At present, the total installed electricity generating capacity of Thailand is 7500 MW According to an official forecast, the average annual growth of electricity demand will be 725 MW during 1992-1996 and 800 MW during 1997-2001. To satisfy this demand, it would be necessary to invest approximately \$7 billion during the next 10 years. Because this level of investment will take an unacceptably large part of total foreign borrowing, the government plans to encourage participation of the private sector in electricity generation. Among the various technology options for power production, cogeneration appears to be the most promising technology due to its very high effectiveness of fuel utilization. Therefore, in the first phase of private power generation, the Thai government is encouraging cogeneration systems. Sugarmills, where expertise and equipment for electricity generation already exist, appear to be in a particularly advantageous position to participate in the private power generation program. At present, there are 46 sugar mills in Thailand with a total capacity of 338,000 tons of cane per day. The fiber part delivered from the milling of sugarcane, bagasse, is normally used to produce steam for the process heat and electricity generation. Four technical options have been considered for increasing the electricity generation potential of Thai sugar mills. These are the use of (1) bagasse dryer, (2) cane trash for electricity generation during nonmillion season, (3) cane trash and single extraction-condensing turbine, and (4) cane trash and double extraction-condensing turbine. The investment and operating costs for each of these alternatives have been evaluated. The internal rate of return is used to indicate the benefit of each alternative. Each of the four alternatives has been considered for each individual sugar mill. The estimated capital investment varies in U.S. dollars from a few hundred thousand to US\$ 65 million per mill. The result shows that the potential surplus electricity generation capacity of the sugar mills varies from 0. 5 to 50 MW per mill. Use of bagasse dryer and cane trash requires moderate investment but would give substantial returns. The electricity generation is approximately 2600 GWh. Double extraction-condensing turbine option could generate as much as 8000 GWh annually, but the financial return is limited due to very high investment cost.