Co-generation of Electricity and Steam

Cogeneration is a technology which was made popular by President Carter of the US in 1977. In his famous energy programme, he called upon large industries make Cogeneration – combined generation of power & process heat – as this resulted in higher overall efficiencies. Earlier to 1977, the concept was known as ‘ in-plant generation’ ‘total energy system’ ‘by-product power generation’ etc. President Carter’s support & incentives brought Cogeneration to its present popularity.

Studies conducted by TERI (Tata Energy Research Institutes) have indicated that 5200 MW of power can be generated through use of cogeneration in sugar factories in India.

For the last 4 years, the Ministry of Non-Conventional Energy Sources (MNES) has been promoting optimum bagasse based cogeneration technologies. A capacity of 300 MW of surplus power generation through bagasse was already synchronized with the grids. Efforts of the Ministry have also led to the announcement of Power Purchase Policies by the State Electricity Boards and the development of expertise for project planning, execution and operation.

Need for Co-generation:
The power sector in the country is unable to meet the current demand and has a peak demand shortage of about 27% and an energy shortage of about 9%. Studies have indicated that the total demand for power will be 1,20,000 MW by 2002 AD. To meet this capacity demand, an additional capacity of around 12,000 MW must be added every year to the present installed capacity of 84,000 MW.

With the present generation, the per capital KW consumption in India has remained at an extremely low level of 300 KW per annum.

The Central Electricity Authority (CEA) has estimated that the country will need an incremental generation capacity of 1,41,000 MW by 2007 AD. At today’s level, this will cause not less than Rs.5,00,000 crores. 

The current forecasts in India however, indicate that we are likely to fall way behind the required capacity additions. As a result, electrical energy shortages are likely to increase to 20% from the present level of 10%. Peak power shortage will be even higher. The situation could be much worse in the states like Karnataka & Andhra, where even the current electrical energy shortages are reported to be of the order of 50-70%.

The industrial sector today consumes approximately 34% of the total electricity generated in the country. It has reduced its reliance on State Electricity Boards and there has been a dramatic drop of about 6% of total power supply to the Industry. The industrial sector has projected an annual growth rate of around 12%. High-quality stable power will be required to sustain such a high growth rate and to keep-up with the overall economic growth. The industry, therefore, has relied on captive power generation, which is primarily diesel-based generation and is estimated to be around 10,500 MW. This type of captive generation is not only expensive, but also in-efficient.

Advantages of Co-generation 
1. Energy – efficient technology - Cogeneration is an energy – efficient technology, as it utilizes the low-grade exhaust heat from the steam Turbine (which is usually rejected in the condensor) for process heating. This enchances the efficiency of energy utilization from 35% in the conventional power generating system to 70-90% in the cogenerating system.

2. A cheap source of power - Today, State Electricity Boards are seeking cheaper sources to generate power. A cogeneration system can compete with Central Power Stations that have enjoyed large economies of scale. Cogeneration becomes additionally attractive against diesel generating sets. The cost of power generated by DG sets without cogeneration will range from Rs.3.50 – 4.00 per KWh, whereas the price of cogeneration varies between Rs.0.49/Kwh and Rs.1.35/Kwh. The pay-back period is within 3 years.

3. Low gestation period – Cogeneration plants can normally be commissioned within 2 years from the conception of the project. Coal based thermal plants normally take about 5 years before commissioning, whereas gas-based power plants normally take about 3 years before commissioning.

4. Low Pollution Levels - All stages of energy conversion paths normally result in emissions and the most critical pollutants are Co2, So2, Nox and other particulates. These are significantly reduced due to low fuel consumption levels in cogeneration systems.

Industrial cogeneration thus becomes an important option for future electricity supply. Even in the United States, there are projections of doubling the cogeneration capacity; from the present 28,000 MW to 63,000 MW by the year 2010. In many European countries like Netherland, Cogeneration is expected to contribute upto 30% of the total electricity capacity by the turn of the century.


Selling co-generation power to KEB grid through Banking & Wheeling
In the concept of energy banking, the surplus with the cogenerator could be supplied to the State Electricity Board with the understanding that equivalent energy would be returned to him when required. In Karnataka, Banking charges are 2% of the energy generated per month.

Wheeling refers to the transfer by direct transmission or displacement of electricity from the cogeneration plant to a consumer over the facilities of the State Electricity Board. For this, the cogeneration is required to pay the SEB’ Wheeling Charges’ for making use of the transmission and distribution facilities. The Wheeling charges, applicable in Karnataka is 10% of the energy generated. 

