cdm potential of bagasse cogeneration in india
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Energy Policy 35 (2007) 4779–4798
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CDM potential of bagasse cogeneration in India
Pallav Purohita,�, Axel Michaelowab
aResearch Programme on International Climate Policy, Hamburg Institute of International Economics, Neuer Jungfernstieg 21, D-20347 Hamburg, GermanybPolitical Economy and Development, Institute of Political Science, University of Zurich, Muhlegasse 21, 8001 Zurich, Switzerland
Received 3 December 2006; accepted 29 March 2007
Available online 29 May 2007
Abstract
So far, the cumulative capacity of renewable energy systems such as bagasse cogeneration in India is far below their theoretical
potential despite government subsidy programmes. One of the major barriers is the high investment cost of these systems. The Clean
Development Mechanism (CDM) provides industrialized countries with an incentive to invest in emission reduction projects in
developing countries to achieve a reduction in CO2 emissions at lowest cost that also promotes sustainable development in the host
country. Bagasse cogeneration projects could be of interest under the CDM because they directly displace greenhouse gas emissions while
contributing to sustainable rural development.
This study assesses the maximum theoretical as well as the realistically achievable CDM potential of bagasse cogeneration in India.
Our estimates indicate that there is a vast theoretical potential of CO2 mitigation by the use of bagasse for power generation through
cogeneration process in India. The preliminary results indicate that the annual gross potential availability of bagasse in India is more
than 67 million tonnes (MT). The potential of electricity generation through bagasse cogeneration in India is estimated to be around
34TWh i.e. about 5575MW in terms of the plant capacity. The annual CER potential of bagasse cogeneration in India could
theoretically reach 28MT. Under more realistic assumptions about diffusion of bagasse cogeneration based on past experiences with the
government-run programmes, annual CER volumes by 2012 could reach 20–26 million. The projections based on the past diffusion trend
indicate that in India, even with highly favorable assumptions, the dissemination of bagasse cogeneration for power generation is not
likely to reach its maximum estimated potential in another 20 years. CDM could help to achieve the maximum utilization potential more
rapidly as compared to the current diffusion trend if supportive policies are introduced.
r 2007 Elsevier Ltd. All rights reserved.
Keywords: Clean development mechanism; Bagasse cogeneration; India
1. Introduction
Increasing demand of energy and adverse environmentalimpact of the use of fossil fuels emphasized the need ofharnessing renewable energy. The conventional sources ofenergy are getting depleted at a very fast rate, which hasfocused attention to the new and renewable sources ofenergy. Cogeneration is widely recognized world-wide asan attractive alternative to the conventional power andheat generating options due to its low capital investment,short gestation period, reduced fuel consumption and
e front matter r 2007 Elsevier Ltd. All rights reserved.
pol.2007.03.029
ing author. Tel.: +4940340576 67; fax: +49 40340576 76.
esses: [email protected] (P. Purohit),
[email protected] (A. Michaelowa).
associated environmental pollution, and increased fueldiversity (ESCAP, 2000). The main factors that attributedto this phenomenon are the two oil shocks that led toincrease in energy prices and the availability of efficient andsmall-scale cogeneration systems which became cost-effective and competed well with the conventional large-scale electricity generation units. A variety of measureshave been undertaken by several national authorities topromote the growth of cogeneration.Cogeneration, also called combined heat and power
(CHP), is a sequential generation of electrical power andthermal energy (steam). It is an efficient and cost-effectivemeans to save energy and reduce anthropogenic emissions.It can result in primary fuel savings of 35% for a typicalsystem as a result of the increased efficiency of a
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Table 1
Major sugarcane producing countries in the world
Rank Country Productiona (Int $1000) Production (MT)
1 Brazil 8,725,914 420,121,000
2 India 4,825,286 232,320,000
3 China 1,819,452 88,730,000
4 Thailand 1,029,610 49,572,000
5 Pakistan 981,260 47,244,100
6 Mexicob 937,277 45,126,500
7 Colombia 827,669 39,849,240
8 Australiac 794,369 38,246,000
9 Philippinesb 643,870 31,000,000
10 USA 535,948 25,803,960
Source: (http://apps.fao.org/page/collections?subset=agriculture accessed
on 13 February 2007).aProduction in Int $1000 have been calculated based on 1999–2001
international prices.bFAO estimate.cUnofficial figure.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984780
cogeneration system, which may be as high as 85% (firstlaw efficiency1), compared to separate generation of steamand power (Smouse et al., 1998). Despite the obviousadvantages of cogeneration, it remains an untappedpotential in most countries, including India. For example,cogeneration accounts for just 6% of total electricityproduction in the European Union; although about 30%of total electricity production in Denmark, the Nether-lands, and Finland is cogenerated (Skelton, 1996). About7% of total electricity generated in the US is cogenerated(GRI, 1996). Among developing countries, small-scalepower and heat production from agricultural waste iscommon (Mbohwa, 2002a,b; Osawa, 2004), for examplefrom rice or coconut husks. The global potential, estimatedat 135TWh2 per year in absolute terms, is very high,despite being small in comparison to global electricityproduction. Cogeneration from bagasse3 could supply 25%of power in sugarcane producing countries. The overallpotential share in the world’s major developing countryproducers exceeds 7%, but no more than 15% of thispotential has yet been realized (WADE, 2004).
There is an abundant opportunity for wider use ofbagasse-based cogeneration in the world’s main sugarcaneproducing countries of Brazil, India, Thailand, Pakistan,Mexico, Cuba, Colombia, and The Philippines (Cundyet al., 1983; Szklo and Tolmasquim, 2001; WADE, 2004;Martinot, 2005; Prasertsan and Sajjakulnukit, 2006). Totalsugarcane production in the group is 945 million tonnes(MT) a year, which provides the potential for 95,000GWhof electricity generation (WADE, 2004). About 1.34GT ofsugarcane was produced globally in 1999, which equates toapproximately 375MT of bagasse, 50% of which istypically burned (Das et al., 2004). Table 1 presents the10 highest sugarcane producing countries for the year 2005.India is the second largest producer of sugarcane next toBrazil with a production of more than 300MT ofsugarcane in 2001–2002 (MOA, 2003). In India, about4million ha of land is under sugarcane farming with anaverage yield of 70 t/ha (MOA, 2003). Besides Brazil and
1It is well known that energy efficiency refers to the relationship between
the output (service) of a device or a system and the energy put into it. The
first law efficiency relates to the ratio of energy input to energy output of a
device whereas the second law efficiency—the ratio of energy input of a
device to the minimum amount of energy theoretically needed to perform
a task. The electrical conversion efficiency for a small reciprocating engine
varies from 20% to 32% whereas for a large reciprocating engine it varies
from 26% to 36%. Similarly, in case of small gas turbine the electrical
conversion efficiency varies from 24% to 31% whereas for a large gas
turbine it varies from 26% to 31%. The electrical conversion efficiency for
a steam turbine varies from 17% to 34%. In all the above prime movers in
cogeneration package the thermal recovery is 50% (CEC, 1982). There-
fore, the overall cogeneration efficiency (first law efficiency) is high i.e.
73–88%.2Source: http://www.esi-africa.com/archive/esi_4_2004/38_1.php.3In the process of sugar production, cane is crushed to extract the juice;
this juice is then further processed to white or raw sugar. In the process of
crushing the by-product bagasse is produced, a fibrous material. The
combustion of bagasse, as biomass, will permit the electricity generated
from the project to qualify as renewable.
India, Australia, South Africa, Cuba, China, tropical andsubtropical countries also are major contributors to worldproduction of sugarcane (WADE, 2004). Thus, sugarcanebagasse has a strong potential in displacing fossil fuels andcan be extensively used in boilers, turbines, and furnacesfor power generation.Cogeneration of bagasse describes the use of sugarcane
waste bagasse to cogenerate heat and electricity at highefficiency in sugar mills (Reddy, 1997; WADE, 2004). Atypical cogeneration plant has an overall efficiency of70–90% (first law efficiency) compared with the 30–40% ofconventional condensing plants (WADE, 2005). Generat-ing power by direct combustion of sugarcane bagasse inboilers has a maximum efficiency of about 26% (Perez etal., 2002). Combustion systems with such efficiency aretraditionally used in sugarcane plants. The economicbenefits of bagasse as a fuel for cogeneration include (a)increasing the viability of sugar mills, (b) near-zero fuelcosts, (c) increased fuel efficiency, (d) increasing diversityand security of electricity supply, and (e) location at thepoint of energy demand, leading to minimal transmissionand distribution costs. Similarly, the social benefits ofonsite bagasse cogeneration are (a) greater employment forlocal populations, (b) more widespread availability ofelectricity, and (c) more secure and reliable supply ofelectricity for existing consumers. As a biomass fuel,bagasse supplies a raw material for the production ofnatural, clean, and renewable energy, enabling its use tofurther government targets for renewable energy use(Bhattacharya et al., 1999). The environmental advantagesof bagasse cogeneration are low emission of particulates,SO2, NOx and CO2 compared to coal and other fossil fuels(ESCAP, 2000).In India, the number and size of sugar mills are sufficient
to make a measurable contribution to local power supplies.India has been estimated to have a total bagasse cogenera-tion potential of 1500–5000MWe, with most estimates
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Fig. 1. Time variation of cumulative installed capacity of bagasse cogeneration projects in India. Source: Annual reports of Ministry of Non-conventional
Energy Sources.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4781
around 3500MW (Eniasivam, 1995; Sharma and Sharma,1999; MNES, 2006). At present, the total installed capacityof bagasse cogeneration projects in the country is 491MWthat is far below from their respective potential (MNES,2006). Fig. 1 presents the cumulative installed capacity ofbagasse cogeneration projects in India. One of the possiblebarriers to the large-scale dissemination of bagassecogeneration projects in India is the high upfront cost ofthese systems. Other barriers to cogeneration developmentare technical barriers, financial drawbacks, poor institu-tional framework, short-sighted electric utility policies, andlow environmental concern, etc. The Clean DevelopmentMechanism (CDM) of the Kyoto Protocol allows devel-oping countries to generate emission credits (CertifiedEmissions Reductions, CERs) for industrialized countriesat lowest cost by greenhouse gas emission reductionprojects. Bagasse cogeneration projects become relevantfor the CDM because they directly displace greenhouse gasemissions while contributing to sustainable rural develop-ment. We assess the theoretical CDM potential of bagassecogeneration in India before discussing whether at thecurrent market situation such projects could becomeattractive.
