Brazilian biogas seeks space in power market

Brazil's biogas sector is trying to find space in the power market, especially in the regulated segment.

Water reservoirs that feed hydropower generation are at record-high levels, leaving little immediate opportunity for biogas. But market participants are waiting for a drought — such as the one Brazil faced in 2021 —to understand which opportunities will present themselves, energy trading firm Comerc's director of regulatory and institutional issues Ana Carla Petti said at Brazilian biogas producers' association Abiogas' technical seminar last week.

Panelists at the event pointed to power capacity tenders as a possible niche biomethane could explore. These tenders were established last year to offset the intermittent nature of renewable solar and wind plants, which have been expanding rapidly in Brazil.

Eletrobras' thermal plant mandate might also pose an opportunity for biomethane generation. Brazil's natural gas legislation equates biomethane to natural gas, so biomethane power projects are always allowed to compete in natural gas-specific generation tenders.

Biomethane can also benefit from the lack of pipeline infrastructure in the regions indicated by the Eletrobras mandate, according to Jose Roberto Filho, a power market analyst at Schneider Electric. Usually, biomethane plants are far from Brazil's pipeline network and transport their products through trucks.

In the distributed generation segment, the government could boost biogas usage if it took reference values used to pay distributors (VR) for this type of generation and matched it to those used for urban solid waste projects, according to Sidnei Vital Guimaraes, business development manager at energy solutions firm Aggreko.

Distributors can freely purchase up to 10pc of their power demand from any source, including distributed generation. But there is a price cap set by electricity regulator Aneel, which represents the maximum amount distributors can pass through to their tariffs. Biogas' VR is R390/MWh ($77.66/MWh), while solid waste's is R561/MWh.

There are other opportunities in the distributed generation segment for biomethane. For instance, biogas generator EVA Energia has implemented a biogas capture program for swine waste in a farm in Mato Grosso state. The company captures the gas to generate electricity used in the farm.

Market participants also see opportunities in the renewable hydrogen generation business, because purifying biogas into biomethane lead to concentrated CO2. That could easily be used as feedstock for hydrogen generation, according to the panelists.

By Rebecca Gompertz