Co-generation in Sugar Mills
The process of manufacturing crystal sugar requires steam. In existing cogeneration systems, steam is generated in low-pressure boilers by using bagasse – the woody fibrous residue of crushed cane – as fuel. This system was developed when the possibility of exporting power to the grid was not envisaged. Further, since the storage of large quantities of combustible bagasse in the premises of the sugar mills was not advisable, most of the boilers were designed to use almost the entire quantity of bagasse produced. Thus, there is a ‘built-in energy inefficiency’ in the sugar factories, using all the bagasse as fuel for their low pressure boilers. By up-grading the steam parameters, the sugar industry can produce electricity far in excess of their own requirement and sell the surplus power to the grid.

Benefits of Cogeneration in Sugar Mills
1. Power generation using bagasse is environmentally cleaner as bagasse produces very little fly ash and no sulphur.

2. The net contribution to the green house effect from a bagasse – based cogenerating plant is zero, since the carbon dioxide absorbed by the sugarcane grown is more than what is emitted by the cogeneration plant.

3. A bagasse-based installation has a much lower gestation period of 18-24 months, as compared to the 96-120 months required for a coal based power unit.

4. A bagasse – burning unit requires a smaller capital investment and lower recurring costs compared to fossil fuel-based power plants.

5. Such a unit uses a totally renewable source of energy, which does not involve mining, extraction and long-distance transportation of fossil fuels.

6. The rural location of sugar mills enables cogenerated power to be directly fed to the local sub-station, consequently minimizing transmission & distribution losses & the provision of long feeder lines.

7. Cogeneration results in quick returns on capital investment.

8. No expenditure is incurred for the safe storage & disposal of bagasse.

9. Power is generated at lower costs & pay-back periods are shorter.

10. The generation of surplus power in sugar factories is ideally suited for rural electrification & setting up of agro-based units in the villages.

Assumptions for Cogeneration 
1. Bagasse produced is 30-35% of the cane crushed. The typical figure in Karnataka is 32%.

2. The ration of process steam consumption is 50-55% of the cane crushed. Efforts are being made to reduce this to 40%.

3. Mill wet bagasse contains about 50% moisture. The gross calorific value of mill wet bagasse is 2280 Kcal/kg.

4. The following are the ultimate analysis of bagasse as a main fuel & lignite as a secondary fuel for Cogeneration –

Bagasse Lignite
H2 3.2% 1.49%
C 23.5% 25.78%
N2 - 0.3%
02 21.75% 15.58%
S - 0.55%
Moisture 50% 50%
Ash 1.5% 6.3%
GCV (Kcal / kg) 2280 2750


Possible models of Cogeneration 

A) Extraction cum back pressure route –
The main features of this configuration are listed below

1) The sugar factory produces only as much steam as is needed for its process.

2) Surplus power production is envisaged only during the crushing season.

3) This is the cheapest option from the point of view of initial cost & efficiency of the system.

B) Extraction & Condensing route -
This system has the following features

1) The sugar factory produces steam by using the entire quantity of bagasse produced during the crushing season.

2) By using an extraction & condensing turbine, surplus power production can be extended during the off-season by operating the turbine in the condensing mode.

3) Power can be generated by using bagasse bought from nearby non-bagasse using sugar mills or by using bagasse left over during the later part of the crushing season.

4) The capital cost is higher for this system.

5) This system ensures the supply of stable surplus power during the crushing season, there-by reducing fluctuations in sugar plant operation.

C) Condensing route based on dual fuel system -
This option has the facility of ensuring a year-round, stable surplus power supply through the use of a support fuel. Its main features are listed below:

1) This is a viable option for sugar mills with access for secondary source of fuel.

2) In such an option, the reliability of alternate fuel supply has to be ascertained. Design aspects of boiler should ensure availability of a suitable furnace capable of multi-fuel combustion, particularly the combination of bagasse & coal/lignite.

3) The capital cost of multi-fuel system, particularly using coal as support fuel will be high, in addition to the connected considerations of pollution control & ash disposal.

4) High skilled manpower is required for the operation & maintenance of such an advanced technology.

In addition to the options outlined above, the following simple energy conservation measures, when adopted in a sugar plant, can contribute to surplus power generation –

a) Replacement of turbo drives used for cane preparation & milling with the hydraulic or electric drives.

b) Reduction of process steam consumption from the existing level (50-55% on cane) to 42-45% by the incorporation of modifications in the Juice heating & evaporation system.

c) Introduction of more controls & instrumentation in power plant operations.

d) Use of bagasse driers to reduce the moisture content in bagasse, before it is burnt in the boiler.