The paper is set out as follows. Section 2 provides somesalient features of the sugar industry in India and itscharacteristics. The details of the Indian programme onbagasse cogeneration are given in Section 3. Section 4provides a brief detail of bagasse cogeneration systems.Section 5 presents a method for the estimation of thepotential of bagasse cogeneration. The discussion how theCDM could mobilize bagasse cogeneration and CDMpotential of bagasse cogeneration in India is presented in
Sections 6 and 7, respectively. Section 8 presents theforecast diffusion levels of bagasse cogeneration under anoptimistic CDM and business-as-usual scenario. Section 9summarizes the findings of the study.
2. Sugar industry in India and its characteristics
The Indian sugar industry is the second largest agro-processing industry in the country after cotton textiles(USAID, 1993; Murty et al., 2006). With an estimatedproduction of 18.6MT in sugar year or SY2006 (sugar yearis from October to September), India is the second largestsugar producer in the world (after Brazil), accounting foraround 10–12% of world’s sugar production. India’ssugarcane cultivation area of 4–4.5 million ha accountsfor 2.7% of India’s cropped area. Sugar industry accountedfor around 1% of GDP of the country during the financialyear 2005–2006 (FY2005). The value of output from sugarat current prices increased from Rs. 146.27 billion inFY1994 to Rs. 229.24 billion in FY2004. The share ofsugar in the value of output from agriculture has howeverdeclined from 7.1% in FY1994 to 4.9% in FY2004 (ICRA,2006). The Indian sugar industry has a turnover of Rs. 500billion per annum and it contributes almost Rs. 22.5 billionto the central and state exchequer as tax, cess, and exciseduty every year (MFCA, 2007). As shown in Table 1, Indiais the largest consumer and second largest producer ofsugar in the world next to Brazil (FAO, 2007). Fig. 2 showsthe sugar map of India. With 566 operating sugar mills indifferent parts of the country, Indian sugar industry hasbeen a focal point for socio-economic development in therural areas. The growth of sugar mills in India since
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Fig. 2. Sugar map of India. Source: www.indiansugar.com.
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Fig. 3. Growth of sugar industry in India. Source: www.indiansugar.com.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984782
1950–1951 to 2000–2001 is shown in Fig. 3. The Govern-ment of India initially permitted small-sized new units of1250 t crushing per day (TCD) capacity only and later onincreased the minimum economic size of plant to2500TCD and has recently increased this to 5000TCD.Such policies of the government led to the sugar industrygrowing horizontally with an all-India per unit averagecapacity of 2690TCD.
Gur and Khandsari are traditional Indian sweeteners,which are produced in addition to sugar. These are thenatural mixture of sugar and molasses. If pure clarifiedsugarcane juice is boiled, what is left as solid is gur alsocalled as jaggery. Capital requirement in gur making isvery less, when compared to the capital requirement for a
sugar plant of the same capacity. At present, around one-third of India’s sweetener production of 26MT is in theform of these products (www.crnindia.com/commodity/gur.html). The sugar industry employs 0.5 million workersand also provides substantial indirect employment throughvarious ancillary activities. About 50 million sugarcanefarmers and a large number of agricultural laborers areinvolved in sugarcane cultivation and ancillary activities,constituting 7.5% of the rural population. The industryalso provides employment to about 2 million skilled/semi-skilled workers and others mostly from the rural areas(SRS, 2007).The area under sugarcane production increased around
2.5 times since 1950–1951 to 2001–2002 (MOA, 2003).Sugarcane production since 1950–1951 to 2001–2002increased around five times. Table 2 presents the all-Indiaarea, production and yield of sugarcane (MOA, 2003). Itmay be noted that, since 1950–1951 to 2001–2002 the yieldof sugarcane production increased from 33.42 to 65.87 t/ ha(i.e. nearly doubled). The percentage of area covered underirrigation increased from 67.3% in 1950–1951 to 92% inthe year 1999–2000 (MOA, 2003). As shown in Fig. 1,sugarcane is cultivated in many of India’s 28 states andseven union territories; however, production is centered innine states: Andhra Pradesh, Bihar, Gujarat, Haryana,Karnataka, Maharashtra, Punjab, Tamil Nadu, and UttarPradesh (MOA, 2003). Roughly half of India’s land is used
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Table 2
Area, production, and yield of sugarcane during 2001–2002 in respect of major sugarcane producing states
State Area (million ha) Percentage of
total area
Production
(MT)
Percentage of
total production
Cumulative percentage
of total production
Yield (kg/ha)
Andhra Pradesh 0.21 4.83 17.61 5.87 82.99 82,820
Assam 0.03 0.62 1.01 0.34 99.34 37,184
Bihar 0.12 2.74 5.82 1.94 97.65 48,165
Gujarat 0.18 3.99 12.46 4.15 87.15 70,902
Haryana 0.16 3.68 9.33 3.11 90.25 57,593
Karnataka 0.41 9.29 33.75 11.25 77.12 82,528
Madhya Pradesh 0.05 1.22 2.09 0.70 98.35 38,776
Maharashtra 0.58 13.13 45.14 15.04 53.77 78,097
Orissa 0.01 0.25 0.65 0.22 99.56 58,351
Punjab 0.14 3.25 8.82 2.94 93.19 61,664
Tamil Nadu 0.33 7.41 36.34 12.11 65.88 111,425
Uttar Pradesh 2.00 45.50 116.22 38.73 38.73 58,008
Uttaranchal 0.13 2.86 7.56 2.52 95.71 60,010
West Bengal 0.02 0.53 1.98 0.66 99.01 85,124
Others 0.03 0.70 1.32 0.44 100 @a
All India 4.40 100 300.10 100 68,154
Source: MOA (2003).aSince area/production is low, yield rate is not worked out.
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Fig. 4. Time variation of area, production, and yield of sugarcane in India. Source: MOA (2003) and own estimates.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4783
for agriculture, a figure exceeded only by Bangladeshamong the world’s major developing countries and farhigher than the world’s average of 11% (WRI, 1994). Asshown in Table 2, more than 75% of land under sugarcanecultivation in India is concentrated in only four states:Uttar Pradesh, Maharashtra, Karnataka, and Tamil Nadu(MOA, 2003); nearly half of the total is in Uttar Pradesh.It may be noted that more than 77% production ofsugarcane is concentrated in these states. Across India, theamount of land used to cultivate sugarcane is growingannually. Fig. 4 presents the time variation of area,
production, and yield of sugarcane in India along withprojections till 2020.Sugar is extracted from two different raw materials—
sugarcane and beet. Both produce identical refined sugar.Sugarcane is grown in semi-tropical regions, and accountsfor around two-thirds of world sugar production. Beet isgrown in temperate climates, and accounts for the balanceone-third of world production. In India, sugarcane is thekey raw material for the production of sugar. Most of thesugarcane produced in India is a 10–12-month crop plantedduring January to March. In northern Maharashtra and
ARTICLE IN PRESSP. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984784
parts of Andhra Pradesh and Karnataka, there is also an18–20-month crop. In most areas, the 12-month crop isfollowed by just one ratoon crop, that is, a new crop grownfrom the stubble of the harvested crop. At present,sugarcane is being cultivated throughout the countryexcept in certain hilly tracts in Kashmir, HimachalPradesh, etc. The sugarcane growing areas may be broadlyclassified into two agro-climatic regions—subtropical andtropical. The major sugarcane producing states in the sub-tropical areas include Uttar Pradesh, Uttaranchal, Bihar,Punjab, and Haryana. In tropical areas of India, sugarcaneis grown primarily in Maharashtra, Andhra Pradesh,Tamil Nadu, and Gujarat.
Sugarcane and sugar production is seasonal with morethan 90% of the sugarcane and sugar production in thewinter months of November–March. The sugarcane-crushing season lasts on an average of 100–150 days perannum depending on the region, weather, irrigation andcultivation practices as well as cane availability, in itself afunction of the prices paid to cane growers. Sugarcane andsugar production is partly dependent upon monsoons.Higher acreage under sugarcane in a season of normalmonsoons and higher yields results in higher sugarcane andsugar production. Both area and production of sugarcanefluctuate considerably from year to year. This is due tovariations in climatic conditions, the vulnerability of areascultivated under rainfed conditions, fluctuations in pricesof gur and khandsari (semi-white centrifugal sugar), andchanges in returns from competing crops. Despite thisinstability, both area and production of sugarcane haveincreased considerably over the past three decades. Theaverage area under cane increased from 2.4million ha inthe early-sixties to about 4.3million ha at present (ICRA,2006).
