PROJECT DEVELOPMENT FACILITY
REQUEST FOR Pipeline Entry and PDF Block B APPROVAL
FINANCING PLAN (US$)
GEF ALLOCATION
AGENCY’S PROJECT ID: 3515
GEFSEC PROJECT ID:
COUNTRY: Brazil
PROJECT TITLE: Energy Generation at Sugarcane
Mills Using Trash and Bagasse
GEF AGENCY: UNDP
OTHER EXECUTING AGENCY (IES): CTC-Centro
de Tecnologia Canavieira
DURATION: 5 years
GEF FOCAL AREA: Climate Change
GEF OPERATIONAL PROGRAM: OP 6: Promoting
the Adoption of Renewable Energy by Removing
and Reducing Implementation Costs
GEF STRATEGIC PRIORITY: CC-5
ESTIMATED STARTING DATE: June 2005
ESTIMATED WP ENTRY DATE: May 2006
PIPELINE ENTRY DATE:
Project (estimated)
Project Co-financing
 CTC
 Manufacturers
 Sugarcane mills
 MCT/FINEP/other
Project Total co-financing
estimated:
Project Total estimated:
6 to 8,000,000
62,800,000
3,750,000
250,000
55,800,000
3,000,000
62,800,00
68,800,000
70,800,000
PDF A*
PDF B**
350,000
PDF C
Sub-Total GEF
350,000
PDF CO-FINANCING (details provided in
Part II, Section E – Budget)
GEF Agency
National Contribution
Others (CTC)
300,000
Sub-Total Co-financing:
300,000
Total PDF Financing:
650,000
RECORD OF ENDORSEMENT ON BEHALF OF THE GOVERNMENT:
Carlos Eduardo Lampert Costa
Date: April/04/2005
Ponto Focal Operacional do GEF no Brasil
Ministério do Planejamento, Orçamento e
Gestão - SEAIN
This proposal has been prepared in accordance with GEF policies and procedures and meets the
standards of the GEF Project Review Criteria for approval.
Oliver Page
Regional Coordinator for Latin America and
the Caribbean in Energy and Climate Change
Tel.: (507)302-4548
e-mail: oliver.page@undp.org
Yannick Glemarec
Deputy Executive Coordinator
UNDP/GEF
Date: 14 October 2005
1
LIST OF ACRONYMS AND ABBREVIATIONS
bar
BEN
BIG-GT
BNDES
CENBIO
CEST
CO2
CTC
ESALQ
FINEP
GEF
GHG
IPT
ISSCT
MCT
MJ
MME
MSRI
MW
PPA
PROINFA
RE
SMA
SMRI
SRI
STAB
TPS
UNDP
UNICA
UNICAMP
UNIFEI
WBP
Unit of pressure (1 bar = 105 Pascal)
National Energy Balance
Biomass Integrated Gasification/Gas Turbine Technology
National Bank for Economic and Social Development
Brazilian Reference Center in Biomass
Condensing, extraction steam turbine
Carbon dioxide
Centro de Tecnologia Canavieira, formerly Centro de Tecnologia
Copersucar
Agricultural College Luiz de Queiroz - University of São Paulo – Brazil
Financiadora de Estudos e Projetos (Governmental Financing Agency for
Projects and Studies)
Global Environmental Facility
Greenhouse gas
São Paulo Institute of Technology – Brazil
the International Society of Sugar Cane Technologists
Ministry of Science and Technology of Brazil
1,000,000 Joules
Ministry of Mines and Energy
Mauritius Sugar Industry Research Institute
1,000,000 Watts
Power Purchase Agreement
Incentive to Alternate Sources Program
Renewable energy
The Secretary of Environment of the State of São Paulo
Sugar Milling Research Institute - South Africa
Sugar Research Institute – Australia
Brazilian Society of Sugar Technologists
Termiska Processer AB – Sweden
United Nations Development Programme
Union of the Cane Agro-industry of São Paulo
University of Campinas – Brazil
Federal University of Itajubá – Brazil
Project BRA/92/G31 – Brazil Biomass Gasifier/Gas Turbine Power Plant
Demonstration
PART I - PROJECT CONCEPT
A – SUMMARY
Problem Statement (preliminary gap analysis)
1. Energy generation with sugarcane bagasse and trash has the potential to supply a
substantial amount of electricity in Brazil. However, this potential has not been
developed to date. There is the need to develop the necessary technology (strategy and
equipment) to implement trash recovery and its use as supplementary fuel to bagasse at
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sugarcane mills, at attractive cost and without hindering mill operations. If this can be
done, it will be possible to produce electric energy year round with renewable fuel, selling
guaranteed electricity at a profitable basis to end consumers, assuring the sustainability of
the project.
Baseline
2. Electric power generation at the sugarcane mills is a reality, with the production of
surplus energy to the grid growing very slowly. The not so attractive prices obtained for
the seasonal energy produced to the grid, with the use of bagasse only, has inhibited
larger investments in generation. Most mills that have already moved to larger power
generation scale happened to be investing in new boilers at the time when energy prices
were high (energy shortage). Other mills that have problems with the trash left in the field
(pests and cane sprouting delay for example) will keep on trying isolated solutions to get
rid of the trash. To solve these problems, most of the mills are investing in pest control,
varieties less susceptible to the presence of trash and adequate equipment for tillage and
other field operations.
3. It is important to point out that even during the power shortage period when several
sugarcane mills got contracts with high energy prices, none of them succeeded in using
trash. If, in the near future, energy prices continue to increase, many sugarcane mills
might invest in power generation systems, but trash will remain not being used as a fuel
due to the lack of experience with adequate technology and a full cost-benefit evaluation.
4. Not using trash results in the waste of a renewable source of energy to produce energy
year round, and will lead to the growth of natural gas thermal units as a means to provide
the electric energy demand growth in the country. The baseline course of action leads to
negative global environmental impacts, as the main sources of new electric energy will
rely on fossil fuel based sources.
GEF Alternative
5. A successful implementation of sugarcane trash recovery and its use as a supplementary
fuel to bagasse to generate electric power in a sugarcane mill, using conventional
boiler/steam-turbine systems (preferably 65 to 82 bar boiler and CEST), would make it
possible to generate a significant amount of power to the grid and create the necessary
conditions for the generation year round (season and off-season). The end of project
scenario is characterized by the following:

The studies of the alternative scenario will generate knowledge about trash (potential,
recovery system, handling, agronomic impacts, economics, etc.) and its use for energy
generation in sugarcane mills with a sufficient level of technology to warrant cost
effective and sustainable operation.

The development of the necessary new equipment (and prototypes when necessary),
for the whole system of trash recovery and use, with the manufacturers, will make the
information and necessary technology immediately available for the market.
3

Being able to generate electric power year round opens the range of possible
consumers (autonomous consumers) making it likely to obtain better prices for the
energy, which would make several new cogeneration projects at sugarcane mills
economically viable, with significant amount of electric power being exported.

The contact of the sugarcane sector with possible consumers will strengthen the
relationship among producers and consumers, widening the possibilities of new
investments in energy production at the mills.

