Cogeneration system in the cane sugar industry produces not only molasses and raw sugar but also exportable electrical power. Main components of the system are boiler, steam turbine, condenser, and sugar juice evaporation process. Bagasse is used as fuel for boiler. Bagasse is a by-product of sugar juice extraction process. It is characterized by a high moisture content, which leads to the inefficiency of energy conversion. The integration of steam dryer in cogeneration system to reduce bagasse moisture content before combustion will improve the system performance. The moisture content of bagasse is reduced in a steam dryer due to heat transfer from steam condensation. Saturated steam supplied to steam dryer is obtained by mixing superheated steam extracted from steam turbine with the appropriate amount of cooling water in desuper-heater. The objective of this paper is to evaluate the performance of this cogeneration system quantitatively. Models of boiler and steam dryer are used for this purpose. Simulation results show that the cogeneration system integrated with steam dryer generates more power output than the reference cogeneration system without steam dryer under the conditions that sugar juice processing capacity and bagasse consumption are the same. Furthermore, the cogeneration system integrated with steam dryer requires 20% less heating surface area than the reference cogeneration system under the condition that temperatures of flue gas exhausted from boilers of both systems are the same.