Historically, sugar mills have been designed to meet theirenergy requirements by burning bagasse. Bagasse is thefibrous waste that remains after recovery of sugar juice viacrushing and extraction. The bagasse percentage cane canvary from 23% to 37% (ICRA, 2006; Mbohwa and Fukuda,2003). This depends on the fiber percentage cane, whichnormally ranges from 12% to 19%. The rest of the bagasse ismade up of trapped dissolved matter, trash, and water. Itsmoisture content can be reduced by better de-watering,improved processing, or by simply leaving the bagasse to dry.The value of bagasse as a fuel depends largely on its grosscalorific value (GCV), which in turn is affected by itscomposition, especially with respect to water content and tothe calorific value of the sugarcane crop, which dependsmainly on its sucrose content (Das et al., 2004). The GCV ofbagasse ranges from around 2275kcal/kg for 50% bagassemoisture to around 3426kcal/kg for 25% moisture content(ICRA, 2006). The bagasse is burnt in boilers that arenormally designed to use both bagasse and/or coal. Theaverage steam to bagasse ratio is normally 2.2. At a densityof 130kg/m3, storing bagasse takes a lot of space, hence theneed to use boilers that burn as much of it as possible. Theboilers generally range from 35–150 t of steam per hour, at
pressures varying from 15–82bar and temperatures rangingfrom 300–525 1C (Quevauvilliers, 2001).Indian sugar mills are already using bagasse to meet their
steam and power requirements. As only 20–30% of allbagasse is used for these purposes, the remaining is beingwasted or being incinerated for disposal purposes rather thanenergy recovery (ICRA, 2006). Sugar mills can utilize thisbagasse for cogeneration of power. Several studies in Indiaand other parts of the world point to the sugar industry as aprime candidate for supplying low-cost, non-conventionalpower via cogeneration. The advantages of sugar millcogeneration include relatively low capital cost requirementsand the use of a renewable, indigenous waste (bagasse) as a‘‘non-polluting’’ fuel. From a financial point of view, bagassecogeneration has many potential advantages for the sugarmills including increasing their viability, near-zero fuel costs,increased fuel efficiency, and location at the point of energydemand leading to minimal transmission and distributioncosts. However, insufficient incentive to supply electricity tothe grid because of low or non-existent buyback rates hasmeant low utilization of such cogenerating potential.
3. Programme on bagasse cogeneration in India
Fig. 5 presents the contributions of hydro, thermal,nuclear, and renewable in the all-India installed capacity(123,015MW) of electric power generating stations underutilities up to the year 2005 (http://powermin.nic.in). Theprogramme on biomass power/cogeneration is being imple-mented during the 10th Plan with the objective of (a)promotion of bagasse/biomass cogeneration and industrialcogeneration routes of power generation, (b) provide supportto research and development activities for development oftechnologies as well as applications research for enhancementof potential in identified areas, and (c) support and thusenlarge activities through awareness creation, publicitymeasures, seminars/workshops/business meets, etc.State-of-the-art biomass power/cogeneration projects
designed with boiler configurations of 87 bar and higherpressures are now being installed in the country. Theinformation taken from the commissioned projects indicatehigh plant load factors (PLFs) (X80%) with stableoperation. The Ministry of Non-conventional EnergySources (MNES) provides certain incentives for bagassecogeneration projects. There are interest subsidies if theboiler pressures are above 60 bar. The primary objectiveof the subsidy is to motivate potential entrepreneurs toinvest in bagasse/biomass cogeneration. Table 3 presentsthe details of central financial assistance for bagassecogeneration projects. Several other incentives are avail-able to the entrepreneurs for setting up biomass/cogenera-tion projects. These include (a) sales tax and excise dutyexemption, (b) 80% accelerated depreciation in the firstyear, (c) customs duty concession, (d) tax holidays onincome from the power projects, (e) exemption from localsales tax in some states, and (f) preferential tariffs in mostpotential states.
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0
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Installed capacity (in MW)
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68308 31865 12172 3310 1202 6158
Fig. 5. Cumulative installed capacity of electric power plants in India. Source: http://powermin.nic.in.
Table 3
Central financial assistance for bagasse cogeneration projects
S. No. Bagasse cogeneration Pressure configuration Interest subsidy (%)
1. Projects by Cooperative/Public/Joint Sector Sugar Mills 40 bar and above 3
60 bar and above 4
80 bar and above 5
100 bar and above 6
2. Projects in IPP Mode in Cooperative /Public/Joint Sector Sugar Mills 60 bar and above 2
80 bar and above 3
100 bar and above 4
3. Projects by Private Sector Sugar Mills 60 bar and above 1
80 bar and above 2
100 bar and above 3
Source: Lok Sabha Secretariat (2005).
6http://cdm.unfccc.int/UserManagement/FileStorage/FS_738241547.7
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4785
In India, electricity generation is primarily managed byprivatized companies that were previously state-run elec-tricity boards. The ‘electricity Act 20034 is now the maindriver of reform in this sector. The Act consolidated the lawsrelating to the generation, transmission, distribution, andtrading of electricity and generally sought to put in placemeasures to promote the development and supply ofelectricity across India. There are not any explicit targetsfor renewable energy; however, it does mention that theNational Electricity Policy should develop the power sectorwith regard to the optimal utilization of renewable energyresource. It also states that the Central Government should,in consultation with State Governments, set out a nationalpolicy ‘‘permitting stand alone systems (including thosebased on renewable sources of energy and other non-conventional sources of energy) for rural areas’’.5 There
4http://powermin.nic.in/acts_notification/electricity_act2003/preliminary.
htm.5The Electricity Act, 2003, Part II, Paragraph 4.
is a recommended price for power from renewable sourcesof Rs. 2.25/kWh, paid on a base year of 1994/1995and increased annually at 5%. This is a directive fromMNES but is not regulated and individual negotiationwith the power companies now seem the norm across India.In some states the price received for electricity exportedto the grid is fixed. For example, in case of Karnataka,there is a flat price (@3.32 INR/kWh6) that KarnatakaPower Transmission Corporation Ltd. (KPTCL) is paying,despite the fact that they should escalate this amountannually. Similarly, in Uttar Pradesh, the current price forelectricity from bagasse cogenerators is Rs.2.85/kWh.7
There is an opportunity to apply for a state capital subsidy8
for surplus power supplied to the grid. A number of
http://cdm.unfccc.int/UserManagement/FileStorage/
QLJFZEB1HX4UUGJD1R0310AW8TUC38.8For example, in Karnataka there is an opportunity to avail the state
capital subsidy of Rs. 2.5 million per MW for surplus power supplied to
the grid.
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Table 4
Heat to power ratio and other parameters of cogeneration systems
Cogeneration system Heat to power ratio (kWth/kWe) Power output (as percent of fuel input) Overall efficiency (%)
Back-pressure steam turbine 4.0–14.3 14–28 84–92
Extraction-condensing steam turbine 2.0–10.0 22–40 60–80
Gas turbine 1.3–2.0 24–35 70–85
Combined cycle (gas plus steam turbine) 1.0–1.7 34–40 69–83
Reciprocating engine 1.1–2.5 33–53 75–85
Source: www.energymanagertraining.com/bee_draft_codes/best_practices_manual-COGENERATION.pdf accessed on 27 September 2006.
10The steam parameters were upgraded to 87 bar and 515 1C which give
almost 5–6% higher output in gross power generation than the 67 bar
system in the year 2004. As of now there are 12 plants already in operation
with 87 bar and 515 1C steam parameters in Uttar Pradesh, Karnataka,
Andhra Pradesh and Tamil Nadu and about 15 projects are under
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984786
major financial institutions such as IREDA, IDBI, IDFC,IFCI, PFC, and nationalized banks are being involved inbagasse cogeneration project implementation. For example,in the case of biomass cogeneration (including bagasse-based cogeneration in sugar industries), IREDA has so farextended financial support for 35 projects with installedcapacity of 461MW for power generation out of which369MW are commissioned (IREDA, 2006). Similarly,a 6.5MW biomass-based (rice husk) power generation byM/s Indian Acrylics Ltd. in the state of Punjab was financedby banks.
As a result of support from various stakeholders, amomentum has been generated in the installation ofcogeneration projects in the private sector sugar mills.However, it has been realized that unless cooperative sectormills which constitute more than 55% of the sugar mills inthe country, are also enabled to implement cogenerationprojects, the ultimate potential for additional powergeneration cannot be realized. The MNES had earlieroffered significantly higher financial incentives for thecogenerating sugar mills in the cooperative sector. However,in spite of these, the progress in actual project imple-mentation has been hardly moderate as the installedcapacity for cogeneration power plants in cooperative sugarmills is only just 50MW from eight sugar mills (MNES,2006). MNES has identified favorable policy guidelines suchas a fair and attractive purchase price9 for the generatedelectricity, prompt payments for the purchased electricity,expeditious statutory permissions wherever required, long-term stability of declared policies, etc. to faster promotion ofbagasse-based cogeneration projects in the Indian sugarmills.