Investments and operational costs incurred to solve the problems caused today by the
trash left in the field after unburned cane harvesting (pests, cane yield reduction, etc.)
would not be necessary (or can be reduced), and these resources directed to trash
recovery actions.

The energy produced at the mill will be grid connected and has the advantage of
decentralized electricity production. Sugarcane mills are usually close to cities and
potential consumers, reducing losses and transmission costs.

The new activities performed at the mill will bring employment and other economic
as well as social benefits of locally produced and nationally sold renewable energy
and lengthening of the local production chain with consequential added value using
renewable energy as process input.

Project implementation will make a direct contribution to the reduction of GHG
emissions (to be calculated during PDF execution) by replacing fossil fuel usage with
renewable energy.
B - COUNTRY OWNERSHIP
B.1 Country Eligibility: Brazil is eligible for GEF financing since it signed the UNFCCC on
June 4th, 1992 which was ratified by Congress, in accordance with the National Constitution,
by means of the Decree no.1 of February 28th, 1994. The Convention entered into force for
Brazil on May 29th, 1994, 90 days after its ratification by the National Congress.
B.2 Country Driveness
6. Hydropower’s share of 86% of the country’s electricity has a positive aspect of renewable
energy use, but leaves the country exposed to the seasonality of the water availability
which has caused several localized problems in the past. With the privatization of
government utilities and the changes in regulations the participation of the private sector
in electric power business increased significantly, and new investments to increase
electric power availability were expected.
7. The low tariffs culture, inherited from the times when the Government owned the power
sector, survived even with privatization and discouraged large investments in new power
plants and high voltage transmission lines. These facts associated with a lower than
average rainfall in 2001 resulted in this power shortage. This created favorable conditions
for the implementation of thermal power plants and as a consequence several gas fired
4
plants are being planned; the biomass could take a share of these new plants if adequate
conditions are created to permit it to compete with fossil fuels, especially natural gas.
8. An important support has been given to renewable energy by the Congress approving the
Federal Law No. 10438, on April 26, 2002, which creates a market reserve for wind
power, small hydro plants (up to 30 MW) and biomass. This law created the PROINFA –
Programa de Incentivo a Fontes Alternativas (Incentive to Alternate Sources Program).
The implementation of PROINFA defined in Phase 1 a quota of 3300 MW until 2006 for
renewable energy divided among wind power, small hydro and biomass, setting prices for
each of them; in Phase 2 - After 2006, 15% of new power generation has to come from
renewable sources until they reach a share of 10% of the total electric energy
consumption.
9. It was expected that sugar/ethanol mills could have the largest share in biomass power
generation, with the advantage that mills are normally located near large consuming
centers. Nevertheless, recent decrees have allowed great electrical consumers (at least 3
MW and 69kV) to become free from public utilities and these consumers can be
connected to the grid system in 13.8kV, if they buy energy from renewable sources. This
will probably benefit both, the energy generator and the consumer, with better energy
prices. Today there is a wide gap between the value received by the energy generator and
what is paid by the consumer. It is expected that energy generators will get the better
prices producing year round energy, since it will be the most demanded.
10. An increase in the country demand for energy is going on, with the need for new utility
power plants, what would be an important opportunity for sugarcane mills if they can
generate power year round. Therefore, this project is consistent with national priorities
and policies for the energy sector and for renewable energy production, in particular as
expressed through PROINFA.
C. PROGRAM AND POLICY CONFORMITY
C.1 Program Designation And Conformity
11. The proposed project fits into the GEF Focal Area of Climate Change and addresses
Operational Programme 6: Promoting the Adoption of Renewable Energy by Removing
Barriers and Reducing Implementation Costs. This project will fall under Strategic
Priority 5, Global Market Aggregation and National Innovation for Emerging
Technologies. It will potentially have a positive impact even on sugar production in annex
1 countries, where attempt to use trash has still to result in full scale implementation.
C.2 Project Design
a) Project Background
Present Situation
12. In Brazil, 41% of the energy matrix is renewable (the world average is 14%, and in
developed countries 6%). Biomass contributes with 27%, while hydraulic power responds
for 14% (BEN 2003). Hydropower contributes with 84% of the country’s electricity. The
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high hydro power plants installed capacity has a positive aspect of renewable energy use,
but leaves the country exposed to the seasonality of the water availability.
13. In the late 90’s the government owned the power sector (based mostly on hydroelectric
power) and decided to move towards privatization and changes in regulations with the
purpose of attracting new investments for the sector. Unfortunately, the low tariffs
culture, inherited from the times when the government owned the power sector, survived
even with privatization and discouraged large investments in new power plants and high
voltage transmission lines. This fact associated with a lower than average rainfall in 2001
resulted in a severe power shortage (with a rise in the tariffs). This created favorable
conditions for the investment namely in thermal power plants and as a consequence
several gas fired plants are operating.
14. The power shortage lasted for almost a year. During this period some sugarcane mills
interested in selling energy to the grid, but waiting for better energy prices to invest in
higher pressure boilers and turbo-generators managed to get good power purchase
agreements covering the harvesting season, with prices of energy reaching values up to
R$ 135.00/MWh (before crisis best contracts were of R$70.00/MW). The power surplus
