An energy auction for alternative sources is scheduled for April 27th and will coincide with the end of the sugar cane crop. In addition to cane marc, the auction aims to hire wind power, solid waste power and other types of biomass.
The last LFA (alternative source auction) took place in 2010, whereas normally renewable energy has been contracted through reserve auctions, A-3 and A-5. As none of the products applied to the other types of auction, the government decided to use the LFA denomination. The LFA will have different dates for delivery (therefore, not an A-type auction), and it will allow for contracting both new and existing projects (thus, not a reserve auction).
Brazil’s power sector regulator Aneel approved a price ceiling for the auction. The maximum bidding prices will be BRL 179 / MWh for wind power projects, and BRL 215 / MWh for biomass projects. A total of 570 proposals have been registered for this auction, totalling a combined capacity of 14,962 MW. This includes 530 wind projects (12,895 MW) and 40 thermal biomass schemes (2,067 MW).
The contracts will last 20 years. The supply from biomass plants is set to begin at two dates, January 1st, 2016 and July 1st, 2017, whilst the wind plants have to start generating power on July 1, 2017.
According to recent statistics by the Global Wind Energy Council (GWEC), Brazil added 2,472 MW of wind power capacity in 2014, bringing the total to 5,939 MW. The government auctions are the main driver for the growth of the local wind energy sector.
Sorghum emerges as a viable alternative source of biomass
A decrease in the sugar cane crop is leading to an increasing search for alternative sources of biomass. The market estimated a 16-million-ton decline in sugar cane production as a result of lower investments. However, numbers presented by the consultancy company Datagro indicate that the actual drop was 44 million tons, this time caused by unfavorable climate conditions.
Currently, the scenario is somehow different due to the highest energy price ever recorded in the spot market. Those that already have contracts would rather avoid the spot market, whilst companies that do not have contracts want to make the most of the power plants to optimize the profit in this moment. The price is ranging from BRL 600 to 800 / MWh.
Due to the lack of raw material for processing, a portion of the power plants has anticipated the crop. Nevertheless, what would have become a disastrous situation in past times is now a challenge that can be tackled by using alternative sources of biomass, which include wood chips, agricultural waste, and sorghum, among others. Technological advances also play a role in overcoming this challenging scenario. Modern, flexible boilers that can be supplied with several fuels can handle those alternatives to sugar cane.
Two of the largest sorghum suppliers, Ceres and Nexsteppe confirm the demand is growing and the product has become an attractive option for large groups. There are ongoing businesses, however they must remain confidential due to secrecy policies. The amounts are still minor, but the evolution scale is very promising.
Sorghum has a fast crop cycle. Around 120 days after the plantation, the sorghum is ready to be cropped. Growth can be of 4cm daily, reaching 4,5m to 5m height when mature. The 2012/13 crop had a total demand of 50 thousand tons. The following crop, only if we take Nexsteppe into consideration, surpassed 200 thousand tons. In modern boilers, one ton of sorghum is equivalent to 0,5MW.
As sorghum as a biomass source is still in improvement phase, the leaps in quality are impressively high, averaging 30%. As a comparison, other biomass sources as corn and soy present gains of 1-1,5% within a timeframe of 3 to 7 years.
The high settlement price for differences (PLD) and a non-heated ethanol market contribute to increasing the interest for biomass. Ceres highlights its improvement program, which aims to release even better hybrids with doubled productivity and lower cost. The type of equipment used to plant and crop the sorghum is different from the one used with sugar cane, but it can be chartered for a reasonable price. The sorghum may be mixed with marc, but it needs to be cropped and taken to the boiler right away, therefore it is necessary to cultivate it in a range of maximum 20km to the power plant.