4. Bagasse cogeneration technology
Cogeneration provides a wide range of technologies forapplication in various domains of economic activities.Cogeneration systems can be applied widely in industryand buildings, and produce electricity, heating, and coolingat efficiencies up to 90% (WADE, 2004). This compares tocurrent state-of–the-art central electricity generation with anet efficiency of no more than 50%. Table 4 presents
9There is a recommended price for power from renewable sources of Rs.
2.25/kWh paid on a base year of 1994/1995 and increased annually at 5%.
some technical parameters of various cogeneration systems.The steam turbine-based cogeneration system can beconsidered over a large range of heat-to-power ratios.Using high-pressure boilers, efficient turbines, and employ-ing energy conservation measures, cogeneration of powercan be substantially improved. For techno-economic pointof view, standard high pressure (63 bar)10 and hightemperature (480 1C) boilers should be used and satisfac-tory water quality for boiler feed should be assured. Thoughthe choice of turbine depends on the pressure of boilerbut a simple back-ressure type or a controlled extractionand/or bleed or condensing type or a combination ofthese could be a better choice. Technological optionsavailable for cogeneration systems broadly fall into threemajor categories:
4.1. Extraction-cum-back pressure route
In this option, steam is produced in a boiler at highpressure and is then expanded in a steam turbine to therequired process pressure (Habib, 1992) however; the qualityof steam produced is same as for the process steam. Byupgrading the steam parameters, it is possible to generatesurplus power even after meeting the captive power demandonly during the crushing season. The extraction-cum-back-pressure cogeneration system is the cheapest from theviewpoint of the initial capital cost and efficiency. Thisturbine, however, has the disadvantage that the fluctuationsin surplus power supply are related to the fluctuations in canesupply, process steam demand, etc. Therefore, the recom-mended steam parameters for the techno-economic feasibleoperation of this system are 63bar pressure at 480 1Ctemperature (Fig. 6). Two registered CDM project activitiesnamely LHSF Bagasse Project, and grid connected bagasse-based cogeneration project of Ugar Sugar Works Limitedfrom India are using the back-pressure turbine for generatingpower.
implementation (MNES, 2006). Several continuous bagasse feeding
system, regenerative feed water heating, variable frequency drives have
led to improve the plant reliability and efficiency.
ARTICLE IN PRESS
EPBT
Process steam
Steam
BoilerFuel(Bagasse)
Power
Return condenser
Fig. 6. An extraction-cum-back-pressure turbine (EPBT) route.
E
C
T
Condenser
Return condenser
Process steam
Steam
BoilerFuel(Bagasse)
Power
Fig. 7. An extraction and condensing turbine (ECT) route.
Dual fuel
Steam
Bagasse (season)
EPBT Power
Condenser
Return condenser
Process steam
Fuel
and/or
Fig. 8. The condensing route based on the dual fuel system.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4787
4.2. Extraction-cum-condensing route
In this case, the entire bagasse produced in a sugar mill isused for steam generation at 65 bar pressure at 480 1C andpower is cogenerated using an extraction-cum-condensingturbine-generator set (Fig. 7). This option may supplypower during off-season by making use of surplus bagassefrom other sugar mills or by using the bagasse saved in thecrushing season. Its capital cost as well as cost of electricityproduced is likely to be higher than the extraction-cum-back-pressure route. However, this mode has the potentialto supply stable surplus power for a longer period.Recently, three project activities namely, Ajbapur sugarcomplex cogeneration project (registered with the CDMEB), bagasse-based cogeneration power project of RanaSugars Ltd. Amritsar, Punjab, and bagasse-based powerproject at Jamkhandi Sugars Ltd., Bagalkot, Karnataka,approved by Indian DNA are using extraction-cum-condensing route for power generation.
4.3. Condensing route based on dual fuel system
It is capable of supplying year-round stable surpluspower through the use of support fuels such as natural gas,
coal, lignite, and rice straw/husk during off-season (Fig. 8).The capital cost of the multi-fuel system would be higheralong with the associated problems of pollution controland ash disposal. The system, using advanced technologyof higher steam parameters, requires highly trained/skilledmanpower for its operation and maintenance as theavailable level of skill would not be able to serve thepurpose. This model is appropriate for sugar mills havingcapacities larger than 5000TCD. It would therefore benecessary to ensure maximum energy economy andoptimum system configuration to ensure the best cost-effective results. The design aspects of the boiler also needto be examined to ensure availability of a suitable furnacecapable of multi-fuel combustion, particularly the combi-nation of bagasse and coal/lignite. One of the registeredCDM project activity ‘‘SRS Bagasse Cogeneration’’extracting-cum-condensing turbine in which 1 of the 45bar boilers has been converted to a dual fuel boiler whichwill allow coal to be burnt.
5. Potential estimation of bagasse cogeneration in India
The availability of bagasse essentially depends upon theyield and residue to crop ratio for sugarcane. Therefore, inIndia, the potential bagasse availability, BPb, can beestimated as
BPb ¼Xn
i¼1
As;iY s;iRCs, (1)
where As,i represents the area under sugarcane productionin ith state, Ys,i represents the yield of sugarcane in ithstate, and RCs the residue to crop ratio for sugarcane.It is assumed that a certain fraction, x1, of the sugarcane
production is being used for several other competitiveapplications (such as molasses, alcohol, etc.). Similarly, afraction x2 of the bagasse is being used for pulp and paperindustry, particle board, etc. Therefore, the net estimatedavailability of bagasse for the cogeneration can beestimated by using the following expression:
BPb ¼ 1� x1ð Þ 1� x2ð ÞXn
i¼1
As;iY s;iRCs, (2)
ARTICLE IN PRESS
Table 5
Gross estimated potential of bagasse for cogeneration in India
State Sugarcane
production (MT)
Gross availability of
bagasse (MT)
Uttar Pradesh 116.22 26.15
Maharashtra 45.14 10.16
Tamil Nadu 36.34 8.18
Karnataka 33.75 7.59
Andhra Pradesh 17.61 3.96
Gujarat 12.46 2.80
Haryana 9.33 2.10
Punjab 8.82 1.98
Uttaranchal 7.56 1.70
Bihar 5.82 1.31
Madhya Pradesh 2.09 0.47
West Bengal 1.98 0.45
Assam 1.01 0.23
Orissa 0.65 0.15
Others 1.32 0.30
All India 300.10 67.52
Source: own estimates.
13Source: www.ienica.net/italyseminar/fibres/capretti.pdf.14Source: www.uperc.org/ORDER-JAN%2006.15This value of specific bagasse consumption has been suggested by
several State Electricity Regulatory Commissions in India (such as Tamil
Nadu Electricity Regulatory Commission Chennai (TNERC), Uttar
Pradesh Electricity Regulatory Commission (UPERC), and Andhra
Pradesh Electricity Regulatory Commission (APERC)). For more
information see the following websites accessed on 15 February 2007:
http://tnerc.tn.nic.in/orders/nces%20order%20-approved%20order%
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984788
The annual electricity generation potential due to bagassecogeneration can be estimated by using the followingexpression:
AEPbc ¼1� x1ð Þ 1� x2ð Þ 1� zð Þ
Pni¼1As;iY s;iRCs
SFCb
� �, (3)
where SFCb (in kg/kWh) represents the specific bagasseconsumption and z the electricity used for the ownconsumption in the cogeneration system.
Table 2 presents the area, production, and yield ofsugarcane during 2001–2002 in major sugarcane producingstates (MOA, 2003). On the basis of the data presented inTable 2, and using Eq. (2) the estimated value of bagasseproduction is presented in Table 5. The fraction ofsugarcane being used for other alternative operations, x1,has been taken to be 0.1 (Purohit and Parikh, 2005).Therefore, the net sugarcane being used for sugar industryhas been estimated to be more than 270MT (Table 5). Inthe literature the residue to crop ratio for sugarcane variedfrom 0.2 to 0.3 (www.fao.org; www.aseanenergy.org).Using an average value of 0.25 (www.fao.org) for theresidue to crop ratio the gross annual bagasse potential hasbeen estimated to be more than 67MT.
Utilization of agricultural residues as raw material forpulping, predominantly in small mills is increased in thepast three decades (FAO, 1984). Bagasse is the mostpromising among such agricultural residue(s) as forstraw, there are a number of constraints on a majorincrease in its utilization for pulping. As of 1999, furnishused by the industry were approximately 30% hardwood/eucalyptus, 23% bagasse/straw and bamboo/reed; 15%wastepaper; 5% pulp, and 4% other materials. It isestimated that only 8% bagasse is used for paperproduction.11 Currently, several research and developmentefforts are being made to further develop and promotebiodegradable plastics made of sugar and bagasse thatbreakdown into water and CO2 within 6 months instead ofthe 100 years or so required by conventional plastics.As it takes 17 kg of sugarcane bagasse and 3 kg of sugar tomake just 1 kg of biodegradable plastic, bagasse-basedplastics are currently niche products. However, theirchemical resistance, quality, and biodegradability arepromising despite the higher costs associated with theirdevelopment.12 In the near future, environmental require-ments may accelerate a wider uptake of cane plastics.Bagasse could also compete, to some extent, withpetrochemicals involved in the manufacture of adhesives,synthetic fibers, herbicides, and insecticides as well assubstances like ethyl ether, acetic acid, ethyl acetate, anddiethyl amines (WADE, 2004). Once again, the mainadvantage of bagasse in these applications would be itsbiodegradability.
