Sugaronline Editorial - Bagasse means business By Meghan Sapp
Published: 01/20/2017, 11:47:00 AM
Ever-improving technologies are helping mills to secure their bottom lines using their bagasse.
Burning sugarcane bagasse for electricity is hardly new, but a new wave of investment in ever-more efficient technologies has mills looking at opportunities to diversify their incomes and boost bottom lines. With yet another global surplus on its way, finding ways to offset lower sugar prices through electricity or biofuels can be one way of keeping afloat in a bear market.
Thailand’s Buriram Sugar is just the latest in a string of new investments in bagasse-based power. The company announced this week that it was setting up an infrastructure investment fund to build the company’s fourth biomass plant, in addition to its first white sugar refinery. Though drought has hindered cane production, production is expected to recover and bring along with it enough biomass to justify an additional plant in addition to the two 8MW plants and one 9MW plants it already has.
From Jamaica, where sinking mill Long Pond is getting support to invest US$42 million in cogeneration, allowing it to develop a new revenue stream, to Fiji where income from bagasse cogeneration almost equals that from sugar, cogeneration is a must to ensure financial health of mills.
Pakistan has made investment in bagasse cogeneration a priority, with the government establishing clear rules from Power Purchase Agreements with fixed rates for the mills, with as much as 700MW of power currently possible during the November to February crush period. Another 387MW are under development that should be online by 2018.
But without those clear policies to drive investment, it can be difficult to encourage upgrades to modern, efficient boilers and secure long-term sales contracts to the grid. That’s especially true when low sugar prices have negatively impacted mills’ bottom lines or where the short deficit period has only begun to help mills get back on their feet. UNICA says that policies in Brazil have not supported bagasse as they should have, which has kept the industry from benefiting as much as it could so it’s not surprising that investments in 2017 will be slower than hoped.
So with Brazilian mills unable to invest, other options are beginning to emerge, like Colombia’s Manuelita that has been awarded a 25-year contract to sell 30MW from its Vale do Paraná subsidiary—but not until 2021. The company also plans to invest US$19.3 million to produce cogeneration power for sale to the national grid in Colombia. And when Brazilian mills can’t use all of their bagasse, there may even be options for exporting it in the form of pellets. Japan’s Sumitomo is already producing 175,000 tonnes of pellets for export in a joint venture with Cosan, which could increase to as much as 2 million tonnes by 2020.
There’s so much that can be done with bagasse that cogeneration is only the beginning. From gasification like is being done in the Philippines to cellulosic ethanol in Thailand or advanced biofuels in Australia and elsewhere, the possibilities are endless.