Background: The government has increased the price for ethanol by 10-25% for sugar season 2018-19 to support 10% blending with petrol. The 2030 target is ethanol blending of 20%. Sugar mills will benefit from raw-material flexibility, as they can now produce ethanol form B-heavy molasses and cane juice. The move is expected to improve profitability as well as reduce sugar production imbalance.
Sugar cane processing generates valuable by-products such as bagasse and molasses (press mud). Old mills use bagasse for captive steam and power requirements and sell molasses in the market. Integrated mills with energy efficient manufacturing processes consume lower steam and generate power for captive use and sale, earning 7-9% additional revenue in the process. Molasses are used to produce ethanol, which is used for blending with petrol as fuel.
We visited sugar mills to gauge the impact of the recent announcements in ethanol blending and waste treatment. Considering the benefits, most sugar companies are investing in distillery segment as ‘need of the hour’.
Impact: Sugarcane is now treated as an energy crop – with renewed focus on ethanol blending and power generation from bagasse and waste from distillery. Sugar mills are opting for flexible models, as these give them the option to manage sugar and ethanol production from B-heavy molasses, which the government has allowed from the current sugar season. These mills are now targeting higher ethanol production, power production, and biogas from distillery waste and press mud. The government is strictly tracking environmental pollution. Distillery effluents (called spent wash/ slop/ vinasse/ stillage) are treated as hazardous waste that is not suitable for direct disposal. With new pollution norms, sugar mills are installing incineration boilers to generate power from distillery waste. Old mills without waste treatment facilities are mostly setting up biogas projects. With changes in the business models and with government support, the industry is expected to see better days ahead.
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