Biomass has already avoided a blackout and now claims strategic treatment

In slang, saying that someone or something is “in the bag” is synonymous with energy depletion. But, in the reality of sugarcane mills and in the diversification of the Brazilian energy matrix, bagasse is a valuable asset that has already saved the Southeast/Center-West electrical subsystem from collapsing in the most serious water crisis in almost a hundred years. And it has even greater potential.

In 2021, the energy released into the Brazilian electrical system produced with sugarcane bagasse and other biomass (cellulose black liquor, wood chips and biogas, mainly) enabled a 14% saving in the water levels of the subsystem reservoirs Southeast/Midwest.

Without this help, the capacity of the lakes would be reduced from 18% to 4%, which, in practice, would make it impossible for the hydroelectric plants to operate, increasing the risk of blackouts. Today, sugarcane bagasse represents 60.5% of all cogeneration – production of two or more forms of energy from one fuel – existing in the country.

This still little-known story proved, according to Newton Duarte, president of the Energy Cogeneration Industry Association (Cogen), the indispensable strategic role of biomass in the security of the Brazilian electrical system.

The greatest supply of bagasse occurs in the sugarcane harvest in the Center-South, between April and October, which precisely coincides with the dry and critical period for hydroelectric generation. “Biomass can be the element that helps to store water in reservoirs. The ideal would be to use biomass in such a way as to always keep two thirds of the reservoirs guarded. Because the periods of drought come, inexorably”, he points out.

Biomass can contribute eight times more

In just over a decade and a half, Brazil tripled the volume of electricity from sugarcane biomass released into the National Interconnected System (SIN). Currently, there are 17 gigawatts (GW) in commercial operation, which represents 8.8% of the installed capacity of the country’s electricity matrix (194 GW).

The untapped potential, however, could be eight times greater. According to the Energy Research Company (EPE), linked to the Ministry of Mines and Energy, the technical potential of bioelectricity generation for the grid is 143 GW, while the amount actually launched in the system, in 2022, was 18.4 GW. This is without taking into account the multiplier effect that the so-called retrofit (modernization) of operations at the plants and the use of straw and biogas.

Currently, most of the energy generated from the burning of renewable organic matter is still destined for self-consumption by industries, representing 51% of the total generated.

The surplus sold in the national electrical system, above the declared physical guarantee of the plants, is remunerated by the Settlement Price of Differences (PLD), which would be very low due to the good level of the hydroelectric reservoirs, discouraging the offer in the short-term market. “It’s an idiotic rule that obliges me to settle for the PLD when I could be selling on the free energy market. I’ve been trying to change this nonsense for four years”, says Duarte, from Cogen.

Ten-Year Energy Plan is outdated, claims Cogen

Despite the expressive growth in just a few years, the biomass sector complains of errors in the federal government’s strategic planning. Elaborated in 2022, EPE’s Ten-Year Energy Plan 2031 projects growth in the segment between 80 MW and 400 MW, at most, per year. As a reference, 1 MW is enough to supply 1,300 homes.

“This is a joke, because last year alone, an additional 900 MW of biomass produced from black liquor entered the market. Aneel itself has already granted 2,400 MW by 2026. In the last five years, despite the economic problems and the pandemic, we delivered 350 MW per year. So, this perspective of 80 MW per year is absolutely wrong”, says Duarte.

And what is the effect of these excessively modest official projections? “Imagine that I am a multinational from Germany or the USA. I want to invest in Brazil in a new factory for turbines, boilers, speed converters. But then I see a document like that, from the government, and I conclude that I’m not going to do anything. Because your country’s Energy Expansion Plan envisages 80 MW per year, and that’s meager, it doesn’t affect our plant or our competitors’, adds the Cogen executive.

Use of public hearing is questioned

“I worked in multinational all my life [Siemens e General Electric], I know exactly what that is. A public policy that does not match the reality and prospects of the market, and, by denying the market, it is bad for everyone”, he underlines.

According to Duarte, of the more than 300 suggestions made in a public hearing for the Ten-Year Energy Plan, EPE would not have incorporated any. “Am I so stupid or are they so smart that they can’t take advantage of any of the 300 suggestions?”, he asks.

The energy generation park from biomass has already been installed in the country for 40 years, mainly in the sugar-energy region of the Center-South. In 2010, with an increase in demand for ethanol after the international financial crisis, the sector added 1,750 MW of supply in a single year.

“In fact, having a growth forecast of 80 MW or 200 MW means that you are not looking strategically at this source. We need to rethink public policy. We have dormant potential, but we only take advantage of 13%”, says Zilmar José de Souza, manager of Bioelectricity at the Union of Sugarcane and Bioenergy Industry of Brazil (Unica).

EPE says it considered suggestions in the final version of the plan

In response to the criticisms, EPE sent a note to People’s Gazette stating that it holds frequent meetings and interactions with the bioenergy market, and that “different information evaluated and used by EPE, including those referring to the costs of implantation and operation of bioelectricity plants, have as main origin the entrepreneurs themselves and are directly informed by them during the process of technical qualification of electric energy auctions”.

The company denied that any suggestions were received on the ten-year plan, and assured that it had analyzed more than 500 contributions sent by more than 50 institutions, “many of which were considered for improvements incorporated in the final version of the plan”.

In the regulated electricity market – whose prices are set by the National Electric Energy Agency (Aneel) – the sugar-energy sector still complains about the lack of differentiated remuneration for renewable energy sources, which emit less pollutants and have continuous supply capacity.

Last year, the government removed from the legislation the subsidy that was given to wind, photovoltaic, biomass and Small Hydroelectric Power Plants (PCHs). These sources paid only 50% of the so-called “wire tariff” which covers energy transmission and distribution costs.

“They took it from the law with the promise of, in the future, restoring remuneration for the environmental attribute of these sources. But this process is still at a standstill”, points out Souza. Before the end of the benefit, however, there was a rush to approve projects, which ended up creating a stock of grants that include the subsidy.

To have or not to have a subsidy, that is the question

For some time, in the energy transition process, encouraging renewable sources will still be necessary, according to Unica’s Bioelectricity manager.

“Sometimes it’s a matter of having a quota in the auction for the purchase of biomass from PCH energy, for example. In the Mexican market, you pay an extra US$ 10 as an environmental attribute. There are ‘n’ shapes. It is necessary to put the studies on paper and transform them into a carbon market, which represents the valuation of the environmental attribute in the electricity sector”, adds Souza.

In the opinion of Claudio Ribeiro, president of 2W Ecobank, one of the largest operators in the free energy market, the time has passed when wind, solar and biomass sources were expensive and needed subsidies to be competitive.

Currently, the market itself asks for energy with these sustainable labels. “These energies are already competitive for two reasons: because there has been a technological evolution of renewable generation and because consumers are increasingly turning to these sources, they don’t want to buy from a conventional source, because they have goals of obtaining ‘net zero’. People are increasingly using electrification, and it will be necessary to invest in generation again. There is no longer any way to expand the generation of large hydroelectric plants, it will be through renewable sources”, says Ribeiro.

Of the new investments in energy generation, currently, 80% are already in renewable sources. 2W itself is investing BRL 2 billion in the construction of two wind farms, with 139 MW in Rio Grande do Norte, and 261 MW in Ceará, which should start operating in January and April of next year. The company’s goal is to arrive in 2027 offering 2 GW in the market, enough to serve 3 million homes.