of sugar mills has increased from nearly null in 1999 to around 500 MW. The installed
capacity, including the required power for self consumption, in the Brazilian sugar cane
sector is estimated to be around 1,600 MW.
15. During the period of shortage, the government, together with the power companies,
imposed a rationing regime to the consumers and an increase in energy prices to cope
with the lack of energy. This stressing situation had the positive side effect of teaching the
population how to save energy and introducing more efficient equipment in the industry
and business buildings. The result was a significant reduction in the average power
consumption and the end of the rationing regime. Even after the ending of the rationing
regime, power consumption did not increase immediately. The incorporated technology
and new population habits set a level of energy consumption by nearly 20% lower than
before the crisis. As a consequence, the interest of the private power companies in buying
energy has vanished and new projects and investments in sugarcane mills to generate
power have stopped.
16. In April 2002 a Federal Law created the PROINFA - Programa de Incentivo a Fontes
Alternativas (Incentive to Alternate Sources Program) creating a market reserve for Wind
Power, Small Hydro Plants (up to 30 MW) and Biomass with a guaranteed price and
purchase of the produced energy for 20 years. Its implementation was planned in two
phases: Phase 1 - Insertion of 3,300 MW of renewable energy starting production until
the end of 2006 (equally divided among Wind Power, Small Hydro and Biomass); Phase
2 - After 2006, 15% of new power generation has to come from renewable sources until
they reach a share of 10% of the total electric energy consumption in the country. The
main objective of PROINFA is to increase electric power generation and diversify the
energy matrix with regional solutions and the use of renewable energy.
17. It was expected that sugar/ethanol mills could have the largest share in biomass power
generation with addition of surplus power generating capacity in the range of 10 to 100
MW per participating mill, with the advantage that mills are normally located near large
consuming centers. Nevertheless, the price of R$ 93.77 set for the energy produced from
bagasse discouraged most sugarcane mills. At the end of 2004, after the second call,
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bagasse had only 655 MW, while Wind Power (minimum price of R$ 180.18/ MW) and
Small Hydro (with R$ 117.02/MW) had fulfilled their quota of 1,100 MW each at the
first call. Thereafter, the government decided to fulfill the quota for Biomass with the
other two renewable energy sources, resulting in 1,379 MW for Wind Power and 1,266
MW for Small Hydro, summing the 3,300 MW planned by the program.
18. Power generation in the majority of sugar/ethanol mills is still limited to the harvesting
season (6 to 7 months/year) and at levels sufficient for their own needs. This is achieved
with steam generation in low pressure steam boilers (22 bars). To be able to export
energy, the sugarcane mill has to make significant investments to change to higher
pressure, more efficient boilers, and turbo generator. This change to higher pressure
boilers has been done by some sugarcane mills with boilers reaching the end of their
lifetime. In other words PROINFA did not trigger new investments. On the other end,
those contracts signed during the energy shortage period, with nearly double the
PROINFA prices, did provide incentives where invoice would pay for the needed
investment.
19. Recent decrees have allowed major electricity consumers (at least 3 MW and 69kV) to
become free from public utilities. These consumers can be connected to the grid system at
13.8kV, if they buy energy from renewable sources. This will probably benefit both the
energy generator and the consumer, with better energy prices. Today there is a wide gap
between the value received by the energy generator and what is paid by the consumer. As
it is the case worldwide, it is expected that energy generators will get the best prices
producing year round energy, since it will be the most demanded.
20. This is an interesting opportunity for sugarcane mills to get a better price for the
generated energy, guaranteeing power all year around, (possibly integrating several
energy producers). At a global and national level, reduced CO2 emissions, increased
labor related to energy production, improved grid balance and safety as well as improved
balance of payment are benefits to this option.
Present Power Situation in Sugarcane Mills in Brazil
21. Nowadays, most sugar cane mills generate power sufficient only for their own needs.
They operate at 22 bar/300oC steams with backpressure steam turbines and process steam
consumption of 500 kg/ton of cane and a surplus power production that can reach 10
kWh/ton of cane, with power generation only during the season (6 to 7 months). This
corresponds to a maximum electric power surplus of 2.3 MW during the harvesting
season (a total of 10 GWh) for an average mill in Brazil of 1 million tons of cane per
year. Considering the present size of the sugar cane industry in Brazil (around 350 million
tons of cane/year), a total of 800 MW electric power surpluses is exported to the grid
(total energy of 3,500 GWh). In fact, this is not what really happens since due to the very
little energy produced, most of these mills do not provide energy to the grid.
Potential with Better Boilers
22. With a small optimization in process steam consumption to 450 kg/ton of cane and with
the adoption of 65 bar/480oC steam condensation extraction steam turbines (commercial
technology), it is possible to get a surplus of minimum 40 kWh/ton of cane, generating
energy during the harvesting season, just using bagasse as fuel. That means sugar cane
7
mills could export 4 times more energy than present situation, by using available
technology of higher pressure boilers, with a surplus electric power of 9.2 MW during the
harvesting season (a total of 40 GWh) for the average mill in Brazil of 1 million tons of
cane per year. This means a total electric power surplus potential at sugar cane mills of
3220 MW during the harvesting season (total energy of 14,000 GWh). Changes in present
scenario to the situation with better boilers started to happen during the rationing period,
with better energy prices. After that period, when energy shortage finished and prices of
energy went down again, this process slowed down, even with the government program
to incentive renewable energy (PROINFA).
Potential with Better Boilers and Trash

