Brazil rejects biomass-only auctions for now

Ventura Filho added that wind and hydroelectricity remain the cheapest forms of energy in Brazil. In the past, Brazil held auctions for specific forms of energy such as wind or biomass.

With the drop in the cost of wind energy because of subsidised government financing for wind turbines, biomass cogeneration from cane bagasse has become less competitive.

Zilmar Jose de Souza, head of bioelectricity at cane industry association Unica, said the lack of government policy to stimulate investment in biomass is threatening its potential to become an important contributor to the nation's energy matrix.

Cogeneration from cane biomass is renewable and has the potential to bring 15.3GW to the grid by 2020, of Brazil's current total generation capacity of 113GW. At present, biomass accounts for 2.1GW of installed capacity, although the sugar and ethanol mills themselves use 1GW of this for their own day-to-day operations.

In the past two new energy auctions, an average of 43pc of total energy demand contracted went to wind energy, compared with 4pc to biomass. Souza said biomass plants that have to compete directly with the cheaper forms of wind and hydroelectric energy are less interested in participating in the auctions.

Yet biomass electricity generated from cane is an exceptionally fitting source of energy to complement the predominantly hydroelectric-driven grid. Souza said that mills' peak generation potential coincides with low hydroelectric output because of the dry season, when the government is often required to dispatch more expensive merchant thermoelectric plants.

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