Sugar-energy bioelectricity in energy trading environments: reasons for the lack of competitiveness

Renewables such as sugar-energy biomass can contribute to national electrical security, job creation and mitigation of greenhouse gas emissions. However, after the auction of reserve energy, in 2008, exclusive biomass, in the regulated contracting environment (RCE), the authors observe that this energy environment has lost competitiveness in the auctions. Thus, a study on the present theme is justified, based on the problem: What are the reasons for the lack of competitiveness of sugar-energy bioelectricity in the Auctions of the RCE of the National Electric Energy Agency? The purpose of this study is to understand the situation of sugar-energy bioelectricity in the Brazilian market.

Literature review was conducted through the Scientific Electronic Library Online database, as well as the survey of primary documents at Sugarcane Industry Union and Electric Energy Trading Chamber.

The reasons for lack of competitiveness in RCE electricity auctions are: distant location of transmission lines; difficulties in obtaining licensing; delay in responses from environmental agencies; difficulties in securing financing for electricity generation projects for distilleries; non-pricing of positive environmental externalities as adequate disposal of waste; and the non-recovery of the cost of retrofit of the plants. The present situation may create economic, social and ecological circumstances adverse for Brazilian development, such as a lack of employment and income generation, loss of international currencies from imports of technologies not developed and produced in the country and more significant inefficiency greenhouse gas mitigation.

The originality of this study is in the contribution to the scarce literature on the understanding of the reasons for the lack of competitiveness of the Brazilian sugarcane sector in auctions of the regulated energy environment, based on SWOT analysis and, based on this understanding, to propose solutions for the expansion of this important matrix energy.