23. Using trash as a supplementary fuel to bagasse, reducing process steam consumption to
340 kg/ton of cane and with the adoption of 82 bar/480oC steam condensation extraction
steam turbines (commercial technology), it is possible to get a minimum surplus of 100
kWh/ton of cane, generating energy year round. The average mill in Brazil of 1 million
tons of cane per year could export an average of 11.6 MW during the whole year (a total
of 100 GWh). That means sugar cane mills could easily export 10 times more energy than
the potential present situation, by using trash as a supplementary fuel to bagasse and
investing in commercially available technology of higher pressure boilers, condensation
extraction turbines and reduction in process steam consumption, going from the current
scenario of Brazil’s total surplus power potential at sugar cane mills of 3,500 GWh/during
harvesting season (800 MW generated only six months) to 35,000 GWh/year round
(4,000 MW generated during the whole year). This situation has good chances of success
since energy would be generated during the whole year, with better selling prices. What is
fundamental is that the recovery and use of the new fuel – trash – can be operationally
and economically viable.
Past GEF Experience and Lessons Learned
24. To increase the role of biomass for electric power production at sugarcane mills, it would
be necessary to achieve higher efficiency power generation systems and low cost,
abundant sources of biomass, and this would imply in the use of sugar cane agricultural
residues (trash) besides bagasse as fuel.
25. Project BRA/96/G31 – Biomass Power Generation: Sugar Cane Bagasse and Trash, has
been carried out with the purpose of addressing the use of trash with bagasse in more
efficient energy generation systems, in this case using gasification, with the goal of
contributing to the reduction of CO2 emission in electric power generation. It was the
first attempt to analyze the whole harvesting system including trash recovery and its
impacts in the field and factory. The project has the participation of UNDP, GEF, MCT
(the representative member of the Brazilian government), CTC (administration of project
activities, development and execution of the project), and TPS (development of the
gasification technology). Project total funding exceeds US$ 9,000,000 with grant
participation of GEF, Swedish National Energy Agency and European Commission with
co-funding of CTC and sugarcane mills.
26. Project BRA/96/G31 has been planned to be an extension of Project BRA/92/G31 –
Brazil Biomass Gasifier/Gas Turbine Power Plant Demonstration (known as WBP
project) that had the objective to build a woody biomass fueled gasification/gas turbine
8
(BIG-GT) demonstration plant in Northeast Brazil. The objective was to use the technical
information developed in the WBP project to investigate the possibility of utilization of
BIG-GT technology for power generation using sugarcane residues (bagasse and trash) as
fuels. Project BRA/96/G31 did not foresee the implementation of a real demonstration
plant but rather to investigate the integration of the BIG-GT technology with a typical
mill for engineering development only. WBP demonstration plant would be used to test
both fuels: woodchips from planted forest and sugarcane residues from sugar/ethanol
mills.
27. The delay, and cancellation, of the demonstration plant of the WBP project, jeopardized
Project BRA/96/G31 development since the gasification technology engineering/design
of the BIG-GT had not been developed to the point to be able to provide the required
technical information. In spite of that, Project BRA/96/G31 generated consistent data to
make technical and economic evaluations of the concept, and to disseminate the findings
throughout the sugarcane industry worldwide.
Summary of Project BRA/96/G31
28. The potential of sugar cane trash determined was around 140 kg (dry matter) per ton of
stalk mass. This is quite similar to the amount of bagasse obtained per ton of milled cane
(280 kg with 50% moisture content). Considering the sugar cane harvesting in Brazil in
the year 2004 of around 350 million metric tons, the potential of trash (dry matter) would
be close to 50 million metric tons.
29. Today, most of the trash is burned prior to harvesting but the percentage of area harvested
unburned is growing due to the phase out burning legislation. The fraction of the trash
potential that is possible to be delivered to the mill is a function of the percentage of area
that will be harvested unburned, the percentage of this area where the trash can be
removed and the recovery system efficiency.
30. The characterization of sugar cane trash to be used as fuel showed similar parameters to
bagasse (the present fuel used by the mills). Significant differences were observed only
for ash content (that is lower for bagasse), chlorine figures (that are higher for trash,
especially for the tops) and moisture content that is around 50% for bagasse, and varies
for trash (10 – 40%), depending on recovery system and drying time before recovery.
Despite the fact that trash and bagasse exhibit quite similar dry matter Heating Values,
trash usually provides a superior Heating Value that can be 1.7 times higher than for
bagasse due to moisture content differences.
31. Several harvesting alternatives with trash recovery were considered and tested, with
technical viability (equipment and process) achieved for the three (3) alternatives of
unburned chopped cane mechanically harvested, which are:
a. Conventional harvesting - harvester operating with cleaning system on and
delivering clean cane to the transport trucks and leaving the trash in the field, with
trash recovered with balers (after sunshine trash drying and windrowing).
b. Whole material harvesting with the harvester operating with the cleaning system
turned off, and delivering cane with the trash to the transport trucks and trash
separation and processing at the mill site.
c. Partial cleaning with the harvester operating with the cleaning system at low speed,
leaving part of the trash in the field for agronomic purposes and the rest with the cane
9
that is loaded in the transport trucks and trash separation and processing at the mill
site.
32. The studies and tests carried out during the project for the trash recovery alternatives of
“conventional harvesting (baling)”, “whole material harvesting” and “partial cleaning”,
indicated preliminary costs of US$ 18.5, US$ 31.1 and US$ 13.7 per ton of trash - dry
matter (including investment cost, operational cost and impacts in the field and factory),
with trash recovery efficiencies of 64%, 66% and 50%, respectively. These costs include
the agricultural impacts of trash removal in the field and trash processing at the mill.
However they do not take into account negative impact of trash left in the field and
presented later.
33. The gasification tests in the TPS pilot plant have shown that both bagasse and trash are
good gasifier fuels and the BIG-GT/mill integration studies have indicated that this
technology can nearly double the surplus power generation. Nevertheless, the need for
high investment and further process optimization resulted in high energy cost (around
US$ 75/MWh for the first plant), hindering the immediate use of the gasification
technology.
What is happening with Trash?
34. Recovery of the trash left in the sugarcane fields is an alternative that has long been under
consideration by sugarcane mills to obtain a supplementary biomass fuel to bagasse. In
the past, some mills worldwide have tried to collect and use trash as a fuel with no real
success. Most of them have used baling as the recovery system. Nevertheless, none of
them have really addressed all the logistics of sugarcane harvesting, trash recovery, trash
handling/processing and use. More than that, no studies or tests have included field and
factory impacts of trash recovery and its use as a fuel in the boilers. Besides the technical
aspects, economic viability has also been a strong barrier to trash use. Trash
characteristics such as low density, abrasiveness and mineral impurities lead to high costs
for trash recovery, transport and its processing.
35. Trash collection and use has been pursued in many sugarcane producing countries and
trials were conducted, some of them for long periods and extended areas, but always in an
experimental level. Countries such as Australia, Colombia, Thailand, Brazil and others
have tried different alternatives such as trash baling, trash recovery using hay harvesters,
trash recovery directly from the sugarcane harvester, trash and cane harvested together,
but none of them turned to be sustainable.
36. The main reasons are trash recovery cost and the effects with respect to the sugarcane
crop, sugar and ethanol production activities, including agronomic, operation and
industrial aspects of the trash recovery alternative, leading also to negative economic
impacts. The following describes various techniques used by sugar mills and their results.
Baling
10
37. The alternative of trash recovery with the majority of tests worldwide considers
conventional unburned cane harvesting with trash recovery using balers. This is a straight
forward solution when it is thought merely on the trash recovery as an isolated operation
due to the fact that the machine is designed to collect forage material and it has a
relatively low purchase cost.
38. Nevertheless, trash recovery using balers involves a series of operations. During
unburned sugarcane harvesting, sugarcane stalks are delivered to trucks and the trash
separated by the harvester is left in the field. After a period of 3 to 7 days when trash is
left in the field to dry, it is recovered by balers after a windrowing operation to
concentrate the trash. The produced bales are left in the field by the baler machine and
should be collected by loaders and infield trucks and stored in the field in a place out of
the cultivated area. Then, bales should be loaded into trucks and transported to the mill
site, where they should be unloaded and shredded to be used in the boilers.
39. A series o problems are encountered using balers for trash recovery:
 need of trash windrowing before baling;
 excessive soil in the trash (average of 6% in weight);
 timing of trash recovery (between harvesting and first sprouts coming out);
 high moisture content if it rains on the trash in the field before recovery;
 problems with the machines that are not designed to work on bare land and with
trash, high amount of soil and peaces of cane left with the trash, with significant
down time and maintenance costs;
 low operational performance, leading to large fleet;
 management of machines (balers, bale collecting machines, bale transport
trucks) and employees;
 Excessive traffic in the field with soil compaction and sugarcane stool damage
implying in sugarcane yield decrease, not only of the next crop, but also of the
following ones until the field is replanted.
40. Independent from trash cost resulted from baling operation the described problems have
hindered any effort in introducing this alternative in the sugarcane mills.
Hay Harvesters
41. Hay harvesters have been tried in the operation of trash collection in several sugarcane
mills. Similarly to baling, trash is left in the field for 3 to 7 days to dry, after conventional
unburned sugarcane harvesting. Trash recovery operation takes place after a previous
windrowing of the trash.
42. The big advantage of this equipment is that the trash is shredded in the machine and
loaded in trucks. The trash delivered to the mill can be fed to the boilers with no need of
other shredding operation.
43. Nevertheless, problems similar to the ones faced with baling are encountered here:
 need of trash windrowing before baling;
 excessive soil in the trash, even more serious than with baling (average of 10%
in weight);
 timing of trash recovery (between harvesting and first sprouts coming out);
11





