Lugazi lies approximately 47 kilometres (29 mi), along the Kampala-Jinja Highway, east of Kampala, the capital of Uganda and the largest city in that country.

The power station was designed and built around the sugar manufacturing plant of SCOUL.

The fibrous residue from the process of crushing sugar cane, known as bagasse, is burnt to heat water in boilers and produce steam.

As of December 2010[update], the power station was capable of producing a maximum of 5MW of electricity, which was fully utilized internally by SCOUL.

At that time, plans were underway to expand power production to 16MW, of which 7.4MW was to be sold to the grid and the remaining 8.6 was for internal use by SCOUL.