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MECAS(09)05 - Cogeneration – Opportunities in the World Sugar Industries

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A survey of already installed cogeneration capacity in the sugarcane processing sector as well as existing development plans shows that bagasse-based production of electricity for export to the national grid is fast becoming a major activity of sugar mills. An increasing number of mills in a growing number of countries are already involved or are planning to start in the near future electricity production in excess of captive consumption.

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A review of the current situation and prospects for cogeneration in 13 countries in Africa, Asia, Latin America and Oceania shows that the scope for efficient, competitive and environmentally friendly electricity production could be sizeable. In technical terms, the amount of energy that can be extracted from bagasse is largely dependent on two main criteria: the amount of processed cane and the technology used for energy production. Crucially, only the use of high-efficiency boilers generating extra high pressures and temperatures allows production in excess of the captive consumption of a mill. The cost of boilers and their installation is relatively high but, as shown by projects in Brazil and Thailand, capital investment costs may be recovered by revenues from electricity exports to the national grid in a period not longer than 5 years. On the other hand, the success of cogeneration by sugarcane mills is fully dependent on the existing legal framework and the prevailing electricity market rules. Firstly, the electricity generation and supply to the national grid has to be allowed for sugarcane mills. Secondly, prices paid to mills by the utility company have to be adequate. Power Purchasing Agreements have to be long-term. The legal framework has to ensure fair and easy access to the grid for sugar mills. To kick-start the process in the sugar industry financial and tax incentives in line with incentives offered for other generators of renewable energy are of great importance. Financial aid from national and international development agencies is particularly important in the time of the global credit crunch, when normal commercial financing is rarely available or too expensive.

 

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