high moisture content if it rains on the trash in the field before recovery;
problems with the machines that are not designed to work on bare land and
with trash, high amount of soil and peaces of cane left with the trash, with
serious problems of excessive down time and maintenance costs;
high wear and cost of the shredding knives;
high machine purchase cost;
Excessive traffic in the field.
Other Techniques
44. In the search for a viable alternative for trash recovery, other trash recovery systems were
tried or are under development, such as:
 Recovery of the trash straight from the harvester into an infield transport equipment
(instead of throwing it in the field), with a previous shredding operation performed at
the harvester to increase trash density. Studies and design are being carried on by
CTC in Brazil, but the project is still in the initial phase. Trash shredding at the
harvester is risky since the machine is already very complex, with several functions.
Any problem with the shredding system would inhibit harvester operation with severe
consequences for the whole harvesting system. Another critical point is the delivery
by the harvester of trash and cane to the infield equipment (running by the side of the
harvester) in separate bins at the same time. The system has been tried in Australia in
the past, with no real success.
 Harvesting cane with no cleaning and taking cane with trash to the mill. Trash is then
separated from the cane at the mill site. The idea has been tried in Brazil (project
BRA/96/G31) and Australia and has good potential. Nevertheless, several problems
encountered such as low truck load density (with increase in transport cost), trash
separation and shredding at the mill site have to be properly addressed.
Proposed Alternative for Trash Recovery
45. The starting point to choose the best alternative for trash recovery are the findings and
experience gathered in Project BRA/96/G31, regarding sugarcane trash recovery,
agronomic impacts, trash separation/handling and use at the mill.
46. The success of a trash collection system is its adequate insertion in the whole process of
sugarcane production, which is the first purpose of the grower. Trash recovery and use
should fit in the process without hindering the main activities of producing sugar cane,
sugar and ethanol. Therefore, the best trash recovery alternative is not necessarily the one
with the least apparent trash cost. There are several aspects not considered or not
measurable at first that can have a big impact on cost or on the technical viability of the
process, including logistics of the operation, existence of adequate equipment, equipment
management and maintenance, mineral and vegetal impurities in the cane, trash recovery
problems after rain, time available for trash recovery after harvesting and before
cultivation or cane sprout, and impact on sugarcane yield.
47. The alternative of trash recovery with the best chances to become a reality is the
alternative of whole material harvesting that considers the transport of trash with the cane
in total. This alternative permits also the operation in the partial cleaning mode for
particular situations, when it is necessary to leave some trash in the field for agronomic
12
purposes. This can be performed just by adequate operation of the harvester, extracting
part of the trash from the harvested material and leaving it in the field. The main
difference in trash cost of the alternatives of whole material harvesting and partial
cleaning (US$ 31.1 and US$ 13.7 per ton of trash - dry matter – respectively as
preliminary figures) is due to the greater amount of trash with the cane present in the first,
which reduces significantly cane load density, increasing transport costs. On the other
hand, the first alternative has higher recovery efficiency (66%) than the second (50%),
bringing therefore more trash to the mill. Besides that, partial cleaning has the
disadvantage that in the cleaning process, the part of the trash that is removed and left in
the field is the driest and easiest to separate, and that would be the best to be burned at the
boilers. In summary, trash would be harvested with the cane. The main investment in
terms of trash recovery and processing would be performed at the mill site, where a dry
cleaning station (for trash and mineral separation from cane) and a trash shredding
equipment would be necessary.
48. The interesting point of these two options is that the field operations are almost the same
as for actual sugar cane harvesting, with no specific operations for trash recovery. There
is the need to adapt/modify the cane harvester to the condition of no cleaning or partial
cleaning. Probably the infield transport equipment and road truck fleet would be modified
and its number increased with the purpose of transporting a greater material volume, but
no significant change in operations timing, management, type of equipment and
maintenance would occur. The implementation of these and other modifications and
developments will reduce significantly operational trash recovery cost.
49. The present problems faced by sugarcane growers in commercial sugarcane fields due to
the present practice of leaving trash in the field after unburned cane harvesting indicate a
beneficial shift towards trash removal that will probably reduce the agronomic cost
incurred by trash removal (that should be quantified by new cost estimates).
50. The reduction of the operational trash recovery cost and the agronomic cost of trash
removal might get overall trash cost for the alternative of whole material harvesting
significantly down to economically viable figures.
Driving Forces for Implementation of Trash Recovery and Use
51. In 2004 Brazil produced and processed around 350 million metric tons of sugar cane
which corresponds to 27% of the 1300 million tons grown worldwide in more than a 100
countries. Besides its economic importance, sugarcane heavily contributes for the
country’s energy matrix. Around 50% of the sucrose in the cane is directed to the
production of 14 million cubic meters of ethanol per year, displacing 12 million cubic
meters of gasoline. A life cycle analysis for ethanol production has indicated, that for
each unit of fossil energy input to the agro-industrial system approximately 9 units of
renewable energy output (ethanol and surplus bagasse) result, to be used outside the
system.
52. This situation has a huge potential for improvement if we bear in mind that ethanol
represents only one third of the energy available in cane; the other two thirds represented
by fiber in the cane stalks (bagasse) and in cane leaves (trash), are almost totally used in
the process in the following way (average figures for Brazil):
13


