Cogeneration (or combined heat and power [CHP]) systems provide steam and power to industrial and other plants throughout the world. Very high efficiency levels, in the range of 75-90 per cent, can be reached, as compared to conventional power plants where the efficiency level is only around 35 per cent. This is because the low-pressure exhaust steam from the turbine is not condensed, but is recycled back to the factory for process use. The power produced by these cogeneration plants is thus used within the plant as auxiliary consumption, with the surplus being exported to the grid.
Most sugar mills, since their inception, have had cogeneration power plants. Since the main fuel used is bagasse, which is a renewable source, such power is termed as “renewable energy”. These power plants do emit carbon dioxide (CO2) like other thermal power plants, but in reduced quantum, the sugarcane crop absorbs several times more CO2 for its growth during the process of photosynthesis. This is where the bagasse-based cogeneration power plants have the twin advantages of being renewable and help absorb CO2 from the atmosphere.
As of December 31, 2024, the bagasse cogeneration sector stood at 9,806.42 MW and biomass (non-bagasse) cogeneration at 921.79 MW in India according to the Ministry of New and Renewable Energy (MNRE). The size of the former is due to India ranking as one of the world’s top two sugar producers, the other being Brazil. Of the total bagasse cogeneration in the country, the state of Maharashtra leads with 2,907.3 MW, followed by Uttar Pradesh with 1,985.5 MW and Karnataka with 1,868.91 MW.
Tariff woes
The Central Electricity Regulatory Commission (CERC) is the central body that regulates various aspects of generation, transmission and distribution at the national level, with state electricity regulatory commissions (SERCs) at the state level. These commissions play a crucial role in setting tariffs for the cogeneration power.
Although the overall CERC guidelines are applied, individual SERCs have their own tariff structure for cogeneration projects; meaning the price per unit of electricity produced can differ significantly, depending on the location, type of fuel used (for example, bagasse, coal, gas), plant capacity, plant load factor, and the state’s overall power demand.
As per the Maharashtra Electricity Regulatory Commission’s Order 2024, the comparison of energy charges for bagasse projects in various states (in Rs per kW) are – Maharashtra (Rs 4.80 per unit – proposed) and Andhra Pradesh (Rs 3.82 per unit for 2023-24). For Tamil Nadu, the variable component has been taken as Rs 3.79 per unit for 2024-25 + Rs 2.32 = Rs 6.11 per kWh and for Karnataka, the variable cost is Rs 4.76 for 2024-25. However, many of the sugar plants in these states have reported dissatisfaction with their tariff structures. Some have preferred to shut down their cogeneration power plants during the off season, leading to a national waste of installed power generation capacity. It is interesting to note that Gujarat, with an installed capacity of 65.3 MW, has taken steps to promote the sector with a tariff of Rs 4.86 (variable component for the first year) + Rs 2.18 (without accelerated depreciation).
The central government is expected to step in to ensure a uniform tariff policy across all states, for power exported to the grid by bagasse-based cogeneration power plants, if the real benefits are to be passed on to sugarcane farmers and also to help sugar factories survive. Meanwhile, the government has been encouraging ethanol production.
Scope for better efficiency
There are several case studies of successful cogeneration plants in sugar mills all over India. However, sources indicate that if steam generation temperature and pressure are raised from 400°C to 485°C and 33 bar to 65 bar respectively, 80 kWh of more electricity can be produced per tonne of sugarcane crushed. According to experts, this upgrade, and other technical and policy initiatives to enhance this sector are required to increase the viability of sugar mills, which have been under tremendous financial stress in the past decade. Some of these have been described below:
Waste heat recovery (WHR) of gases can be further harnessed for drying bagasse, as the moisture content in bagasse reduces its gross calorific value. Many sugar mills have either installed or are planning to install WHR systems, as these are more profitable compared to the economics of installing new equipment versus savings in bagasse, as well as ensure longer life of boiler furnace areas.
