The cogeneration system in sugar factory uses bagasse with high moisture content as the fuel for the boiler, which results in low boiler efficiency. The system also produces superheated steam, which is extracted from the turbine, and mixed with cooling water to produce saturated steam required by the evaporation system. The potential use superheated steam to reduce bagasse moisture content is ignored in the standard practice of the sugar factory. In this article, an investigation is made into the improvement of the cogeneration system by using superheated steam dryer to reduce the moisture content of bagasse. Mathematical models are developed for the typical system without superheated steam dryer and the improved system with superheated steam dryer. They are then used to compare the performances of both systems. It is found that, under the condition that the required steam flow rate for the evaporation process and the power output are the same, the improved system requires less bagasse consumption, and has larger energy utilization factor. In addition, water that would be lost with flue gases in the typical system is recovered in the improved system.