93% of the 50 million tons of bagasse (dry matter) is used as fuel in cane processing,
in a very inefficient way.
85% of the 50 million tons of trash (dry matter) is burned prior to cane harvesting to
reduce the cost of this operation; the other 15% is left on the ground to decay after
unburned cane harvesting. In both cases the net result is that carbon in the fiber
returns to the atmosphere in the form of CO2.
53. These facts indicate that with some effort and investment bagasse and trash can be saved
and used to generate electric power for the grid, with the benefits of biomass utilization
for energy production, especially regarding CO2 accumulation in the atmosphere. Three
things are required to accomplish this.



Improve process energy efficiency to generate more bagasse surplus: Higher
energetic efficiency in the production of sugar and ethanol can be accomplished
if economic reasons justify, since the technology needed is commercially
available.
Use an efficient technology to generate power: Several studies including Project
BRA/96/G31 indicated that Biomass Integrated Gasification/Gas Turbine
Technology (BIG-GT) could be an interesting option to generate power in sugar
mills, but a sound economic and technical solution is still not defined. An
intermediate option has been adopted by most sugarcane mills interested in
generating power to the grid that is to invest in 65 to 82 bar boilers and CEST.
Harvest unburned cane and recover a reasonable fraction of the total trash:
One critical point in the implementation of year round power generation in
sugar/ethanol mills in order to make investment financially viable is recovery of
part of the available trash, which requires that green cane harvesting is used.
54. Until the end of the 90’s, burning of the sugar cane field was a common practice before
sugarcane harvesting, and has the purpose of eliminating the trash, animal and insects
hazards, achieving good manual and mechanized harvesting rates.
Environmental
pressures to stop cane burning in the field have resulted in laws and regulations intended
to limit cane burning, more specifically Federal Decree No. 2661 of July 9, 1998 and São
Paulo State Law No. 11241 of September 19, 2002 have established a time schedule to
cane burning phase out.
55. Mechanization of cane harvesting, an increasing practice due to labor shortage in the past,
had an impulse with unburned cane harvesting and has passed in the Center South of the
country (which includes the State of São Paulo) the 35% mark. The unburned cane
harvesting in the center south is presently around 20%. The trend is clearly toward
increasing both of these figures and there are several mills, especially in the State of São
Paulo (that concentrates more than 60% of the cane in Brazil), already harvesting more
than half of their cane unburned.
56. In areas of unburned cane harvesting, the trash (green and dry leaves) is left in the field,
forming a thick trash blanket over the field. At first, several possible benefits of this
organic matter left in the field (trash) started to be proclaimed, such as: protection of soil
surface against erosion, reduction in water evaporation, incorporation of the nutrients of
the trash into the soil and weed control (with the result that the use of herbicides could be
eliminated).
14
57. The benefits were in fact observed in the first areas of unburned cane harvesting.
Nevertheless, with the expansion of the unburned cane harvesting it was observed that
agronomic benefits and problems can vary depending on several factors, especially on
climate condition and plagues of the region. Several mills started to have serious
problems with the trash blanket, such as: difficulties in carrying out mechanical
cultivation and ratoon crop fertilizing; delayed ratooning and the occurrence of gaps
(discontinuity of sprouts in the line of cane), causing a reduction in cane yield; cane root
rot when temperatures are low and/or the soil is very wet after harvesting; increase in
population of pests that shelter and multiply under the trash blanket and selection of
weeds that are not controlled by the trash blanket.
58. Several sugarcane mills, motivated by the described agricultural problems, have been
seriously considering trash removal. This have led mills such as Nova America, Da Barra,
Da Pedra, São Luis Dedini, São Martinho, Barra Grande, São José ZL, Quatá and São
Francisco (all of them in the State of São Paulo) to perform trials to recover some of the
trash to use as supplementary fuel to bagasse. CTC has provided information and some
support in these cases based on the experience gained with Project BRA/96/G31.
Nevertheless, trash recovery is still an envisaged plan, but with no real implementation
success. Most of these experiences were basically tests restricted to small areas that lasted
for some months or rarely for a couple of years and never got along due to lack of
adequate technology, equipment, investment and economic validation.
59. The present scenario of increasing demand for electric power (with a possible new
shortage of energy in Brazil in the near future), the country unburned sugarcane
harvesting legislation (with problems in several areas due to the trash left in the field), the
problems caused by the trash blanket in several areas and the world consciousness
regarding renewable energy (including the Kyoto Protocol) set important conditions for
power generation at sugarcane mill, using trash as a supplementary fuel to bagasse.
60. The first step would be the implementation of sugarcane trash recovery and its use as a
supplementary fuel to bagasse to generate electric power in conventional systems
(boiler/steam-turbine systems – preferably 82 bar boiler and CEST – condensing,
extraction steam turbine), during the whole year (season and off-season). In the future, the
implementation of advanced cogeneration systems such as BIG-GT that would further
increase the power generation in the sugar mills would be a step closer, since trash
recovery would be already set, adding to bagasse the necessary fuel supply to run the
plant year round.
b) PROJECT PROPOSAL
Baseline Scenario
61. Without GEF, the sugar industry in Brazil will continue to modernize with a main focus
on sugar and ethanol production. Opportunities to produce electricity will be harvested
when the need of a given consumer corresponds to the achievable offer of the mill. In this
case, over the next 10 years, out of the nearly 100 mills (about 50% of Brazil sugar
production), stakeholders of CTC, about 10 are expected to convert their boiler to
probably 65 bars. This change, complemented with relatively minimum investments, will
allow some of these mills to export electricity to the grid provided that the electricity
15
price obtained covers and justifies energy related additional investment. These mills will
potentially produce and export 9.2 MW to the grid and only during the harvesting season.
62. Mills will comply with the no-burning legislation and increase their mechanized
harvesting. Trash will be left on the field, with the implications mentioned above. The
risk of affecting sugar harvesting and sugar production with the introduction of trash in a
massive way into the boilers will be estimated very high.
63. As a result, on one hand, mills will not be in a position to benefit from interesting PPAs
for which prices are higher when production is guaranteed all year around. The
PROINFA programme will not provide a good framework for this since the price is too
low to trigger investment and since the GOB has decided to fill the missing gap on
biomass with other renewable energies and globally biomass based electricity production
will not significantly increase over the next years. In summary, higher efficiency boilers,
to replace worn out boilers and mechanized harvesting will form part of the investment
plans of the sugar industry. Trash use will remain at a research level and will not develop.
Alternative Scenario
64. The objective of the project is to avoid the emissions of 4.8 Mt CO2 (direct impact), by
reducing the cost and minimizing the risks associated to trash use, in addition to bagasse,
for energy generation. This will maximize electric power generation in sugarcane mills,
which will substitute the corresponding power in thermal generation using fossil fuels
(especially natural gas).
65. Electric power will be generated in conventional systems (boiler/steam-turbine systems –
preferably 82 bar boiler and CEST – condensing, extraction steam turbine) with the use of
sugarcane trash as a supplementary fuel to bagasse, making possible with this extra fuel
to have year round generation (season and off-season). Power purchase agreement will be
negotiated, with the energy sold to the final consumer (what would be possible with year
round generation), obtaining better prices for the electricity. All year round electricity of
11.6 MW per standard 1 Mt mills will be available.
66. The project will consider a group of 10 sugarcane mills as potential candidates for
investment, with the purpose of implementing the project in at least 3 mills and very good
perspectives that the technology will be replicated in the near future. The implementation
of the project in this 3 mills will lead to a total of 240.000 t of CO2 displacement per year
(using natural gas generation as baseline), when the mills reach 50% of the total trash
recovery (considering average of 2 million tons of milled cane per implemented project
mill).
67. During the process of implementation and after that, the technical and economic viability
