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In the second part of a two-part interview, the head of Brazil's power cogeneration association Cogen, Newton Duarte, speaks with BNamericas about a renewable source of power that remains a wallflower in the Brazilian energy sector: biogas. Duarte believes Brazil has huge potential in this area.
BNamericas: The Brazilian government has, on many occasions, expressed its willingness to hold an energy auction exclusively for biomass and biogas. Does Cogen believe we could see one this year?
Duarte: [Brazil's energy minister] Fernando Coelho Filho had said this auction would happen in the first half of 2017. However, I don't think it is a good idea to count on that promise, because a new energy auction will depend on the country's economic recovery. We have great expectations concerning the inflation index, which is already falling. A drop in the inflation index would strengthen a falling interest forecast. Today, Brazil has a real interest rate of 10%; not even on Jupiter is money that expensive.
Joking aside, I truly believe that, when Brazil's central bank accelerates the pace of interest rate cuts, investment in infrastructure will bounce back strongly, and biomass and biogas will be at the center of this. Brazil's energy consumption grew about 2% at the beginning of the year, which may be a result of high temperatures. But it still indicates the beginning of a recovery.
BNamericas: Many companies in the energy sector believe Brazil has great potential in the area of biogas. But this potential is not yet widely recognized, nor is the technology widely deployed. How does Cogen assess the potential of this source for cogeneration and distributed generation?
Duarte: Biogas will be a strategic matter for us in 2017. There is basically only one power plant using biogas in Brazil today, operated by Geo Energética. The plant is located in Paraíso do Norte, a small city in Paraná state. Because biogas is obtained through the production of sugar and ethanol, after the sugarcane milling process, it eventually becomes an important extra income for the company. It is also possible to fuel the power plant with a bit of straw added to the vinasse, which is a sub-product of the fractional distillation of sugarcane for the production of ethanol.
BNamericas: Does biogas have what it takes to become the next renewable source to attract foreign investors to Brazil, taking into account the size of the country's sugarcane industry?
Duarte: Yes, I believe so. Companies that invest in this form of biogas production have several options, such as power generation and the supply of trucks that carry sugarcane and vinasse. Biogas can also be purified for the production of biomethane, which is a sustainable substitute for natural gas. Distribution companies are paying attention to biomethane solutions, which can be used to supply smaller markets which are usually some distance from natural gas-consumption centers and the pipeline network.
There are studies indicating that Brazil could produce 30Mm3/d of biogas using vinasse. But we have to be careful. Cogen will conduct a study with an engineering company to assess the country's potential for biogas production, considering 360Bl of vinasse. We are talking about thousands of MW of electricity that could be produced with biogas, but that will only happen if Brazil creates a regulatory environment that is attractive to investors.