Brazil's biomass electricity auction attracts 118 factories with 7.8GW capacity

The Brazilian federal government recently launched a grand plan to source a substantial amount of renewable energy from biomass, as a 'Green Reserve' to make Brazil energy secure as it faces potential future electricity shortages. The country's state energy administration agency - the Empresa de Pesquisa Energética (EPE) - will buy and distribute bio-electricity from companies that cogenerate heat and power for their own processes and feed excess power into the grid. The program's first and exclusive bioenergy auction will be held on April 30 this year. EPE has so far registered 118 interested producers who generate green power from agricultural residues and bagasse.

The EPE yesterday announced [*.pdf] details about the project and said that, combined, the 118 projects have a capacity to generate around 7.8GW of renewable bio-electricity over the next two years. This amount will be fed into the Sistema Interligado Nacional (SIN) between 2009 and 2010 (winning companies who rely on bagasse may be required to start feeding their electricity into the grid as early as the next sugarcane harvest in May 2009).

The biomass capacity on offer so far already surpasses the combined output of the new hydroelectric stations of Santo Antônio (3.15GW) and Jirau (3.3GW), being built on the Rio Madeira near the Bolivian border. Put differently, the biomass electricity available as the Green Reserve equals an output comparable to that of around 5 nuclear power plants.

EPE provided regional details, which show the largest contri- bution comes from sugar and ethanol factories in São Paulo state (south-central Brazil). There, 64 plants with an excess capacity of 4.18GW have enrolled for the auction. Cogeneration plants in Goias (1.66GW) and Minas Gerais (834MW) complete the top-three (table, click to enlarge).

The 'green reserve' auction follows the lines of earlier energy auctions: the government announces a price ceiling for the electricity and companies bid downwards from this reference point. However, some aspects of the auction remain unclear. It has not been made public who would carry the costs of bringing the green electricity online. New (inter-)connection infrastructures may have to be build - from the factory to the grid - in which case this becomes an important aspect of the sourcing process.

Besides organizing the auction, the federal government has taken a series of technical and administrative measures that must facilitate and speed up the participation of a large number of sugarcane factories as well as their integration as bio-electricity producers into the SIN; additionally, measures have been taken that will expand the program's capacity further over the next three years:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: bagasse :: cogeneration :: energy security :: renewables :: Brazil ::

Amongst these actions are:

• the application of the concept of interconnective collocation, which implies interconnection stations will be build in geographically optimal locations; as many greenfield bioenergy plants will come online, often far away from each other and from existing interconnection points, a structure will be created that allows optimal placing of new interconnection infrastructures; this guarantees the expansion of a Base Grid organised on the basis of rational, flexible, efficient and economic principles.
• the initiation of studies into interconnections, led by the Operador Nacional do Sistema Elétrico (ONS); studies will focus on Sao Paulo, where bio-electricity plants will often fully load the regional net, in which case the excess electricity must be diverted smoothly to other grids. Optimal distribution strategies will be developed.
• the authorisation for existing bio-electricity generating enterprises to participate in the scheme when they invest in expansion to generate extra biomass energy; they can use this extra capacity to bid in the auction
• the authorisation for selected bioenergy generating sugarcane companies to offer yearly increasing amounts of bio-electricity during the first three years of their participation in the program, provided they present a clear chronogram that shows their sugarcane expansion plans, which form the basis of expanding power generation capacity
  
• a special set of procedures that allows qualified enterprises in the state of Sao Paulo to obtain the necessary Licença Prévia (LP) faster, so as to speed up their participationn
• the creation of a structure that stimulates contacts and negotiations between the Sugarcane Industry Union (UNICA) and the respective secretariats of the Environment Ministry, in order to allow greater offers of bio-electricity to be made

After the registration phase, the EPE will analyse each project individually on its technical and legal merits and will grant final qualifications that will be allowed to take part in the auction.

Translated for Biopact by Laurens Rademakers

References:
Empresa de Pesquisa Energética: EPE cadastra 118 empreendimentos para Leilão de Energia de Reserva - February 21, 2008.