of trash use will result in the interest of several other mills in implementing similar
solutions. These investments will depend basically on negotiating attractive PPAs, since
the technology will not need other incentives aimed at cost reductions to make the
investment viable.
68. Initial contacts with sugar cane mills concerning this project have already initiated and
several mills have shown great interest. Four mills are now committed to invest upon
demonstration of technical feasibility. From these initial contacts it was observed that
16
some of these mills are already selling electricity to the grid, with good prices obtained
through contracts set during the rationing regime, and are willing to even increase the
amount of energy sold if they could have more fuel available. Some of these mills have
been trying to recover trash with no success due to operational and technological
problems, and are abandoning this option for the time being. There is the particular case
of Barra Grande Mill in Lençóis Paulista – State of São Paulo that has a contract with the
sugarcane growers to purchase the baled trash at the market price of bagasse.
Nevertheless, problems in the field with baling machines, soil compaction, maintenance,
etc., and with trash handling, shredding and use at the mill are hindering trash use
progress.
69. A major need is to actually identify potential customers and clarify wheeling and PPA
clauses for this new business, since sugar mills current export electricity mainly on the
spot market. This will require support from the project and will assist sugar mills in
making the final decision to invest.
70. All through the project, and particularly once investments have taken place, it will be
important to dedicate time and effort to bring as detailed information to the sugar industry
outside CTC and in other countries in the region. GEF initiatives in Peru and Cuba will
benefit from the present initiative. Sugar industry mills and research centers in other
countries of LAC such as Colombia, Guyana, Jamaica, and Mexico will also be kept
updated on a monthly basis of project development. It will also complement the IFC
recently approved GEF project of which the investing mill is member of CTC.
71. The project will considers the study and implementation of the alternative of “whole
material harvesting” that considers the transport of trash with the cane, except for the tops
(with high moisture content) that are left shredded in the field. The equipment for this
alternative permits also the operation in the “partial cleaning” mode for particular
situations, when it is necessary to leave some trash in the field for agronomic purposes.
This can be performed just by adequate operation of the harvester, extracting part of the
trash from the harvested material and leaving it in the field. The alternative of “whole
material harvesting”, with the best operational characteristics has the drawback of the
highest trash cost. The project has the proposition to bring down the estimated trash cost
of US$ 31.1 per ton of trash - dry matter for this recovery alternative (output of project
BRA/96/G31) to figures between US$ 10 and US$ 15 (according to preliminary studies)
through the implementation of new technologies, methodologies, cost benefit practices
and cost reviews in the field and factory. This will bring electricity production cost to a
level compatible with PPAs in the country.
72. The main investment in terms of trash recovery and processing would be performed at the
mill site, where a dry cleaning station (for trash and mineral separation from cane) and a
trash shredding equipment would be necessary.
73. The project should provide the means for the development of new equipment that are not
available today because no one is recovering trash in these systems (whole material
harvesting or partial cleaning), acting in several fronts to break technological and risk
barriers such as:
i)
Development of modified harvesters to operate with total trash or partial
cleaning; modifications in infield equipment for volume improvement; new
design for road truck bodies to increase transported volume; development of
17
ii)
iii)
solution/equipment to increase truck load density; further improvements in the
existing dry cleaning station project; development of the shredding equipment
and modifications in the boilers feeding system to mix and feed bagasse and
trash.
Reduce investors risk by providing resources to cover investments in
equipment considered new technology and assessing willingness to pay of
potential electricity buyers. Resources to cover investment in equipment will
not be provided by the GEF. MCT/FINEP is committed to provide additional
financing of up to US$ 1 million for investment per mill, up to three mills.
Provide resources for assistance in all the management and technical issues,
including energy commercialization aspects.
74. The other alternatives for trash recovery are not totally discarded and can be considered
during feasibility studies, depending on mill site and field characteristics, and technical
and economical reasons. This would be the case for example of hay harvester use for
trash recovery that has already been tested by some mills. It can become an interesting
alternative if its use can be improved and the problems encountered can be mitigated. It is
an alternative that has the interest of some mills due to the low risks and investment in the
factory.
Project Description
75. Project Development Objective: The objective of the project is to avoid CO2 emissions
by minimizing the cost and reducing associated risks to trash use, in addition to bagasse,
while maximizing electric power generation in sugarcane mills. By the end of the project,
it is expected that the sugar industry becomes all-year round electricity producer for
Brazil based on RE.
76. Outcome 1: 10 mills are committed to invest in trash recovery and use through feasibility
studies and business plans. CTC, MCT and FINEP will secure technical development
while GEF funds will be used to partially finance feasibility studies and business planning
as well as market development activities.
Output 1.1: Demonstrate technical viability of trash use taking into account detailed
data of the 10 candidate mills. While the PDF B will have confirmed the technical
feasibility of trash transport at a reasonable price and magnitude of impacts in boilers,
this particular component will form an integral part of the feasibility study to actually
implement investment.
Activity 1.1.1- Optimize harvesting and transport
Activity 1.1.2- Optimize cleaning, storage, chopping and feed in
Activity 1.1.3- Improve process energy efficiency
Activity 1.1.4- Year round electric power generation: equipment and
operation
Output 1.2: Demonstrate economic viability of trash use
Activity 1.2.1- Estimate costs of additional investments, operation and
maintenance
Activity 1.2.2- Precisely qualify and quantify agronomic benefits
Activity 1.2.3- Estimate sale-price, including guaranteed power
Activity 1.2.4- Elaborate financial simulation and corresponding business
plan
18
Output 1.3: Generate secure market for electricity
Activity 1.3.1- Based on PDF-B results; organize contacts between potential
investing mills and electricity consumers.
Activity 1.3.2- Organize two seminars to present results of feasibility studies
to CTC member mills, major consumers and potential lenders in Brazil,
Activity 1.3.3- Organize working sessions between potential investors,
consumers, lenders MCT and FINEP for a minimum of 10 mills.
77. Outcome 2: Investment is taking place for at least 3 mills. It is expected that financial
calculations will justify investment in trash use. However, should an incremental cost in
investment not be covered by electricity sale price, the MCT and FINEP will co finance
investment. It is also expected that once the comprehensive harvesting solution is
implemented, downward cost trends will be substantial because cost trends will be in
direct relation with the potential market for manufacturers.
Output 2.1: Project approval by financing institutions and energy buyers
Activity 2.1.1- PPA securing financial viability of investment is negotiated
Activity 2.1.2- Securing additional funding sources from Brazil to support
new technological development if needed.
Activity 2.1.3- Lending document is prepared and presented to potential
lenders.
Output 2.2: New technological options are manufactured, acquired and tested
Activity 2.2.1- Harvester, infield equipment, cleaning station and shredder
are manufactured in close partnership with project team
Activity 2.2.2-Equipment testing is carried out successfully and necessary
improvements are carried out as needed.
Activity 2.2.3-Full acceptance by sugar mills
Output 2.3: Power generation equipment are acquired, installed and tested
Output 2.4: Factory modifications, equipment acquisition, installation and testing to
improve energy efficiency at the factory
78. Outcome 3: Monitoring & evaluation, dissemination and replication
Output 3.1: Monitoring results plan and evaluations. Activities in this area will be
carried out on a continuous basis. Not only are they a requirement of GEF but they
will also allow to prepare material for dissemination and review project progress to
reorient action for maximum impact if necessary.
Output 3.2: Dissemination of project’s results. This component will be carried out
throughout the project and will be achieved at three levels because of the level of
confidentiality of data provided:

