Biomass thermal generation soars in Brazil

Biomass-fired plants were responsible for more than half of Brazil's power generation last week for the first time this year, as other thermal plants remain off-line for maintenance and higher hydropower generation reduced thermal demand.

Biomass-only plants — which benefit from low operational costs and mostly dispatch at the spot price (PLD) — accounted for 17pc of the thermal dispatch last week. Small thermal plants (PQUs) with mostly biomass generation (described as "others" in Argus thermal power load charts in the Argus Brazil Gas and Power report) added up to 40pc of power, accounting for a total of 4.4GW of the 8GW in thermal power load last week.

With water storage levels in hydropower dams in the country's power system at 70.4pc of capacity last week, Brazil does not need to include fuel-fired thermal generation to its power load, allowing for 61pc of the total power load in Brazil to come from hydropower generation.

Natural gas was the second most dispatched thermal source last week after biomass, at 23pc, at an average of 1.8GW. The majority of this generation is due to inflexibility in gas contracts, such as for take-or-pay clauses in gas contracts.

Nuclear thermal generation has also decreased the total thermal power load, with Angra 2 nuclear plant's maintenance leaving only Angra 1 operating, contributing 647MW to the thermal load, or 8pc of the total. 
Angra 2 maintenance is almost complete, but there is not yet a timeline for power dispatch to resume, Angra 2's operator Eletronuclear said.

Small thermal plants can generate power without grid operator ONS' approval. They are free to set long-term supply contracts and sell any surplus on the spot market or negotiate spot-exclusive contracts with favorable conditions to operate on the free market.

PQUs have zero fuel costs (CVUs) and typically sell power at the spot price or under bilateral contracts.

The power spot price level was at R70/MWh ($12.82/MWh) on 21 July, an increase from a week prior, as the dry season advances.

Biomass generation is also influenced by the sugarcane milling season, which creates bagasse as a by-product. Power generation through an otherwise residual product can be used as a way to increase revenue, as most of Brazil's center-south sugarcane mills began cropping season later than usual because of unfavorable weather conditions.

By Rebecca Gompertz