Technical and operating efficiency of the existing plants can be enhanced by a replacement of inefficient machinery with new energy-efficient equipment. Many promoters such as the Nirani Group are taking over closed/sick sugar mills, servicing them, and replacing inefficient machinery with new energy-efficient equipment with the latest technologies. Steam consumption has reportedly improved from 40 per cent on cane to 32 per cent on cane or even lesser.
The use of other biomass with bagasse up to 20 per cent in multifuel boilers needs to be encouraged – for example, pelletisation of cane trash left in the fields and of other biomass has huge scope, especially when the demand for excess bagasse is increasing, in view of additional boilers (including incineration boilers) being proposed in the existing sugar mills for catering to the steam and power requirements of ethanol plants, biogas plants, etc.
Cogeneration plants should be encouraged to operate during off seasons by offering a suitable GBI (generation-based incentive) by the government.
Except for a few state governments, many state boards (SEBs) do not want to enter into long-term power purchase agreements with sugar mills for off season supply and also do not provide attractive tariffs. These mills, which had installed condensing-cum-extraction turbines to operate during the off season, are now having to deal with fluctuating tariffs depending on power demand and supply. This leads to expensive equipment lying idle due to non-use during the off season.
In view of huge resources available under CAMPA (Compensatory Afforestation Fund Management and Planning Authority), 20 per cent should be earmarked for bioenergy/biofuel tree plantations to increase biomass fuel supply. The central government should also take necessary steps to ensure every state provides suitable areas for private afforestation and allows the subsequent use of such biomass for power generation.
The cost of transmission lines from the sugar factory to the substation should be borne by the state government/SEB, to reduce the cost burden on the sugar factory’s cogeneration project viability.
A comprehensive government scheme is required for supporting a feedstock/crop-residue supply chain management system, including for cane trash, the burning of which has become an air pollution hazard in the past few years. This should incorporate assistance components, based on public-private partnership models, for harvesting equipment such as balers, successfully used in the state of Punjab, and the setting up of biomass depots, and mechanisms for collection, densification, transportation and storage.
The sectoral and unit exposure limits as per Credit Monitoring Arrangement 2000 guidelines mandated by the Reserve Bank of India for cooperative sector banks, need to be revamped to ensure streamlined financing options. Cooperative banks should also treat private companies that have taken over sick/closed cooperative sugar factories on lease as eligible for funding as if they are cooperative units.
Trading of energy in the form of renewable energy certificates (RECs) is allowed since 2010, for which the CERC as well as SERCs have set various regulations. But this has become a loss-making business due to poor demand in the market. Moreover, RECs lapse after two years from their issue date, if not traded/sold during the period. The MNRE should take note and get this barrier removed, or RECs will become more or less “academic” as per experts and begin losing their value over time.
Association steps up
The Cogeneration Association of India (Cogen India), established in 2001 in Pune, set up the National Cogeneration Awards in 2022 for successful/high-efficiency bagasse cogeneration projects with consistent performance, and their technical officials. These awards have given a boost to the much-deserved technical staff who have helped their plants contribute substantially to India’s clean energy targets. The winning plants included both private and cooperative sugar cogeneration units. The association is also working with state governments to resolve tariff issues.
Cogen India realised there was a huge gap in the sector in terms of technology and energy-efficiency awareness. By tying up with equipment manufacturers, it began organising residential in-plant training programmes, hosted at actual cogeneration plants for practical/field visits, to bring the latest technology, and operations and maintenance best practices, to their doorstep.
Exporting know-how
Meanwhile, India is also offering technical assistance to other less developed countries the wish to revamp their sugar and cogeneration industry, including Fiji, Bangladesh, Nepal and some African countries, in the form of equipment/technology or engineering-procurement-construction/consultancy services. The International Finance Corporation even supported a survey and feasibility study of the sector in Nepal a few years ago with private consultants from India, while the Indian government/Exim Bank of India had provided a loan of $50 million to Fiji to modernise its sugar sector over 20 years ago.
Anita Khuller