Lucknow : Once considered a key alternative revenue source for the sugar industry, electricity generation from sugarcane bagasse has seen a sharp decline in Uttar Pradesh. In the financial year 2024, bagasse-based electricity contributed only 41% to the state’s total renewable energy output, the lowest in six years, reports Business Standard.
According to data from the Central Electricity Authority, sugar mills in the state generated approximately 2.92 billion units of electricity from bagasse in FY 2024. In contrast, the share of bagasse-based power stood at 76% in FY 2019. Since then, co-generated electricity in the state has dropped by 32.3%.
Bagasse, a byproduct of sugarcane, is burned in boilers to produce steam, which is then used to generate electricity. It is recognized as a renewable energy source. Out of the 122 sugar mills in Uttar Pradesh, 44 have facilities to generate electricity from bagasse, most of which are privately owned. Over the past 10 to 15 years, sugar companies have invested between ₹7,000 crore and ₹8,000 crore in co-generation projects. Despite having an installed capacity of 2,000 MW, these facilities currently generate only 600 to 700 MW.
Industry sources attribute this decline to the government’s failure to increase the purchase price of electricity from sugar mills. Earlier, mills supplied co-generated electricity at ₹5 per unit. However, in 2019, the government reduced the purchase price to ₹3.8 per unit.
Previously, the government calculated the power rate based on a bagasse price of ₹2,100 per quintal. But when electricity rates were lowered, the assumed bagasse price was reduced to ₹1,100 per quintal.
A senior official from a sugar mill told Business Standard, “The government is willing to buy electricity from the open market at ₹8 to ₹12 per unit, but it is not ready to pay us even ₹5 per unit.”
