Brazil’s sugarcane electricity and wind energy

Sugarcane-based electricity generation projects in Brazil are being blown out of the water by wind power and other lower-cost energy alternatives, slowing ambitions to expand one of Brazil’s largest potential new sources of clean energy, experts said.

The world’s No. 1 sugar producer and No. 2 ethanol maker amasses 140 million tonnes a year of bagasse from crushed cane, some of which is burnt in high-efficiency boilers to crank generators supplying a hitherto growing share of Brazil’s power.

The sugarcane industry estimates bagasse could generate 15,300 megawatts (MW) of electricity by 2020, roughly the entire annual needs of Ecuador and about a fifth of its own — but only if it can be made competitive with cheaper wind and natural gas.

Signs of a brownout in bagasse-derived electricity emerged last August when bagasse-based projects mustered only a 4 percent share in the 2,744 MW of long-term power supply contracts sold at a government-run auction.

Natural gas projects claimed 56 percent, wind power 27 and hydroelectricity, which is Brazil’s single most important source of power, 14 percent. Biomass power developers took the hint – only 23 bagasse power projects are registered for the next power auction on March 22, compared with 81 hopefuls last August.

"The rule is to buy at the lowest price, no matter the cost differences among the sources," Zilmar Jose de Souza from Brazilian thinktank Fundacao Getulio Vargas and bioelectricity specialist for Sugarcane Industry Association (UNICA).

He said tax breaks benefitting other energy sources and rising costs for manufacturing of generation equipment for bagasse systems exacerbated by the strengthening local currency, left it more costly than wind, hydroelectric and natural gas.

De Souza advocates government measures such as tax breaks on equipment to make biomass more competitive especially versus fossil fuels, favoritism he believes is justified because of the renewable fuel’s green credentials.

Bioelectricity units are an important source of steady extra revenue for cane mills in Brazil whose revenues are subject to the undulations of sugar and ethanol prices. And much of the bagasse mountain has to be disposed of by burning to make space at mills, whether or not there are power-generating facilities.


While biomass struggles, wind power has made huge strides as costs fall. The sector grew 72 percent in 2011 alone, reaching 1,325 MW. Considering contracts already won in recent auctions, wind in Brazil will reach 5,142 MW by the end of 2013 and 8,047 MW in 2016.

"Brazil is privileged with wind with a capacity factor that is at least double that of traditional countries in the industry such as Germany or Denmark," Pedro Perrelli, executive director at Brazilian Wind Power Association (Abeolica), said.

"With (comparatively) higher productivity on wind farms, the investor is able to receive a return on his investment in an satisfactory period," he said.

Perrelli said the falling cost of wind turbines in the last few years helped cut the cost of new wind farms. The government also offered special credit lines to wind power in its infancy and it can now compete with gas-fired power plants.