Ministry of Agriculture, Livestock and Food Supply - Embrapa

it would be necessary to set up at least 15 new processing units every year for
the next five years, and another ten units per year during the three following years.
On the basis of a standard profile of two million tons/year for each plant,
these 100 new undertakings and the remodeling of other projects would be sufficient
to meet the predicted growth of the domestic and foreign sugar and alcohol
markets. Nevertheless, it is necessary to consider both the internal and external
demand for equipment and services from the sugar & alcohol sector, whose
expansion needs have been fulfilled by our base industry. Brazilian suppliers are
now responsible for the equipment of practically 80% of the installed sugarcane
alcohol capacity in the world. They operate to capacity and have difficulties in
accepting new orders, particularly for delivery periods of less than three years.
The insufficient capacity of our base industry could become an obstacle to the
consolidation of the international fuel alcohol market.
The very favorable scenario for sugar and alcohol has led sector
businessmen to invest more in the expansion of the processing capacity than
in achieving increased energy efficiency, not only in the units already installed
but also in those being built. The greater profitability of the traditional products,
together with the heavy costs of investing in more efficient technology for the
cogeneration of electric power, has put cogeneration in the back burner.
If the processing goal were met – 610-million tons of sugarcane by the
2012/2013 harvest, in addition to supplying 36.5-million tons of sugar and
27.4-billion liters of alcohol – more than 160-million tons of bagasse would be
available. If all the bagasse were burned in high-pressure boilers, the equivalent
of 66 GW of electric power, i.e., 16.5 GW/h could be generated during the
average yearly 4,000-hour harvest period by using the sugarcane straw and
styles, which are usually burned in the field.
Two factors help explain the lack of interest in electric power cogeneration
investments. Firstly, the scarce experience in this new business, which can
even hinder client relations. A second and equally important factor is associated
with the higher costs of the more efficient technologies. These costs have led
investors to choose intermediary technologies, with boilers of 40-60kg of
steam, which usually bring higher rates of return in the short term and require
less capital investments. Since this type of equipment has a relatively long working
life, the units could work for decades while underusing the bagasse potential.
Also to be considered are the uncertainties of the wholesale energy market and
the lack of experience of sugar mill operators with that type of negotiation.
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