Power cuts raise alarm at Brazil’s sugar-energy mills

The ONS notified 12 power distributors on Saturday, June 6, that they would have to cut generation by 1 gigawatt (GW) from 10 a.m. to 2 p.m. the next day. Each distributor was responsible for allocating the cut among the plants connected to its network and notifying them one day in advance, as provided for in the ONS Emergency Plan for Managing Power Surpluses in the Distribution Grid, which was submitted to the National Electric Power Agency (Aneel).

It was the first time the ONS triggered the generation-restriction plan for type 3 plants. Until then, only wind and solar plants under the operator’s direct control had been subjected to cuts. Over the past two years, curtailment has become recurrent for wind and solar power, mainly because of the expansion of micro and mini distributed generation, which has begun meeting demand during the day, precisely when consumption is lower.

Cuts at biomass thermal plants, however, are not as simple as at solar and wind farms. The sugar-energy industry fears that new activation of the plan could disrupt sugarcane crushing, sugar and ethanol production, and the operational stability of mills’ systems.

Because biomass plants use thermal energy from burning sugarcane bagasse to generate power and steam, both of which are also consumed by the mills themselves, the concern is that even a simple reduction in generation could affect steam production and compromise crushing. The risk is greater at mills without condensing turbines, which make up the majority of the sector.

Valor found that most mills that cogenerate power from sugarcane bagasse had to comply with instructions to reduce or cut generation on June 7. There were reports of companies that also had to reduce or even suspend sugarcane crushing as a side effect, but industry sources said those cases were isolated.

CPFL Paulista, for example, called on 86 plants under the curtailment plan, 55 of which were biomass units. Cemig also activated all plants with which it has contracts, in an equal manner, the company said.

Tereos was one of the sugar-energy companies that had to reduce output, but said it did not record “relevant losses in sugar and ethanol production.” In a statement, the company said that “at the five units in operation, there was no significant impact from the activation of the plan.”

Tereos said it already has an “operational flexibility strategy” to adapt production, had been working with that possibility, and that “its teams were prepared to reorganize activities throughout the day, considering possible temporary stoppages, without relevant losses in sugar and ethanol production.”

Even mills without condensing turbines managed to adapt their processes without affecting crushing. Mills without condensing turbines also managed to adjust their processes without disrupting crushing. Usina Alta Mogiana halted generation for the full four-hour period, while Usina Batatais reduced the energy it injected into the grid by 60%. Usina Ferrari also cut its power delivery.

Operational risks

Although the impact for most mills was limited to the energy they stopped injecting into the National Interconnected System (SIN), and the resulting loss of revenue, companies are concerned about possible new curtailment episodes.

“When I no longer have exports [to the system], I need to operate the generator at a lower load. But it still has to run because I need electricity in the industrial process, and that means less steam for the turbine because it is no longer operating at its nominal capacity. That stage is not stable,” said Newton Duarte, president of the Energy Cogeneration Industry Association (Cogen).

In the words of Fábio Venturelli, CEO of São Martinho, “it is as if you were driving a four-wheel-drive car and suddenly had to keep going with one wheel locked, while keeping the car moving and balanced until the destination.” The major concern, he said, is that a reduction in generation could end up altering the mill’s entire energy system. “This could lead to an accident, a fatality,” Venturelli said.

For Luiz Gustavo Junqueira, commercial director at Usina Alta Mogiana, requiring a mill to stop for a few hours is deeply counterproductive. “Operationally, it can be a disaster,” he said. “To maintain the crushing pace, a mill cannot stop once it starts crushing. [With a shutdown], sugar and ethanol production costs go through the roof.”

Even when a mill is able to modulate generation, it may face a problem with surplus sugarcane bagasse. “Many times the mill has no structure to store bagasse, and [then it] will have to find a buyer at a moment’s notice,” the mill owner said. The bagasse market, however, is limited because there are few buyers, and selling to clients located far away is not efficient.

There is also a risk that a prolonged shutdown could affect a company’s own revenue. “If the mill stops producing sugar and ethanol and fails to meet its contracts, it has a lost-profits problem,” warned Duarte, of Cogen.

In June, companies dealt for the first time with curtailment, which requires plants that use biomass to generate electricity to suspend operations.

No quick fix

The power generation cuts at type 3 plants, the group that includes cogeneration units using sugarcane biomass, are worrying, but there is no solution in sight, said Alexandre Leite, a partner in the energy practice at Dias Carneiro Advogados. “For cogeneration, there is no provision for reimbursement [for energy that is not sold]. There is only one for renewables,” he noted. In Leite’s view, solving the dispute would require legislative changes.

Distributors say they are only following orders from the National Electric System Operator. “We understand that the losses caused by the interruption of energy resulting from a determination by the system operator (…) do not characterize a failure to provide the service,” the Brazilian Association of Electric Power Distributors (Abradee) said in a statement.

On distributors’ ability to choose which plant will face curtailment, Abradee said that “from the beginning it has defended that curtailment criteria be transparent, technically grounded, and that they consider the operational specificities of each generation unit.”

The ONS said that “the general guidelines of the [Surplus Management] Plan were presented in a workshop for all agents involved, especially distributors and Aneel,” to “ensure broad transparency, disseminate understanding of the importance of the measure, and obtain contributions that allow its practical applicability to be improved.”