Material Insights · Understanding the Material World

Biomass and Sugar

Every 100 tonnes of cane crushed for sugar leaves about 30 tonnes of wet bagasse, which mills burn for their own steam and power and export the surplus, so sugar output sets one of the largest biomass fuel supplies in India and Brazil.

Biomass (energy) and Sugar (commodity): 5 relationships.

How they are linked

1. Bagasse from cane crushing

Joint production · Strong · Sugar milling → bagasse biomass

Bagasse is the fibre left after cane is crushed to extract juice, so it arrives at the mill in fixed proportion to the cane processed for sugar and ethanol.

  • about 30 t wet bagasse per 100 t of cane crushed (range 22 to 36%)
  • about 48 to 50% typical moisture content of mill bagasse

Because bagasse supply follows the crushing season, it is plentiful for a few months and scarce for the rest of the year, unless mills store it or buy other biomass. A smaller cane crop cuts sugar and biomass output together.

Sources: BioEnergy Consult

2. Bagasse cogeneration

Physical flow · High in India · Bagasse → steam and power at sugar mills

Burning bagasse in mill boilers can supply all the steam and electricity a typical sugar mill needs, and mills with high-pressure boilers export the surplus power to the grid.

  • about 9,806 MW bagasse cogeneration capacity in India, 31 December 2024
  • about 922 MW non-bagasse biomass cogeneration capacity in India, same date
  • ₹3.82 and ₹6.11 a kWh bagasse power tariffs in Andhra Pradesh (2023-24) and Tamil Nadu (2024-25)

Bagasse cogeneration capacity is about ten times that of non-bagasse biomass cogeneration in India, and tariffs set by state commissions, which differ widely between states, decide whether mills invest in efficient boilers. Ethanol distilleries attached to mills need extra steam, so the push for ethanol competes with power export for the same bagasse.

Sources: BioEnergy Consult; Power Line

3. Dry-season power in Brazil

Transition · Medium · Bagasse power fills in for low hydro

Brazil's cane harvest runs through the dry season, when hydro reservoirs are low, so bagasse power arrives when the grid most needs it.

  • about 20.4 TWh bioelectricity from sugarcane supplied to Brazil's grid in 2025
  • almost 4% share of Brazil's electricity consumption this covered, 2025
  • 3.8% lower than the 21.2 TWh supplied in 2024

The seasonal fit gives bagasse power a system value beyond its volume. It also means Brazil's sugar and ethanol choices and the size of its cane crop affect power supply in dry years: supply to the grid fell about 3.8% in 2025 from 2024.

Sources: UNICA (CCEE and ANEEL data)

4. Cane as a biomass source

Physical flow · Direct · Sugar crops → biomass supply

Sugarcane is itself one of the largest managed biomass crops, and its fibre and straw become fuel once the sugar has been extracted, so the biomass sector depends on the sugar industry's crushing volumes.

The tie runs through the mill: cane grown for sugar or ethanol yields biomass as a residue, rather than being grown for fuel. That makes biomass supply from cane cheap but dependent on sugar policy, cane prices and the weather.

Sources: BioEnergy Consult; UNICA (CCEE and ANEEL data)

5. Price link: residue

Cost and price · Weak · Both ways

Cane crushing sets bagasse supply, but most bagasse is burned on site rather than traded, so there is little link between sugar prices and a traded biomass price proxy.

  • 0.11 monthly change correlation
  • 0.17 12-month change correlation
  • 0.18 fitted elasticity

The proxy is a US wood chip price, which has little to do with cane mills, so a weak link is expected. The real tie is in volumes: a large cane crop raises sugar and biomass supply together.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. Bagasse supply is fixed by cane crushing at about 30 tonnes per 100 tonnes of cane, so sugar crop forecasts double as biomass power forecasts.
  2. India has about 9.8 GW of bagasse cogeneration (end 2024), and state tariffs, for example ₹3.82 a kWh in Andhra Pradesh and ₹6.11 in Tamil Nadu, shape its earnings for integrated sugar companies.
  3. Ethanol expansion at mills competes with power export for bagasse steam, so mill strategy shifts with ethanol and power prices.

What to track

  • Cane crushed and sugar output: Sets bagasse supply for the season (Fortnightly in season · ISMA, state cane commissioners)
  • State tariff orders for bagasse cogeneration: Changes the value of exported power for mills (Annual · state electricity regulatory commissions)
  • Brazil centre-south cane crush and bioelectricity supply: Shows the dry-season power contribution in Brazil (Fortnightly · UNICA)

For policymakers

Key learnings

  1. Bagasse cogeneration of about 9.8 GW (end 2024) is about ten times India's non-bagasse biomass cogeneration, and it runs on residues rather than dedicated crops.
  2. Tariffs set by state commissions differ widely, from ₹3.82 a kWh in Andhra Pradesh (2023-24) to ₹6.11 in Tamil Nadu (2024-25), which shapes whether mills invest in efficient high-pressure boilers.
  3. Diverting cane to ethanol raises steam demand at mills, so ethanol and biomass power policy need to be planned together.

What to track

  • Bagasse cogeneration capacity additions: Shows progress in biomass power (Quarterly · MNRE)
  • Bagasse power tariffs and payment delays: Signals investment risk for mills (Annual · state commissions, distribution companies)
  • Cane diverted to ethanol: Shows competing demand for mill steam and bagasse (Annual · Department of Food and Public Distribution)

India

India had about 9,806 MW of bagasse cogeneration at sugar mills at the end of 2024, against about 922 MW of other biomass cogeneration, with surplus power sold to state utilities at tariffs that differ by state, for example ₹3.82 a kWh in Andhra Pradesh and ₹6.11 in Tamil Nadu.

Sources

  1. Energy potential of bagasse, BioEnergy Consult
  2. High efficiency levels: tapping bagasse-based cogeneration plants to add to India's renewable power, Power Line (2025)
  3. Geração para a rede e capacidade instalada (bioeletricidade da cana), UNICA (CCEE and ANEEL data) (2026)
  4. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)