When sugar cane is crushed and the juice separated for crystallization, the remaining dryrnmatter - called bagasse - is burnt in furnace to provide thermal energy. The thermalrnenergy from the combustion of bagasse is used to generate steam which is utilized to drivernthe power turbines, the mill turbines and for the processes in the plant. Currently, allrnEthiopian sugar mills are using bagasse to generate electricity through their cogenerationrnpower plant for self sufficiency and to light the nearby villages only. But manyrnforeign sugar mills are producing and selling electricity from excess bagasse, leaves,rntrashes of sugar cane in addition to self sufficiency. Metahara Sugar Factory, one of thernsugar mills in Ethiopia, fortunately has the potential to use the excess bagasse, which isrncurrently 17.2% of the total bagasse produced, to generate more electric power and earnrnadditional money by selling the power through the national grid or using the power for itsrnown irrigation pump stations. The above figure is determined at the current moisture %rnbagasse, 50.04%, and average evaporation cofficient, 1.998. But it increases to 30.23% ifrnthe moisture % bagasse is lower to 45% and the evaporation cofficient is improved onrnaverage to 2.39 by implementing different energy saving opportunities. A total annualrnsavings of more than 14,844,094.19 Birr can be achieved through the use of the excessrnbagasse. This thesis has assessed the energy resource in Metahara Sugar Factory andrndetermined the steam generation efficiency of the plant. It has also forwarded possiblernmeasures to enhance the electric power generation capacity based on measurements,rncollected data and foreign sugar factories experience.