National programmes on Bagasse – based Cogeneration

A) MNES’s capital subsidy for Cogeneration -
Based on the recommendation of the Task Force Committee, the Ministry of Non-Conventional Energy Sources launched a National Programme on Bagasse-based cogeneration in January 1994.

The following incentives are available to the entrepreneurs as per the programme –

1) Non-recurring capital subsidy upto 30% of the equipment cost or upto Rs.70 lakhs per MW of net surplus power, whichever is lower will be given for projects that envisage the generation of atleast 5 MW of surplus power using boilers, which generate steam at a pressure of 60 bars or higher. However, the maximum amount of subsidy to any cogeneration project will be limited to Rs.6 crores in case of existing sugar mills & Rs.3 crores in case of new sugar mills. MNES has recently enhanced this capital subsidy limits to Rs.10 crores per project.
2) MNES also provides a subsidy on loans sanctioned by financial institutions for the purchase of cogeneration equipments by sugar mills.

B) IREDA’S soft loan for cogeneration -
IREDA has been entrusted with the responsibility of promoting bagasse-based cogeneration as a part of renewable energy development programme. In addition to this, IREDA also finances cogeneration projects based on other bio-mass fuels. The norms for IREDA finance are as under-

Minimum promoter's contribution 25%
Term loan upto 75% of project cost
Interest rate (inclusive of interest tax) 16.5%
Total repayment period (inclusive of moratorium) 10 years
Moratorium (maximum) 3 years

C) Govt. of India’s support for Independent Power Producers (IPP’s) -
The Govt. of India has targeted a capacity addition to the extent of 2000 MW through renewable energy, including 300 MW through bagasse-based cogeneration. In order to achieve this, the Govt. has announced several measures to promote independent power production. These includes –

1. Upto 100% foreign equity participation;

2. Flexible power sale arrangements, wherein power companies can act as licensers, suppliers & distributors of power or can supply power to the grid at large;

3. 4:1 debt-equity ratio on investments;

4. Single window clearance through a new Investment Promotion Cell;

5. Minimum return of 16% on investment, based on 68.5% plant load factor (PLF); &

6. A 30-year initial investment period, with subsequent extensions for 20 years.

7. A five-year Income Tax holiday, with a partial holiday of 70% through the 10th year of the project.

8. 100% depreciation in the I year can be claimed on the following cogeneration equipments –

a) Fluidised Bed Boilers:
b) Back pressure, Pass-out, controlled extraction, extraction and condensing type turbines for cogeneration along with boilers;
c) High efficiency boilers; & 
d) Waste heat recovery equipments-

9. Concessional customs duty, i.e. duty leviable on the import of equipments used for cogeneration is only 20% under Project Import Category.

10. Renewable energy devices, raw materials, components & assemblies are exempted from Central Excise Duty & also from Central Sales Tax (CST).


D) Govt. of Karnataka’s incentives for cogeneration -
The following are the incentives for bagasse – based cogeneration announced by the Govt. of Karnataka –



a) Power wheeling charges 10% of the energy generated for the  third party.
b) Power Banking charges 2% of the energy generated per month.
c) Buy-back rates by KEB Rs.3.15 per KWh.
d) Third party sale Allowed
e) Other Concessions Exemption from Electricity tax
for 5 years for captive use
f) Promotional Agency Karnataka State Electricity Board
g) Subsidies The Govt. Of Karnataka is offering a 
subsidy of Rs.25 lakhs per MW to Cogeneration units based on bagasse.
This is in addition to the existing Union Govt. subsidy of Rs.70 lakhs per MW.

Boiler & Steam Parameters for Cogeneration
As per the studies conducted by & the experiments gained by the leading Boiler manufacturer in the country i.e. BHEL, the following are the ideal boiler parameters for the Indian context of cogeneration –

1) The capacity of the boiler could be 70 tonnes/hour, as suitable for a 2500 TCD sugar plant with a pressure of 65 kg/cm2 at temperatures of 4900C to 5100C.

2) More advanced circulatoring Fluidised bed combustion boilers are made by BHEL & also by Crupp Industries –both in collaboration with Lurgi of Germany. In a CFBC boiler, the fuel is re-circulated upto 40 times, so that the un-burnt volatile materials are completely burnt. As a result, overall boiler efficiencies are achieved upto 80% with mill bagasse, 87% for lignite & 88% for coal. The combustion efficiencies are as high as 99%.

