Ethanol beyond transportation: Unlocking opportunities in gensets and static engines

India’s Ethanol Blended Petrol (EBP) programme is widely regarded as one of the country’s most successful energy transition initiatives. What began as a strategy to blend ethanol with petrol for mobility has now reached a milestone—India has already met its 20% blending target (E20), well ahead of schedule. This accomplishment not only strengthens India’s energy security but also sets the stage for ethanol to play a much broader role in the economy.

The next frontier lies beyond the transport sector, with ethanol emerging as a viable fuel for gensets, static engines, and captive power applications. For an industry audience, the question is not whether ethanol works—it is how quickly and efficiently it can be integrated into new domains, supported by policy, technology, and market economics.

The EBP Journey: From Policy Vision to Ground Reality

India’s ethanol blending journey has been a textbook case of coordinated execution:

Ambitious targets with policy clarity – The government set aggressive blending milestones, creating demand certainty for producers.

Feedstock flexibility – Ethanol is now produced from multiple sources, including various streams of sugar mills such as C and B molasses, sugarcane juice, surplus rice, damaged foodgrains, and maize.

Capacity expansion – Distillery infrastructure was scaled up through interest subvention schemes and long-term procurement commitments by Oil Marketing Companies (OMCs).

Market acceptance – Automobile OEMs developed and tested E20-compatible engines, ensuring a smoother rollout.

The result: India achieved 20% blending in petrol in 2025, making it the third-largest ethanol producer and consumer globally. This success offers confidence to replicate a similar model in other fuel-consuming sectors.

Why Look Beyond Transportation?

While the mobility sector remains a major consumer, non-transport applications are equally important:

Energy security: Diesel gensets consume millions of litres of fuel annually. Ethanol can offset part of this demand.

Carbon reduction: Ethanol’s biogenic origin reduces lifecycle greenhouse gas emissions.

Industrial resilience: For sectors dependent on continuous power—such as telecom, healthcare, and data centres—ethanol-based gensets provide a low-carbon backup alternative.

Rural linkages: Using ethanol in agricultural pumps or small engines directly connects local energy needs with local agricultural output.

Technical Feasibility: What Studies Show

Research and pilot trials over the past decade demonstrate ethanol’s compatibility with stationary engines:

Gasoline gensets: E100 (100% ethanol) in spark-ignition gensets has shown better efficiency and lower emissions under controlled testing conditions.

Diesel gensets: Direct use is more complex due to ethanol’s low cetane rating. However, ethanol–diesel emulsions with additives have shown promising results. In addition, co-firing ethanol with diesel in stationary engines and boilers has demonstrated potential to lower overall emissions.

Captive industrial use: Distilleries already leverage ethanol by-products (spent wash, biogas) for captive power, proving the circularity potential of this sector.

The bottom line: ethanol is technically feasible for gensets and static engines, but commercial scale-up requires systematic interventions.

Key Challenges for Wider Adoption

Despite strong potential, three categories of barriers must be addressed:

Engine Compatibility Most gensets in India are diesel-based. Running them on ethanol requires either conversion to spark ignition, dual-fuel technology, or stable emulsions. Material compatibility is critical, as rubber and other non-metal components must be suitable for the ethanol blends being used.

Fuel Logistics & Storage Ethanol’s classification in the Class A category means dedicated storage and handling systems are needed. Supply chain reliability outside transport blending must be assured.

Economics Delivered cost of ethanol versus diesel is a deciding factor. Incentives, carbon credits, or lower GST may be required to make ethanol competitive.

Lessons from EBP: How They Apply to Gensets

The success of EBP highlights several replicable elements:

Demand signals: Just as OMC procurement anchored blending, institutional buyers (e.g., telecom operators, large hospitals, and data centres) can anchor ethanol demand for gensets.

Standards & testing: BIS standards for ethanol fuels and certification of ethanol-ready gensets will boost market confidence.

Feedstock diversification: This ensures stable supply and protects against raw material price volatility.

Policy incentives: Similar to OMC assured pricing, industrial users need predictable economics to switch.

Roadmap for Industry

To unlock ethanol’s potential in gensets and static engines, the following steps are crucial:

Pilot Projects Roll out ethanol-based gensets in telecom towers, hospitals, cold chain facilities, and data centres where power reliability is critical. Demonstration at scale will address perception barriers.

Flex-Fuel Engine Development Collaborate with genset OEMs to launch E100-ready spark-ignition gensets and dual-fuel diesel–ethanol models. Standardise retrofit kits for small engines in agriculture.

Additive Innovation Support R&D for ethanol–diesel blends with cetane improvers, stabilisers, and cold-start enhancers. This could enable wider use in compression-ignition engines.

Cluster-Based Deployment Prioritise industrial hubs near ethanol production zones for captive ethanol-powered energy solutions, lowering logistics costs.

Policy & Incentives Reduced GST on ethanol gensets, accelerated depreciation benefits, and priority lending will accelerate adoption. Public procurement mandates (e.g., government hospitals and rural electrification projects) can provide the initial demand pull.

What’s Next for Industry Players

In the 3–7 year horizon, ethanol can realistically power:

Backup gensets in commercial and institutional facilities.

Agricultural pumps in rural areas, linking farmers directly to local ethanol supply.

Captive industrial energy in sectors such as sugar, food processing, and chemicals, where ethanol production and use can be integrated.

The EBP programme has demonstrated that ethanol adoption is possible at national scale with the right ecosystem. The next phase requires collaboration between distilleries, engine manufacturers, additive companies, and industrial buyers to create a parallel success story in gensets and static engines.

Conclusion

India has proven through the EBP programme that ethanol can be mainstreamed into the national energy strategy. The immediate opportunity now lies in extending ethanol’s role beyond transportation. With targeted pilots, supportive policies, and industry collaboration, ethanol can become a competitive alternative to diesel in gensets and static engines.

For industry stakeholders, the message is clear: the ethanol economy is not just about mobility anymore—it is about building an integrated, multi-sector energy ecosystem. Those who move early will be best positioned to capture value in this emerging space.

The author is Director General, Indian Federation of Green Energy