Sugar mills in India produce 2,000 megawatt of biomass-based energy every year, as much as windmills produce, and at half the cost, a new study has found
The sugar mills, which produce both electricity and heat through cogeneration, are already selling power to the grid and can produce up to 5,100 MW – 69 percent of the country’s total cogeneration capacity – according to the study carried out by the New Delhi-based NGO Centre for Science and Environment (CSE).
The study said “such alternatives to fossil fuel energy are critical for India’s energy and climate security. But lack of policy and pricing issues threaten the sustainability of this green power
Sugar mills generate biomass-based ‘green’ energy from bagasse, a waste product that comes from sugarcane cultivation. Mills in the five major sugarcane growing states of Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu and Uttar Pradesh are now generating enough to meet the energy needs of a business centre the size of Gurgaon.
However, says the study, India has no policy framework in place to strengthen this green energy source. Sunita Narain, director, CSE, points out: “This energy source is an important win-win solution, as it brings value-addition and additional funds to agricultural resources, which in turn will give better payments to farmers and improve productivity. The question is what can be done to increase this energy source for the future.”
Today, out of the 650-odd sugar mills in India, 107 have cogeneration plants. This revenue stream has managed to bail out sugar mills reeling from the falling prices of sugar, says the report. The Dhampur Sugar Mills in Uttar Pradesh, which has the largest cogeneration capacity in the country, made Rs.420 million from its cogeneration unit in 2007-08, compared to Rs.110 million from its sugar units. It sold about 177 million units of power to the state. The third largest sugar maker in India, Triveni, based in Deoband, Uttar Pradesh, is selling 16-17 MW of power to the grid.
The International Energy Agency says that the sugar sector has a potential to produce 5,100 MW of power through cogeneration, which is 69 percent of total cogeneration capacity. If the resources and technology are improved, cogeneration can produce almost 10,000 MW or 40 percent of the country’s 2008 power deficit.
The report points out that bagasse generates nearly the same amount of power as the wind energy sector. Wind produces almost 2,000 MW, most of which remains unutilised most of the time.
Bagasse-based cogeneration plants also earn carbon credits as the carbon dioxide absorbed by sugarcane plants while growing up is more than the carbon dioxide produced in burning bagasse. The cogeneration plant of Triveni earned about 186,000 certified emission reductions worth over Rs.30 million between March 2004 and December 2007.
India launched its biomass power (bagasse-based cogeneration) policy in 1990. As the shortage of power grew in many sugarcane states, the policy was revised in 2006 to provide capital subsidy (Rs1.5 million per MW) and tax rebates (including 80 percent depreciation in the first year for selected equipment). The 2003 Amendment to the Electricity Act also provided the necessary framework for promoting renewable energy sources – asking states to fix a minimum limit for energy utilities to buy green energy.
However, the country still has a long way to go, the report says. In the absence of a strong policy framework, feed-in tariffs (the premium cost of green power) differ from state to state and are based on scarcity (not policy). While in some states like Tamil Nadu, the tariff is as high as Rs.7 per unit, others like Uttar Pradesh pay only Rs.3 per unit. Low feed-in tariffs have begun to hurt cogeneration, says the study.
Narain says: “The policy must incentivise the generation of power, not capital investment.” The capital cost of biomass energy is roughly Rs.40-50 million per MW, which is half the cost of installing wind energy. But unlike wind, the raw material – bagasse or other agricultural residues – has competing uses and value. Narain says this price must be paid, as it helps local farmers to improve their returns and encourages production of biomass.
Narain also recommends making the renewable purchase obligation (RPO) mandatory, so that it becomes a tool to push for preferential markets for green energy. “To do this,” she points out, “the policy must allow for inter-state sale so that green power-deficit states can purchase from others. In addition, we should consider how biomass-based energy can be used to feed local grids for local and decentralised distribution. Local energy supply should be given preferential tariffs so that villages that do not have power get it.”