Brazil sees biogas as power mandate alternative
Infrastructure market participants believe Brazil may use biomethane to fulfill Eletrobras' thermal power mandate, which would enable the construction of a new pipeline in the country's heartland.
The new gas-fired power plant requirement was added to the 2021 law that privatized power company Eletrobras and would lead to the construction of the 905km (562-mile) TGBC gas pipeline into Brazil's heartland.
The law required 8GW of gas-fire power generation capacity would need to be built in rural parts of the country, anchoring demand for the pipeline.
But this goal failed to come to fruition because an auction to sell a portion of the gas-fired power generation did not have enough bidders. The government held the first Eletrobras power tender last year, but only received offers for 75pc of the 1GW demand in northern Amazonas state and no offers for other states.
The result led some power sector advocacy groups to lobby congress to change the Eletrobras law to shift the remaining non-auctioned power capacity onto other sources, to stimulate their sectors.
Biomethane has emerged in discussions as an alternative that could make the construction of the pipeline economically viable as it can get higher final prices than regular natural gas because of its renewable attributes. A pipeline connecting biomethane plants to consumers would also find less political resistance, also because of its renewable characteristics, some groups in the industrial sector said.
A study funded by a coalition of Brazilian industries showed that taking natural gas to Minas Gerais state — instead of moving it to locations served by existing pipelines — would increase gas prices by around $3/mnBtu.
Market participants point to small hydroelectric plants as one of the most likely suppliers to benefit from these revisions, a source in the power sector told Argus. Brazil's power demand is oversupplied in the regulated market, leaving little room for thermal plants such as the ones in the Eletrobras mandate tenders. The only alternative, these participants point out, would be holding power capacity tenders to supply the country in moments of peak demand.
Congress members opposed to the mandate say they would prefer to end the obligation altogether, an opposition party government official told Argus. Some members of congress say that is highly unlikely to happen, as redistributing the 8GW of power projects among other generation sources — such as wind, solar, small hydroelectric and offshore generation plants — would be a more straightforward path than changing the law.
Related news posts
US-led carbon initiative misses launch date
US-led carbon initiative misses launch date
Houston, 23 April (Argus) — The Energy Transition Accelerator (ETA), a global initiative to use voluntary carbon market revenue to speed the decarbonization of developing countries' power sectors, has missed its planned Earth Day launch but continues to prepare for doing business. At the Cop 28 climate conference in Dubai last year, the initiative's leaders said they hoped to formally launch the program on 22 April 2024 . That didn't happen, but the program's leaders last week announced that the US climate think tank Center for Climate and Energy Solutions will serve as the ETA's new secretariat and that former US special presidential envoy for climate John Kerry will serve as the honorary chair of an eight-member senior consultative group that will advise the ETA's design and operations. The ETA plans to spend 2024 "building" on a framework for crediting projects they released last year. ETA leaders said the initiative could ultimately generate tens of billions of dollars in finances through 2035. The ETA also said the Dominican Republic had formed a government working group to "guide its engagement" as a potential pilot country for investments and that the Philippines would formally participate as an "observer country" rather than as a direct participant immediately. The ETA is still engaging Chile and Nigeria as potential pilot countries too, the initiative told Argus . The ETA is being developed by the US State Department, the Rockefeller Foundation, and the Bezos Earth Fund and would be funded with money from the voluntary carbon market. The initiative's ultimate goal is to allow corporate and government offset buyers to help developing countries decarbonize their power sectors through large projects that accelerate the retirement of coal-fired power plants and build new renewable generation. As of now, the ETA's timeline for future changes and negotiations with countries and companies is unclear. The program's goals are ambitious, especially at a time when scrutiny of some voluntary carbon market projects from environmentalists has weighed on corporate offset demand. By Mia Westley Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Higashidori No.1 reactor faces further delays
Japan’s Higashidori No.1 reactor faces further delays