Cheap and easy availability of bagasse is forcing manypulp and paper industries to switch to bagasse as an
11Source: http://203.81.45.43:8080/apm/apm/common/cwatch_arch10.jsp.12Source: http://www.unica.com.br/i_pages/pesquisa3.asp.
alternative. The pulp and paper industry in India ischaracterized by the dominance of small units below10,000 t per annum capacity. While mills of large capacitiesmainly use wood and bamboo as raw materials, small millsprimarily depend on bagasse and other agriculturalresidues.13 Therefore, the increased use of bagasse for pulpand paper industry may increase price of bagasse due to themarket competition, thus making bagasse cogenerationfinancially unattractive. Therefore, the maximum accepta-ble price of bagasse has been estimated (see Appendix A).The maximum acceptable price of bagasse has beenestimated as Rs. 655/t and Rs. 1071/t at the coal pithead,and at a distance of 500 km from the coal pitheadrespectively. However, in India bagasse price has alreadyreached up to Rs. 1350/t in some states.14
The fraction of bagasse used for other alternativeoperations as mentioned above has taken to be 0.1 (Purohitand Parikh, 2005). The preliminary results indicate that thenet potential of bagasse in India is more than 60MT on wetbasis (Table 6). For the Indian conditions the specificbagasse consumption is taken to be 1.6 kg/kWh.15 Asshown in Table 6 the potential of gross electricitygeneration through bagasse cogeneration in India is
20host%20copy.pdf; www.uperc.org/Copy%20of%20Order%20-UPERC
%20NCE%20Policy%20FINAL%20DT.18-7-2005.pdf; www.ercap.org/
OtherOrders/Order_RP_84_2003.doc.
ARTICLE IN PRESS
Table 6
Potential of electricity generation through bagasse in India
State Net available
bagasse for
cogeneration
(MT)
Gross
electricity
generation
through
bagasse (TWh)
Net electricity
generation
through
bagasse
(TWh)a
Uttar Pradesh 23.53 14.71 13.24
Maharashtra 9.14 5.71 5.14
Tamil Nadu 7.36 4.60 4.14
Karnataka 6.83 4.27 3.84
Andhra
Pradesh
3.57 2.23 2.01
Gujarat 2.52 1.58 1.42
Haryana 1.89 1.18 1.06
Punjab 1.79 1.12 1.00
Uttaranchal 1.53 0.96 0.86
Bihar 1.18 0.74 0.66
Madhya
Pradesh
0.42 0.26 0.24
West Bengal 0.40 0.25 0.23
Assam 0.20 0.13 0.12
Orissa 0.13 0.08 0.07
Others 0.27 0.17 0.15
All India 60.77 37.98 34.18
Source: own estimates.aThe net electricity consumption takes into account the electricity used
for the own consumption in the cogeneration plant.
0
50
100
150
200
250
300
350
400
450
<11 t
o 5
5 to 1
0
10 to
20
20 to
50
50 to
100
100 t
o 500
500 t
o 100
0
1000
to 50
00
5000
to 10
000
>1000
0
Submitted
Registered
Fig. 9. Size categories of submitted and registered CDM projects (average
1000 CERs p.a. until end of 2012). Source: cdm.unfccc.int.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4789
estimated to be around 38TWh i.e. about 6200MW with aPLF of 70% (www.ercap.org; http://bioproducts-bioenergy.gov). A significant amount of electricity is required for theown consumption of the cogeneration plant. Using 10%16 ofelectricity consumption by the cogeneration plant for its ownuse the net annual electricity generation through bagassecogeneration in India is estimated to be around 34TWh i.e.about 5575MW in terms of plant capacity. From Table 6, itmay be noted that Uttar Pradesh has the highest annualelectricity generation through bagasse cogeneration (i.e. morethan 13TWh) followed by Maharashtra (5.14TWh), TamilNadu (4.14TWh), and so on.
17The EB noted that type III project activities may be able to achieve
significant emission reductions, without exceeding the direct emissions
limits i.e.15 kt CO2e and therefore agreed to develop new type III
categories including procedures for more precise estimations of emission
reductions and more detailed monitoring. As an interim solution, the EB
agreed to include the following text in the applicability conditions of all
current type III categories: ‘‘This category is applicable for project activities
resulting in annual emission reductions lower than 25,000 tonnes CO2e. If the
emission reduction of a project activity exceeds the reference value of 25,000
tonnes CO2e in any year of the crediting period, the annual emission
reduction for that particular year is capped at 25,000 tonnes CO2e.’’ The
6. CDM rules for small-scale bagasse cogeneration projects
Small-scale renewable energy and energy efficiencyprojects are helping to meet the needs of rural people indeveloping countries, alleviating poverty and fosteringsustainable development. However, the low emissionreductions per installation are making it difficult for suchprojects to derive value from participating in the CDM.Negotiators of the Marrakesh Accords of November, 2001(UNFCCC, 2002) as well as the CDM Executive Boardrecognized this problem and adopted simplified CDM
16Source:
http://cdm.unfccc.int/UserManagement/FileStorage/FS_738241547.
modalities and procedures for qualifying small-scale17
projects defined as:
�
Bo
reg
cap
renewable energy project activities with a maximumoutput capacity equivalent to up to 15MW,
� energy efficiency improvement project activities whichreduce energy consumption by an amount equivalent to60GWh per year,
� other project activities whose emission reductions areless than 60 kt CO2 per year.
The thresholds for the latter two categories wereincreased by decision of the Conference of the Parties tothe UNFCCC in November 2006. However, the currentdesign of the CDM is resulting in high transaction costs toindividual small-scale projects (Michaelowa and Jotzo,2005) even with the simplified rules. Costs can be reducedby bundling similar small projects into a single project thatis still eligible for the simplified procedures. Michaelowa etal. (2003) find that projects which generate less than 10,000CERs per year will not be viable. However, the ‘‘gold rush’’atmosphere of 2005 has also mobilized small-scale projectdevelopers. Fig. 9 shows the number of different projectsize categories of the 1592 CDM projects submitted untilJanuary 2007. Up to January 2007, 67 projects on bagassecogeneration have been approved by the Indian DNA in
ard took into account the estimated annual emission reductions of
istered SSC project activities to date in agreeing to use the average as a
(24th EB Meeting Report, Para 64).
ARTICLE IN PRESSP. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984790
which 11 projects have been registered, 6 projects requestedfor the registration, and 48 projects were at the validationstage. A 16MW bagasse-based cogeneration projectsubmitted by GMR Industries Ltd. have been withdrawnand a 24MW bagasse-based cogeneration project sub-mitted by the Godavari Sugar Mills Ltd. at Sameerwadihas been requested for the review.
6.1. Baseline
The ‘‘reference case’’ is the energy supply scenario usedto define the baseline18 situation for calculating the GHGemissions that would be expected in the absence of theinstallation of bagasse cogeneration unit. The selection ofthe reference case will have a big impact on the amount ofemission reductions that can be credited to the installationof bagasse cogeneration unit. The CO2 emissions mitiga-tion benefit associated with a bagasse-based cogenerationsystem depend upon the type/amount of fuel saved. Abagasse-based cogeneration system usually replaces elec-tricity. To estimate the CDM potential of bagasse-basedcogeneration system in the country the small-scale meth-odology I.D. ‘‘grid connected renewable electricity genera-tion’’ in its version of 3 March 2006 (UNFCCC, 2006) hasbeen used which explicitly mentions cogeneration forpower generation.
This methodology is applicable to the CHP (cogenera-tion) systems that supply electricity to and/or displaceelectricity from a grid are included in this category. Toqualify under this category, the sum of all forms of energyoutput shall not exceed 45MWthermal e.g., for a biomass-based cogenerating system the rating for all the boilerscombined shall not exceed 45MWthermal. In India, most ofthe bagasse cogeneration units are grid connected andsubstitute electricity. Therefore, for such systems, thebaseline is the kWh produced by the renewable generatingunit multiplied by an emission coefficient (measured inkgCO2equ/kWh) calculated in a transparent and conser-vative manner.
The approved consolidated baseline methodologyACM0006 ‘‘Consolidated baseline methodology for grid-connected electricity generation from biomass residues’’covers a number of different project types for powergeneration with biomass residues at the large scale. Thismethodology is applicable to grid-connected and biomassresidue fired electricity generation project activities, includ-ing cogeneration plants. As per the methodology, theproject activity may include: ‘‘The installation of a newbiomass power generation unit, which is operated next toexisting power generation capacity fired with either fossilfuels or the same type of biomass residue as in the project
18The quantification of climate benefits of a project—i.e. the mitigation
of GHG-emissions—is done by means of a ‘‘baseline’’. A baseline
describes the (theoretical) emissions that would have occurred in case
the CDM project was not implemented. The amount of CERs that can be
earned by the project are then calculated as the difference of baseline
emissions and project emissions.
plant (power capacity expansion projects)’’. Further, theproject activity meets the applicability criteria of consoli-dated methodology as under:
Criteria 1: No other biomass types than biomassresidues, as defined above, are used in the project plantand these biomass residues are the predominant fuel usedin the project plant (some fossil fuels may be co-fired).
Criteria 2: For projects that use biomass residues from aproduction process (e.g. production of sugar or wood panelboards), the implementation of the project shall not resultin an increase of the processing capacity of raw input (e.g.sugar, rice, logs, etc.) or in other substantial changes (e.g.product change) in this process.
Criteria 3: The biomass used by the project facilityshould not be stored for more than 1 year.