3) The flue gas temperature leaving the air pre-heater is 1600C and the feed water temperature at economizer inlet is 1050C.

4) At 65 bar pressure and at 5100C temperature, a boiler of 67 tons per hour with a back pressure turbine produces 12 MW power.

5) The exhaust steam has a temperature of 1390C at 2.5 bars. For practical calculations, the plant load factor shall be reckoned at 75%.

6) The installation of a bagasse drying system which uses waste heat from the boiler flue gases, is also beneficial.

To conclude, the following are the benefits & risks of cogeneration in Sugar Plants

Benefits of Cogeneration-
1. Improved sugar economy & reduced earning fluctuations – In India, the average revenue from by-products for sugar factories is less than 10%. However, with studies carried out in 1995 for two factories in Bihar, it has been estimated that revenue from cogeneration can be close to 40% of the gross revenue. Thus, even a price variation of 10% in sugar would not have more than 5% impact overall. This would help in maintaining a positive contribution even during the worst cyclical depression.

2. Low cost/low gestation investments – Even the highly efficient technology option of Rs 3.00 crore/MW of investment compares favourably with the normal thermal projects where the investment is Rs.4 crores MW The lead time is from 10 months to 24 months depending upon the size & the plant configuration. This is again almost half the time required for thermal plants. Further, many of the Central & State Govt. clearances required for thermal plants are not required here, especially in the case of investment in an operating sugar plant.

3. Positive environmental Impacts- Co2 emissions in a fossil fuel-based thermal plant are around 1 kg/KWh, depending on the carbon content in the fuel. With Bagasse-based cogeneration, it is only 20% of this figure. Thus a Co2 saving of 0.8 Kg/KWh is achievable. Thus 70,000 tons of C02 emissions could be avoided if 30 MW of co-generation power operates at a load factor of 80% for 150 days in a year, in a 5000 TCD sugar plant. This also offers an economic opportunity for trading in global Co2 permits.


Risks as perceived in Cogeneration –
1. Magniture of investment - An investment of Rs.3.00 crores per MW would be essential, using high-pressure & high-efficiency technologies.

2. Risks to Sugar-manufacturing operations – Any disturbance in the topping turbo generator (TG) sets as a result of grid problems, would interrupt sugar manufacturing operations totally.

The cost of such interruptions can be extremely high on account of production loss, machine failure, Spillage of juice, sugar and quality degradation. Similarly on account of low frequency, many of the critical pumps, particularly those operating under vaccum conditions can get deprived.

Viability parameters of cogeneration –
Following are the viability parameters for a cogeneration system by a sugar plant –

1) Viability improves if the sugar units are of larger size of above 4000 TCD, similar to international standards.

2) Before implementing the cogeneration scheme, the power/steam consumption should be optimized by installation of a hydraulic drive for mills, pre-evaporation prevention of steam leakage, proper instrumentation etc. to have a proper balance between steam & power. The steam consumption should be around 40% of cane & the power consumption should be around 12 to 15 KWh/tonne of cane crushed.

3) The cane availability should be adequate to ensure fuel crushing for atleast 160 days in a year. During off season, the availability of alternate fuel at reasonable rates is an important pre-requisite for cogeneration.

4) Problems of grid-interfacing with KEB should be thoroughly looked into. Protection of cogeneration equipment from voltage/frequency fluctuations & failures in the grid etc. needs attention.
5) The turbine efficiencies should be as under -
- at 65 kg/cm2 pressure, condensing turbines – 5 kgs. of steam consumption per KWh.
- Back pressure turbines – 7 kgs of steam consumption per KWh.

Based on the above, the assumed generations are as under –

5000 TCD sugar plant - cogeneration at 65 Kg/cm2



Generation (MW)


Consumption (MW) 9 2
Export (MW) 16 25

1. Season days are assumed at 160
2. Steam is assumed at 40% of cane
3. Operating costs at 5% of capital cost during season & 7.5% of capital cost during off-season
4. The prices of bagasse and alternative fuel are assumed atRs.500 & Rs.2000 per tonne.
5. Power realization is assumed at Rs.3 per unit, net of wheeling charges.

With circulating type Fluidised bed combustion Boilers, the power generation would be 15 to 20% more than the above mentioned figures.


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