Can co-ops become energy producers too? Challenges and prospects for efficient co-generation in India's co-operative sugar sector

Electricity supply in India has not kept pace with rapid urbanization and is projected to be in even greater shortfall in the coming decades. India’s sugar sector – one of the largest in the world – could provide approximately 5,000 MW of power through high efficiency bagasse cogeneration with export of surplus power to the grid network. From the perspective of the sugar sector, diversification into energy production holds the key to survival due to a crash in the price of commodity foods the world over. My project focuses on Maharashtra, a large sugar producing state in India where almost all sugar is produced by cooperatives – farmer-owned entities that serve important social functions in the countryside. It evaluates the particular financial, institutional, and political characteristics of cooperative sugar mills that have prevented them from becoming electricity producers. It finds that domestic renewable energy programs and international projects have not as yet taken into account the financial circumstances of cooperative mills. Some recommendations include introducing alternative financing mechanisms; augmenting interaction and learning among cooperatives; and regulatory policies conducive to renewable power generation. In addition, it finds that if cooperative sugar in India is to emerge as a viable and independent energy producer, systemic changes in the sugar sector as a whole will have to be made.