Criteria 4: No significant energy quantities, except fromtransportation of the biomass, are required to prepare thebiomass residues for fuel combustion, i.e. projects thatprocess the biomass residues prior to combustion (e.g.esterification of waste oils) are not eligible under thismethodology.An analysis of the bagasse cogeneration projects
approved by the Indian DNA indicates that for theestimation of baseline of these projects mostly theapproved methodologies ACM6 and AMS-ID are beingused.
6.2. Additionality
To maintain the environmental integrity of the KyotoProtocol, CDM credits are given only for activities thatwould otherwise not be expected to occur (Bode andMichaelowa, 2003). Therefore, to propose any CDMproject requires careful analysis of additionality and thishas probably been the most contentious point and alsoresulted in the greatest confusion amongst project devel-opers. In the early stages of the CDM, there was muchdebate on the nature and demonstration of additionality.Additionality is important because the CDM takes place indeveloping countries without GHG emission ceilings, butthe carbon credits are used in industrialized countries withbinding emission quotas. An additionality test ensures thatemission reductions are real and that projects would nothave occurred anyway (as part of business as usual). TheKyoto Protocol stops short of requiring project proponentsto show strict financial additionality—that the CDMrevenue makes an uneconomic project economic—and leftscope for the CDM Executive Board to refine thedemonstration of additionality.The Methodology Panel and CDM Executive Board
subsequently took a fairly strict interpretation of addition-ality and developed an additionality tool which methodol-ogy developers may incorporate in new methodologies. Theadditionality tool allows for the use of an investmentanalysis and/or a barrier analysis to determine that withoutthe CDM the project is not likely to have occurred.Although the additionality tool is not mandatory and
ARTICLE IN PRESSP. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4791
project developers can develop their own additionality test,the vast majority of methodology submissions nowincorporate the tried, tested, and approved additionalitytest. High upfront cost, lack of easy and long-termfinancing, project cash flows, etc. are the known investmentbarriers to the bagasse cogeneration projects. Due torestrictions like institutional barriers and low penetrationof bagasse cogeneration projects in certain regions of India,the accumulation of sufficient funds to finance a highinvestment and capital-intensive project is a quite difficultproposition. In terms of costs per kWh in grid-connectedareas, costs of bagasse cogeneration may be higher thangrid electricity by an order of magnitude and projects thusbe additional at any rate. Moreover, in India, cogenerationplants supplying steam and electricity for captive con-sumption in the sugar factory is common practice—it is theexport of electricity to the grid that is not common practiceand which is therefore eligible for carbon credits. Ananalysis of the bagasse cogeneration projects approved bythe Indian DNA and registered by the EB indicates thathigh investment cost is the major barrier for the bagassecogeneration projects. Most of the projects have carriedout the investment and barrier analysis to justify that theproject activity is additional.
6.3. Monitoring
Monitoring under small-scale rules consists in an annualcheck of all systems or a sample thereof to ensure that theyare still operating. Monitoring shall consists of meteringthe electricity generated by the renewable technology. Inthe case of co-fired plants, the amount of bagasse and fossilfuel input shall be monitored. Monitoring of the data onthe mass of bagasse previously marketed, fossil fuel burnedby the former bagasse buyer, efficiency of the bagassecogeneration-based system, efficiency of the fossil fuelplant used by the former bagasse buyer, energy generatedby plants based on fossil fuel(s) connected to the grid,emission factors (tCO2/MWh), net calorific values of fuelsused, etc. could be assured. As per the approved baselinemethodology AM000719 the amount of electricity gener-ated from biomass is an important variable subject tomonitoring.
6.4. Leakages
Leakage is defined as the net change of anthropogenicemissions by sources of greenhouse gases which occursoutside the project boundary, and which is measurable andattributable to the CDM project activity. The projectboundary is defined as the physical boundaries of projectsites. Two sources of potential indirect emissions can be
19This methodology is applicable when access to biomass is not
currently used as energy source, plant uses fossil fuels during off-
season and project is seasonal (http://cdm.unfccc.int/UserManagement/
FileStorage/CDMWF_AM_374220993).
identified for the switch of fossil fuel to renewable biomass.First, leakage can occur in the form of transport emissionsfrom the collection of biomass to the project site. Second,the use of biomass at the project site can potentially lead toa crowding out of biomass and consequentially an increasein the consumption of fossil fuel at other plants in case thesupply of biomass is short of demand. Kartha et al. (2004)suggested that only transmission and distribution (T&D)losses be accounted for in terms of indirect emissionsources for energy efficiency projects and distributedgeneration projects. In terms of calculating a T&D lossfactor (total generation/total delivered electricity), the useof locally available data for the grid area and where absentto use nationally reported data is suggested. Non-technicallosses (i.e. theft) should not be counted in calculating theT&D losses (Banerjee, 2006).The methodology AM0007 (analysis of the least-cost fuel
option for seasonally operating biomass cogenerationplants) relates to a specific type of biomass generationactivity—a fuel switch in an agricultural processing unitduring the off-season. A key element of the methodology isthe treatment of leakage. The methodology provides twomethods of ruling out leakages in which a proposedproject activity must demonstrate that (a) the project willnot deplete the supply of the biomass in question to theextent that it will affect the construction of plannedbiomass power plants; (b) there is no competition forsupply of the biomass that will result in a decrease in theload factor of other biomass-fuelled plants; and (c) theproject will not deplete the supply of biomass to currentusers.To ensure that there is an abundance of surplus biomass
a proposed project activity shall demonstrate that (a) thesurplus supply of biomass, for which there is no use is morethan double the biomass required to fuel all grid-connectedelectricity generating plants (including the proposed plant)using same biomass; and (b) the surplus supply in thiscalculation is equivalent to the total biomass minusbiomass consumed for conventional purposes (i.e. otherthan for grid electricity generation) or the projectproponent should determine the percentage of biomassthat would meet economic and social needs (e.g. cooking,feedstock, biomass cogeneration, etc.) and the percentageof biomass that would meet no social and economic needs(e.g. biomass would be left to rot, be burned, decompose,etc.). These percentages shall be established for theproject’s actual sources of biomass supply.
7. CDM potential of bagasse cogeneration in India
The amount of CO2 emissions saved by a bagassecogeneration system would essentially depend upon theamount(s) of fuel(s) saved by its use, which, in turn,depend upon the annual useful energy provided by thecogeneration unit. The annual CO2 emissions mitigationpotential by the use of bagasse in cogeneration can be
ARTICLE IN PRESSP. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984792
estimated as
ACEbc ¼1� x1ð Þ 1� x2ð Þ 1� zð Þ
Pni¼1As;iY s;iRCs
SFCb
� �CEFe;j,
(4)
where CEFe,j (in kgCO2/kWh) represents the CO2 emissionfactor of the jth regional grid. The term inside the bracketof the right-hand side of Eq. (4) is the annual amount ofelectricity saved by the bagasse cogeneration unit.
An analysis of CDM projects on bagasse cogenerationindicate that a very limited number of projects use fossilfuels in the off-season. Therefore, if ‘‘k’’ bagasse-basedproject activities (where k ¼ 1, 2, 3, y, n) co-fires fossilfuels (such as coal) during off-season to a limited extent,the net annual CO2 emissions mitigation potential can beestimated as
NCEbc ¼1� x1ð Þ 1� x2ð Þ 1� zð Þ
Pni¼1As;iY s;iRCs
SFCb
� �
� CEFe;j �Xn
k¼1
FFz;kCEFz, ð5Þ
where FFz represents the quantity of fossil fuel type zcombusted in the biomass power plant and CEFz the CO2
emissions factor of the fossil fuel type ‘‘z’’.There are five regional grids within the country viz.
Northern, Western, Southern, Eastern, and North-Easternand different states are connected to one of the fiveregional grids (MNES, 2003). The CO2 emissions mitiga-tion potential through bagasse cogeneration systems inIndia is estimated on the bases of the regional baseline.With respect to CEFe the range of regional grid averageemissions factors in India ranges from 450 gCO2/kWh inthe North Eastern grid to 1040 gCO2/kWh in the Easterngrid (CEA, 2007).
What is now the financial attractiveness of a bagassecogeneration CDM project? Sugar factories are typicallyenergy independent, employing cogeneration for their owninternal steam and power requirements. However, in theabsence of financial incentives to sell surplus power, thetechnology chosen is low cost and inefficient. Typically thisproduces just enough energy for the sugar plant’s ownconsumption. In the absence of the incremental powergeneration and supply by cogenerating plants, the regionalelectricity companies generate power from their existingthermal and hydro-based power plants and peak powerfrom diesel and naphta plants. Where additional genera-tion capacity is planned this will generally be thermal.Cogeneration of bagasse increases power generation at theplant and lead to increased exports of power. This willtherefore supplement current and planned energy produc-tion from traditional fossil fuel-based power plants.
