Plenty of bagasse available in the sugar mill of the state having a potential of 1500 megawatt additional power generation through co-generation. UPNEDA started its efforts in 1994 as a catalyst/facilitator to set up power generation projects based on co-generation through bagasse available in the various sugar mills of Uttar Pradesh.

The state government formulated a policy in 1994 to promote the establishment of these projects in the state. Later on after the formation of U. P. Electricity Regulatory Commission, PPA made with the power corporation has been prescribed as model PPA along with the prescription of guidelines, tariffs and other terms and conditions for establishment of power projects, with alternative energy sources which includes co-generation projects of sugar mills.UPNEDA started its efforts in 1994 as a catalyst/facilitator to set up power generation projects based on co-generation through bagasse available in the various sugar mills of Uttar Pradesh.