one foreclose another?
Where we start
With the feedstock, because that is where the file will stop. Supply contracts read for tenor and price mechanism rather than volume, the catchment checked for what else has been sanctioned into it, the manure line modelled twice, and then the file placed with the desk that funds this ticket rather than the one whose name is on the building. If the honest answer is a collateralised term loan with a guarantee behind it, you will hear that from us at the start.
Send us the feedstock contractsinfo@thebluridge.com