To analyze the financial attractiveness of a bagassecogeneration CDM project different project design docu-ments (PDDs) on bagasse cogeneration from Indiahave been analyzed. Table 7 presents the additionalityassessment of Indian projects on bagasse cogeneration
registered/requested for registration to the Executive Boardtill January 2007. We observe that in most of the cases, thebagasse cogeneration projects have low internal rate ofreturn (IRR), thus showing additionality for the CDM. Ananalysis of the bagasse cogeneration projects from Indiasubmitted to the CDM Executive Board indicates that 67CDM projects consist of 1228MW in terms of plantcapacity. The 2005–2006 annual report of the MNES,Government of India indicates that the total cumulativeinstalled capacity of bagasse cogeneration projects in thecountry was 491MW till 31st December 2005 (MNES,2006). Out of the 491MW capacities installed in thebusiness as usual scenario, most of the projects have beeninstalled under the government-run programme on bagassecogeneration (with all the financial and fiscal incentives).In India, the perspective planning, monitoring and
implementation of power projects are the responsibilitiesof Ministry of Power, Government of India. At the statelevel, the state utilities or state electricity boards (SEBs) areresponsible for supply, transmission, and distribution ofpower. There are five regional grids within the country viz.Northern, Western, Southern, Eastern and North-Eastern,and different states are connected to one of the fiveregional grids as shown in Table 8 (CEA, 2007). Therefore,the CO2 emissions mitigation potential through bagassecogeneration in India is estimated on the bases of theregional baseline. The data for the regional baselines havebeen taken from CEA (2007). Table 8 presents theestimated values of CDM potential through bagassecogeneration in India on the basis of the regional baselines.The gross annual CER potential has been estimated atabout 28MT. Among all the states in India, Uttar Pradeshhas the largest annual CO2 emissions mitigation potentialthrough bagasse cogeneration (i.e. about 10MT) followedby Maharashtra (4.6MT), Tamil Nadu (3.6MT), Karna-taka (3.3MT), Andhra Pradesh (1.7MT), and so on.Fig. 10 presents the results of a sensitivity analysis
undertaken to study effect of the residue to crop ratio ofsugarcane on the annual electricity generation and annualCER potential of bagasse cogeneration in India. Similarly,the effect of specific bagasse consumption on the annualelectricity generation and annual CER potential is shownin Fig. 11. It may be noted that the CDM potential ofbagasse cogeneration is highly sensitive to the values of theresidue to crop ratio and specific bagasse consumption.The macro level estimates for the CDM potential ofbagasse cogeneration obtained based on this study willfurther increase with technological improvements (i.e.reduction in specific bagasse consumption).
8. Diffusion of bagasse cogeneration in India
The diffusion of a technology measured in terms of thecumulative number of adopters usually conforms to anexponential curve (Islam and Haque, 1994) as long as thenew technologies manage to become competitive withincumbent technologies. Otherwise, the steep section of the
ARTIC
LEIN
PRES
S
Table 7
Additionality test of Indian projects on bagasse cogeneration
Title Status Methodology Investment
analysis
Barrier
analysis
Investment
and barrier
analysis
Identification
of
alternatives
Institutional/
regulatory
barriers
Technology
barriers
Common
practice
analysis
Impact of
CDM
registration
Remarks
Ajbapur Sugar Complex Cogeneration Project Registered AMS-I.D. O O I,
Inst.,
PP
O � O � O O The IRR of the project increases
from 13% to 23%, with CER
revenues.
Bagasse-based Power Project at Jamkhandi Sugars
Ltd, Bagalkot, Karnataka
Registered AMS-I.D. � O I,
Inst.,
PP
� O O � O � Financial closure for the project
activity has been achieved at high
interest costs.
Bagasse-based Cogeneration Project at Titawi
Sugar Complex
Requesting
Registration
ACM6 � O I,
Inst.,
PP
� O O � O O Risk due to the unstable policies of
the state government
Bagasse-based Co-generation Power Project at
Khatauli
Requesting
Registration
ACM6 � O Inst.,
PP
� O O � O O Institutional and barriers due to the
prevailing practice
Bagasse-based Cogeneration Project at Nanglamal
Sugar Complex
Requesting
Registration
ACM6 � O Inst.,
PP
� O O � O O Institutional and barriers due to the
prevailing practice
Bagasse-based Cogeneration Power Project of
Rana Sugars Ltd, Amritsar District, Punjab
Registered AMS-I.D. � O PP,
T
� � � O � � No Investment barrier
Deoband Bagasse-based Cogeneration Power
Project
Registered ACM6+ACM2 � O I,
Inst.,
T, PP
� O O O O O Institutional and investment risks
Bagasse-based Cogeneration Project at Mawana
Sugar Works.
Requesting
Registration
ACM6 � O I,
Inst.,
PP
� O O � O O Risk due to the unstable policies of
the state government
Ganpati Cogeneration Project at Medak, Andhra
Pradesh
Registered AMS-I.D. � O I,
Inst.,
T, PP
� O O O O O Regulatory and technological risks
Grid Connected Bagasse-based Cogeneration
Project of Ugar Sugar Works
Registered AM15 � O I, T,
PP
� O � O O O The greatest risk relates to the
availability of biomass feedstock.
Installation of Cogeneration Project at Sugar
Manufacturing Unit of Mawana Sugars Ltd.
Requesting
Registration
ACM6 � O Inst.,
PP
� O O � O O Institutional and barriers due to the
prevailing practice
LHSF Bagasse Project Registered AMS-I.D. O O Inst. O � O � O O The IRR of the project increases
from 9.8% to 14.2%, with CER
revenues.
Maharastra, Kurkumbh 1.5 MW Biomass/
Bagasse-based Cogeneration Power Project
Registered AMS-I.C. � O I, T,
PP
� O � O O O Regulatory and technological risks
Pandurang SSK RE Project Registered AMS-I.D. O O I, T,
PP
O � � O O O The IRR of the project increases
from 6.8% to 13.6%, with CER
revenues.
RSCL Cogeneration Expansion Project Registered AM15 O O I,
Inst.,
T, PP
O � O O O O The IRR of the project increases
from 11.9% to 14.5%, with CER
revenues.
Shree Renuka Sugars (SRS) Bagasse Cogeneration Registered AMS-I.D. O O I,
Inst.,
T, PP
O O O O O O The IRR of the project increases
from 9.95% to 17.29%, with CER
revenues.
The Godavari Sugar Mills Ltd (TGSML)’s 24 MW
Bagasse-based Cogeneration Power Project at
Sameerwadi
Request
review
ACM6 � O I,
Inst.,
T, PP
� O O O O O
I: investment barrier; T: technological barrier; Inst.: institutional barriers; PP: barriers due to the prevailing practice.
Source: cdm.unfccc.int.
P.
Pu
roh
it,A
.M
icha
elow
a/
En
ergy
Po
licy3
5(
20
07
)4
77
9–
47
98
4793
ARTICLE IN PRESS
Table 8
Estimated values of annual CO2 emissions mitigation potential through
bagasse cogeneration in India using regional baseline
State Annual CO2 emissions mitigation potential (MT)
Region Baseline
(kg CO2/
kWh)
Annual estimated
potential (million
tonne)
Uttar Pradesh Northern 0.75 9.93
Maharashtra Western 0.89 4.58
Tamil Nadu Southern 0.86 3.56
Karnataka Southern 0.86 3.31
Andhra
Pradesh
Southern 0.86 1.73
Gujarat Western 0.89 1.26
Haryana Northern 0.75 0.80
Punjab Northern 0.75 0.75
Uttaranchal Northern 0.75 0.65
Bihar Eastern 1.04 0.69
Madhya
Pradesh
Western 0.89 0.21
West Bengal Eastern 1.04 0.23
Assam North
Eastern
0.45 0.05
Orissa Eastern 1.04 0.08
Others – 0.86a 0.13
All India 27.95
Source: CEA (2007) and own estimatesaAll India average.
10
15
20
25
30
35
40
45
50
55
60
0.10 0.15
Residue to crop ratio (in fraction)
Ann
ual e
lect
rici
ty g
ener
atio
n (T
Wh)
10
15
20
25
30
35
40
45
50
Ann
ual C
ER
pot
entia
l (m
illio
n)
Annual electricity generation (TWh)
Annual CER potential (million)
0.20 0.25 0.30 0.35 0.40
Fig. 10. Effect of residue to crop ration on the annual electricity
generation and annual CER potential.
0
Ann
ual e
lect
rici
ty g
ener
atio
n (T
Wh)
0
20
30
40
50
60
70
80
90
Ann
ual C
ER
pot
entia
l (m
illio
n)
Annual electricity generation (TWh)
Annual CER potential (million)
120
100
80
60
40
20
0.0Specific bagasse consumption (kg/kWh)
0.5 1.0 1.5 2.0 2.5 3.0 3.5
10
Fig. 11. Effect of specific bagasse consumption on the annual electricity
generation and annual CER potential.