Osaka, 23 April (Argus) — Japanese utility Tohoku Electric Power has confirmed a further delay in reinforcement works at its 1,100MW Higashidori No.1 nuclear reactor, with its completion date unknown. The postponement in restarting the Higashidori reactor in northern Aomori prefecture would encourage Tohoku to secure replacement thermal fuels — such as LNG and coal — for an extended period, although the company is planning to resume another reactor in September. Tohoku previously aimed to complete the reinforcement work at Higashidori in the April 2024-March 2025 fiscal year. But the company needs more time to clear all the procedures for the assessment of basic earthquake ground motions and tsunamis, and to prepare for the plant inspection. It is still unclear when the company will complete the safety measures. The Higashidori reactor is undergoing inspections by Japan's nuclear regulation authority (NRA), based on stricter safety rules following the 2011 Fukushima nuclear disaster. The reactor will need to pass the safety checks and secure approval from local governments before restarting. Tohoku has three commercial reactors, including two at Onagawa in Miyagi prefecture and the Higashidori No.1 reactor, of which it applied to restart two. The 825MW Onagawa No.2 reactor has already cleared the NRA's safety inspections and obtained permission from local authorities to restart. The company is now planning to restart the Onagawa No.2 reactor in September . The possible return of the Onagawa No.2 reactor will help Tohoku reduce consumption of thermal fuels. The company used 2.76mn t of LNG in April-December 2023, up by 12pc from a year earlier, in the absence of all its nuclear reactors. But its coal consumption fell by 12pc to 5.68mn t during the period. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Colombia's electricity woes add to unrest against Petro
Colombia's electricity woes add to unrest against Petro
Bogota, 22 April (Argus) — Colombians took the streets of major cities and towns across the nation on Sunday to protest mainly against health, pension and labor changes, but potential power outages are also creating discontent. Authorities estimated that about 250,000 Colombians marched in widespread protests, sparked by changes in healthcare. Congress in April had rejected President Gustavo Petro's proposals in the sector, and the government the next day seized the two largest private-sector health insurers. Protesting healthcare workers say the government did this to implement changes through a back channel. "Regulatory noise and risk are likely to remain high amid announcements, proposals, and measures [that do not require congressional approval], aimed at changing the game's rules in strategic sectors," brokerage Credicorp Capital said. Colombians also protested being on the verge of electricity rationing like that in neighboring Ecuador as hydroelectric reservoirs remain at record-low levels. Several unions and other associations have long warned the Petro administration to take measures to offset the effects of the El Nino weather phenomenon. Electricity distributors last year called for allowing bills for energy purchased on the spot market to be deferred and for loosening price index rules, among other proposals. The national business council sent at least three letters to the president on the issue. At least nine separate letters calling for preparation to prevent blackouts were sent to the president and ministers. Several actions were only recently implemented . "There are no risk of electricity rationing in Colombia," former energy minister Irene Velez said in 2023. "We do not understand why some people are interested in generating panic." Government weather forecasts also overestimated rainfall expected for March, leading hydroelectric plants to use more water in the reservoirs than they otherwise would have, said director of the thermoelectric generation association (Andeg) Alejandro Castaneda. Reservoir levels stood at 29.5pc today, rising thanks to rains since 19 April, up from 28.75pc on 18 April. Electricity rationing is set to begin when reservoirs drop below 27pc, according to grid operator XM. By Diana Delgado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil RNG supply still seeks demand
Brazil RNG supply still seeks demand
Sao Paulo, 22 April (Argus) — The mismatch between growing Brazil biomethane supply and consumers willing to pay its higher prices still looms over projects expected to go on line in the next few months. There are three projects pending final approval from hydrocarbons regulator ANP to begin operating: Adecoagro's 14,400 m³/d plant in Mato Grosso do Sul, H2A Soluções Ambientais's approximately 4,300 m³/d plant in Goias and Raizen-Geo Biogas' 130,400 m³/d plant in São Paulo. The regulator has no timetable for final approvals. Another 10 biomethane plants, adding up to more than 502,400 m³/d, are scheduled to finish construction this year. Still, most of the upcoming projects lack customers for the additional supply, according to market sources. Finding buyers for this more-expensive natural gas substitute can be difficult, as relatively few companies have specific budgets for decarbonization. Brazil has six plants with ANP authorization to produce and sell about 417,100 m³/d of biomethane. Another 139,000 m³/d of capacity is scheduled to become operational in 2025, bringing total certified biomethane supply to at least 1.2mn m³/d in the next two years. First movers in the biomethane consumer market have been paying a premium to the parity price against natural gas. This premium represents the value of the lower carbon levels in biomethane, which does not always carry tradable certification. Brazil's lack of a market for biomethane guarantees of origin, such as biomethane renewable energy certificates (Gas-RECs), is also inhibited by doubts about the main emissions reporting platform, the GHG Protocol. In 2015, the GHG Protocol allowed the use of biomethane certificates to offset emissions, only to remove them from their documents in 2020, citing the need for more studies. Countries that created regulatory mechanisms before the GHG Protocol changed course have a competitive advantage over Brazil, according to Fernando Giachini Lopes, director of Instituto Totum, which certifies biomethane renewable energy certificates (Gas-RECs) and I-RECs in Brazil. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more