Nine ailing Indian sugar mills to install cogeneration plants

Punjab officials have approved a plan to have nine ailing sugar mills in the Indian state produce green energy via cogeneration facilities.

The co-operative-owned mills, which will still produce sugar, are expected to collectively generate 150MW of electricity when the plants are completed by September 2010.

The energy produced would be used to run the plants, with surplus power sold to utility companies.

The cogeneration facilities will burn the residue of crushed sugarcane and also agricultural waste to generate power. Some of the steam produced in the cogeneration process will be used to refine sugar.

Turning Punjab’s mills into a source of saleable electricity is expected to raise $40m (£24.4m) a year from power companies and save thousands of sugar factory jobs. The nine plants were doomed to closure, as they had been incurring $100m in collective annual losses.

Under the plan, private sector companies have agreed to build cogeneration power plants at the nine mills. Electricity generated from the plants will power the sugar mills, saving them a total of $200,000 a year in energy costs.

The private firms will buy agriculture waste – including paddy and wheat straw – through co-operative farming societies. The waste will be used in part to fuel the cogeneration plants and is expected to provide $120m in annual revenue to farming co-operatives, which would have otherwise burned the straw.

Similar schemes have been adopted across India, where 107 of the country’s 650 sugar mills have cogeneration plants with a combined capacity of nearly 2GW, according to the Indian Sugar Mills Association. Most of the cogeneration facilities are in the nation’s five sugarcane growing states of Uttar Pradesh, Andhra Pradesh, Maharashtra, Tamil Nadu and Karnataka.

India is the world’s second largest producer of sugar, after Brazil. The industry is cyclical and in India, highly fragmented, making it difficult for individual co-operatives to generate a steady income stream. The building of cogeneration plants at sugar mills has prevented many of them from closing.