Barriers to the Expansion of Sugarcane Bioelectricity in Brazilian Energy Transition

Abstract

This article evaluated bioelectricity’s evolving competitiveness and systemic complementarity benefits, both in comparison with other renewable sources. To do so, the results of several energy auctions were analysed, and a modelling exercise was developed using an optimisation model based on stochastic dual dynamic programming. The results indicate that wind and solar energies became the least cost expansions, and sugarcane bioelectricity lost significance and competitiveness in this environment. At the same time, the study shows that wind power’s potential to be complementary to hydropower generation is greater than bioenergy in Brazil. These findings have relevant policy implications regarding the power sector and whether bioelectricity from sugarcane should still be incentivised along with wind power sources. It is worthwhile to point out that although the Brazilian case is explored in the article, it can be used as an example by other countries, especially developing ones, that can take advantage of Brazilian expertise on biomass exploitation aiming at integration with the power sector.