0
Cum
ulat
ive
capa
city
of
baga
sse
co
gene
ratio
n (M
W)
SSbcOSbc
6000
5000
4000
3000
2000
1000
1990 1995 2000 2005Year2010 2015 2020 2025 2030
Fig. 12. Time variation of cumulative capacity of bagasse cogeneration in
India using logistic model.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984794
curve would never be reached because technology use fallsback to zero at the expiry of subsidies. The exponentialgrowth pattern may be of three types—(i) simple exponen-tial, (ii) modified exponential, and (iii) S-curve. Out ofthese three growth patterns, the simple exponential patternis not applicable for the dissemination of renewable energytechnologies, as it would imply infinite growth. Themodified exponential pattern (with a finite upper limit) ismore reasonable but such a curve may not match thegrowth pattern in the initial stage of diffusion (Ang andNg, 1992; Martino, 2003). Empirical studies have shown
that in a variety of situations the growth of a technologyover time may conform to an S-shaped curve, which is acombination of simple and modified exponential curves.The S-shaped curves are characterized by a slow initialgrowth, followed by rapid growth after a certain take-offpoint and then again a slow growth toward a finite upperlimit to the dissemination (Purohit and Kandpal, 2005).However, logistic model is used to estimate the theoreticalcumulative capacity of bagasse cogeneration projectsconsidered in the study at different time periods assumingthat bagasse cogeneration becomes competitive in thefuture.As per the logistic model, the cumulative capacity, N(t),
of the bagasse cogeneration technology disseminated up toa particular period (tth year) can be expressed as (Loulouet al., 1997)
NðtÞ ¼MeðaþbtÞ
1þ eðaþbtÞ
� �, (6)
where M represents the estimated maximum utilizationcapacity of the bagasse cogeneration technology in thecountry. The regression coefficients a and b are estimatedby a linear regression of the log–log form of Eq. (6) as
ARTICLE IN PRESS
Cum
ulat
ive
capa
city
of
baga
sse
coge
nera
tion
SSbcOSbc
6000
5000
4000
3000
2000
1000
01990 1995 2000
Year2005 2010 2015 2020
Fig. 13. Realistic CDM potential for bagasse cogeneration until 2020.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4795
given below (Purohit and Kandpal, 2005):
lnNðtÞ=M
1�NðtÞ=M
� �¼ aþ bt. (7)
Fig. 12 represents the projected time variation of thecumulative capacity of bagasse cogeneration projects usingthe logistic model considered in the study. Two cases suchas standard scenario (SS) and optimistic scenario (OS) arepresented. The values of the regression coefficients usinglogistic model have been estimated by regression of thetime series data for the installation of bagasse cogenerationunits (Fig. 1) extracted from the annual reports of theMNES, Government of India. In spite of the hugepotential and focused promotional efforts, achievementsin the field of bagasse cogeneration have so far beenminimal, primarily due to complex socio-economic policyissues creating barriers as well as reluctance to invest inwhat can seem a risky venture. Moreover, the barriers foraccelerated development of this sector include lack of asustainable and conducive policy and regulatory frame-work, monopolistic nature of the SEBs, innovative finan-cing mechanisms, high risks of fuel linkage, and inadequatecapacity. Therefore, in the optimistic scenario it is assumedthat, in the past, if the diffusion of bagasse cogenerationunits would have been driven by the market forces insteadof subsidies in the form of financial/fiscal incentives thenthe cumulative capacity of installation of bagasse cogen-eration projects would be three times more than the actuallevel (Purohit and Michaelowa, 2006, 2007). The produc-tion of sugarcane and bagasse availability has been takenfor the base year 2001–2002. The potential of bagassecogeneration has been estimated based on the sugarcaneproduction in 2001–2002 whereas in the diffusion ofbagasse cogeneration we have analyzed that how muchtime is needed to reach up to the maximum utilization ofbagasse (available on the 2001–2002 bases) based on thepast diffusion trend of the bagasse cogeneration projects.The projections for the area, production and yield ofsugarcane in India have also been made using the trendanalysis of the past 50 year data (1950–1951 to 2000–2001).Our results indicate that in India, even with highlyfavorable assumptions, the dissemination of bagassecogeneration is not likely to reach its maximum estimated
Table 9
Projected values of the cumulative capacity of bagasse cogeneration and assoc
Year Projected values of the cumulative
capacity (MW)
Projected values of the
generation (MWh)
BAU OS BAU
2008 1899 3658 11
2012 3813 4987 22
2016 5021 5431 29
2020 5432 5542 31
Source: Own estimates.
potential in another 20 years. But all these time periods arenot relevant for the CDM whose current endpoint is 2012and which may only be able to live longer if post-2012negotiations retain an emission target-based policy regime.However, CDM could be used as a tool to foster thedissemination of bagasse cogeneration in the country. Itcould accelerate the diffusion process.Table 9 presents the projected values of the cumulative
capacity of bagasse cogeneration and likely CER genera-tion using the logistic model while Fig. 13 shows thedevelopment over time. It may be noted that with thecurrent trend of dissemination of bagasse cogeneration inthe country the cumulative capacity of bagasse cogenera-tion up to the end of first crediting period in the SSscenario could be installed around 3813MW whereas in theOS scenario more than 4987MW power generating unitsbased on bagasse cogeneration could be installed. Upto theyear 2020, more than 5500MW bagasse cogenerationprojects are expected to be installed that would generatemore than 28 million CERs.
9. Concluding remarks
Our estimates indicate that there is a vast theoreticalpotential of CO2 mitigation by the use of bagasse for powergeneration through cogeneration process in India. Thepreliminary results indicate that the annual gross potential
iated CER generation
annual electricity Projected values of the annual CER generation
(million CER)
OS BAU OS
21 10 19
28 20 26
31 26 28
32 28 28
ARTICLE IN PRESS
Table A1
Input parameters used for calculations
Input parameter Symbol Unit Value
Calorific value of bagasse CVb MJ/kg 19
Calorific value of coal CVc MJ/kg 14
Distance of the end-use point
from the coal pitheaddpl
km 500
Efficiency of utilization of bagasse Zbd – 0.7
Efficiency of utilization of coal Zcd – 0.8
Freight rate of coal
transportation
w Rs./t-km 0.7
Pithead price of coal pcp Rs./t 552
Source: Kumar et al. (2002); http://coalindia.nic.in/; own assumptions.
Table A2
Maximum acceptable price of bagasse at different distances from coal
pithead
Distance from coal pithead (in km) Maximum acceptable price (Rs./t)
At coal pithead 656
100 739
200 822
500 1071
1000 1487
1500 1902
Source: Own estimates.
P. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–47984796
availability of bagasse in India is more than 67MT. Thepotential of electricity generation through bagasse cogen-eration in India is estimated to be around 34TWh i.e.about 5575MW in terms of the plant capacity. The annualCER potential of bagasse cogeneration in India couldtheoretically reach 28MT. Under more realistic assump-tions about diffusion of bagasse cogeneration based onpast experiences with the government-run programmes,annual CER volumes by 2012 could reach 20–26 million.The projections based on the past diffusion trend indicatethat in India, even with highly favorable assumptions, thedissemination of bagasse cogeneration for power genera-tion is not likely to reach its maximum estimated potentialin another 20 years. CDM could help to achieve themaximum utilization potential more rapidly as comparedto the current diffusion trend if supportive policies areintroduced.
Acknowledgment
The financial assistance provided by the e7 Network toPallav Purohit is gratefully acknowledged.
Appendix A. Maximum acceptable price of bagasse
The price of bagasse is the key parameter, whichdetermines the viability of the cogeneration project. Therisks in the pricing of bagasse have provided a substantialbarrier to the CDM project activities. The sugar factoryhas the option to sell bagasse on the open market, andbagasse prices have exhibited volatility in the recent past.High opportunity values for bagasse will make the projectactivity unviable. Allied to the volatility of bagasse pricesthe availability of bagasse also presents risks and barrier toundertaking the project. The fuel for the cogenerationplant is virtually free during the crushing season. However,there is an opportunity cost involved in using bagasse forpower generation. The maximum acceptable price can beused to put an upper limit to the price of bagasse beyondwhich the use of coal and/or other fossil fuel(s) may be abetter financial option. Kumar et al. (2002) proposed ademand side approach for estimating the monetary valueof agricultural residues used as biofuels. This study isessentially based on the assumption that the use ofagricultural residues (directly or after processing) leads tosubstitution of fossil fuels. The maximum acceptable unitprice of an agricultural residue can therefore be estimatedas the monetary value of the equivalent amount of thefossil fuel that can be substituted by the agriculturalresidue. On the basis of this approach, the maximumacceptable price of bagasse ðpmax
b Þ can be estimated as
pmaxb ¼
CVbZdbCVcZdc
� �plc, (A.1)
where CVb represents the calorific value of the bagasse,CVc the calorific value of coal, being substituted by the
bagasse, Zdb the efficiency of bagasse utilization in its end-use device, Zdc the efficiency of coal utilization in its end-usedevice, and pl
c the unit price of fossil fuel at the end-usepoint.It is assumed that both the bagasse as well as coal is
being utilized for the same end use. The expression insidethe bracket of Eq. (A.1) can be interpreted as theequivalent specific mass of coal. The price of coal at aplace would also depend upon distance of the place fromthe coal pithead. The local price of coal,pl
c, can therefore beexpressed in terms of its pithead price, pp
c , in the followingmanner:
plc ¼ pp
c þ wdpl , (A.2)
where dpl represents the distance of the end-use point from
the coal pithead and w the freight rate (Rs./t-km) for thetransportation of coal.The values of the input parameters used in Eqs. (A.1–
A.2) for calculating the maximum acceptable prices ofbagasse are given in Table A1. Using Eqs. (A.1–A.2) themaximum acceptable price of bagasse has been estimatedas Rs. 656/t for the substitution of F grade coal in India.Table A2 presents the maximum acceptable price ofbagasse at different distances from coal pithead. It maybe noted that the maximum acceptable price of bagassevaried from Rs. 656/t at the pithead to Rs. 1902/t at adistance of 1500 km from the coal pithead. In some states,the price of bagasse has already reached near to the
ARTICLE IN PRESSP. Purohit, A. Michaelowa / Energy Policy 35 (2007) 4779–4798 4797
maximum acceptable price20 indicating the optimal utiliza-tion of bagasse.
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