One level which will present detailed results together with results of
negotiations with consumers and lending institutions will involve CTC
members, Brazilian universities such as Campinas University, manufacturers,
consumers and lending institutions actually active in negotiations.

The second level will involve the sugar industry at regional level and will take
place in two occasions throughout the project: Firstly when investment is
secured, technical and financial results will be presented during a seminar. At
19
a later date in the project, and once investment has taken place and trash
recovery related equipment is in operation in the field and at the mill site,
interested sugar mills of the region will be invited to see for themselves.

A third level will allow the industry worldwide to be kept informed through
participation of CTC and of the investing sugar mills in world events related to
sugar and energy production.
Output 3.3: Web-based dissemination of experiences related to trash use. During
the course of the project, information will be gathered on experiences throughout
the world. Also the project will produce interesting results which will serve to other
countries and projects. In addition to seminars and workshop as well as site visits, it
is important to centralize and make available such information and data. The project
will secure this through the design and operation of a web-based platform for
exchanges. Main target for this web-site will be the sugar industry world wide and
research institutes. Nevertheless, universities, consumers and lending institutions as
well as governmental institutions will benefit from this information exchange tool.
Output 3.4: Support replication of project to 5 new sugar mills. Based on the on the
ground experience and on dissemination activities, CTC will identify 5 additional
sugar mills to support their project development with deal brokering services. Initial
consultations have resulted in interesting contacts and interest is clearly rising.
During these discussions, the topic of capacity building was extensively discussed.
Due to the nature of project stakeholders, targeted capacity building was not deemed
necessary. In fact, information availability both under the form of studies and with
actual development of new equipment and operation of the integrated trash recovery
and cleaning, power production equipment, stakeholders felt they would have
enough knowledge to capture and use project outputs.
Annex 1 includes a detailed description of the main activities to be supported by the GEF
Project.
C.3 Sustainability (including financial sustainability)
77. The present scenario of increasing demand for electric power, the country’s legislation on
unburned sugarcane harvesting, the problems observed in several areas due to the trash
left in the field, and the world consciousness regarding renewable energy (including the
Kyoto Protocol) set important conditions for the sustainability of the project.
78. The project will have to address properly the economic aspects and solve the problems
incurred due the trash recovery activity. Nevertheless, once the trash collection system is
adequately inserted in the whole process of sugarcane culture (which is the first purpose
of the grower), with the agronomic impacts, trash handling and use at the mill properly
addressed, the success and sustainability of the project are granted. Additionally, mills
that are setting or already operating with annex refineries and use energy (steam and
electric power) year round will have the necessary fuel supplied by the excess bagasse
and trash, that otherwise would imply the purchase of a supplementary fuel.
79. In other words, sustainability will occur once the objectives of the project are attained,
that is, trash recovery is performed in a way that is operational and does not hinder the
normal operations of cane harvesting and tillage, trash removal benefits sugarcane culture
20
(with the reduction of pests, increase in yield, etc), and power generation using bagasse
and trash is profitable.
80. Financial sustainability will be granted by power purchase contracts to be set during the
implementation project (in the case of energy to be sold to the grid) or by the avoided
energy and fuel purchase (in the case of energy to the mill’s own use such as for an annex
refinery). A favorable policy environment in Brazil is provided by the recent opening of a
free market for major consumers. These consumers will naturally shop around. Since
hydropower stays in the hand of the government, biomass will compete with thermal and
other renewable energies on that market. While thermal energy based production costs
should remain higher than bagasse and trash based energy, other RE do not benefit from
the same advantage of guaranteed power. They will remain supported through the
PROINFA project. Hence a number of basic market conditions are there to guarantee not
only financial sustainability for this particular project but also the future development of
electricity export oriented investment in the future. The position of the executing agency
CTC, technically well recognized and interacting with 50% of the Brazil sugar production
will also be a key success factor.
81. CTC is already active at the moment, in looking for potential energy customers,
discussing pooling mills together if necessary to provide required power levels, and
looking for sugarcane mills that are not self sufficient in energy supply, such as the ones
with annex refineries, where the avoided energy purchase can have an interesting cost
benefit. These alternatives will be explored in more detail during PDF-B and initial phase
of the project.
C.4 Replicability
82. As the largest sugarcane producer in the world, the sugar cane industry in Brazil is a well
consolidated economic sector. It is expected to grow even stronger when trade barriers in
the international sugar market are lowered, creating conditions for cane sugar to take over
the beet sugar space. Besides that, there is a growing interest in increasing the production
of ethanol to be mixed to the gasoline. Brazil is leading this trend, with other sugar
producing countries such as India, Australia, Thailand, Guatemala, Colombia, Mexico,
Cuba and others, also working towards this direction, This trend could result in a
substantial increase in the world production of sugarcane.
83. The present size of the sugar cane industry in Brazil is around 350 million tons of
cane/year and worldwide it is approximately 1.3 billion tons of cane/year. Considering
that unburned sugar cane harvesting is slowly, but steadily, becoming more used and is
becoming a fully developed and mature technology, the replication potential for energy
generation at sugarcane mills using trash as a supplemental fuel to bagasse is enormous.
84. The interest in power generation in sugar mills is growing worldwide. In Brazil, in the
past three years it is estimated that an additional 500 MW have been installed in mills; in
Mauritius and Reunion energy from sugar mills represents a significant fraction of the
total electric energy consumption in the islands; in India there is a strong push from
Federal and State Governments to implement new power generation capacity in the sugar
mills.
85. In fact, replicability of the project will be driven by three major forces:
21
i) In the case of unburned cane, which is the future due to legislation preventing
burning cane in the field, vegetal impurities are significantly greater than in
burned cane. Former practice of mineral impurities removal through washing
cannot apply to chopped cane, because of high sugar losses. If the chosen
alternative for trash recovery considers bringing the trash to the mill with the
cane, and the separation performed at a dry cleaning station at the mill, not
only trash will be removed from the cane but also great part of the mineral
impurities, improving raw material (cane) quality.
ii) In the case of unburned cane harvesting, the trash is now left in the field as a
blanket. This blanket has advantages (inhibiting some weeds, increasing soil
moisture content, etc.) and some disadvantages (difficulties in cane sprout,
increase of some plagues, difficulties of cultivation, etc.). Several mills are
searching for a solution, and are trying several alternatives such as trash
windrowing or trash recovery with hay harvesters, with no real success.
iii) With energy production year round, contracts with final consumers and
decentralized production close to the consuming centers (reduction in
transmission costs), the perspectives for better energy prices can become a
reality, providing the mill with another important revenue source.
86.
Therefore, the forces and conditions favoring today the power generation in sugar/ethanol
mills are likely to persist or even grow stronger in the medium and long term. The
position of CTC with more than a hundred mills as stakeholders is key for the replication
of this project. Output 3.4 will be designed to enlarge this dissemination to other mills in
Brazil and elsewhere in the world. Close ties already exist between Brazil, Cuba,
Colombia and Peru. Building on these relationships, developed in part due to the GEF
projects in these countries will be the cornerstone to replicate the present initiative and to
find ways to further reduce the cost of trash as fuel.
C.5 Stakeholder Involvement/Intended Beneficiaries
87.
The project will involve a wide range of stakeholders, some of them participating directly
on project execution and a wide range of others mainly interested on the technical and
economical results or affected by its implementation impacts. Relevant stakeholders
include:



The participating sugarcane mills – all the studies and implementation
projects will be carried on these mills and with their participation. They have
the advantage of GEF participation in the evaluation and implementation
technology of trash recovery for their own conditions.
Sugarcane mills worldwide – Mills that have problems in dealing with the
trash left in the field after unburned cane harvesting or even those that intend
to generate power to the grid or for their own use are searching for a viable
alternative for trash recovery and use. The sugar cane sector will have an
additional source of income with the surplus power and access to financial
resources to invest in the modernization of the mills.
Civil society - it will benefit of a better environment due to reduction in CO2
emissions, decentralized energy (again with less impact on the environment)
and more jobs availability. In the specific case of jobs, it is important to say
that mechanization, which is happening independent of this project
22









implementation, is reducing the number of jobs in the field (cane cutters being
substituted by the harvesters). Trash recovery implementation will open new
more qualified job opportunities, not only in the field but also in the industry.
The country and the federal government – the use of a natural own country
resource will avoid the use of imported fossil fuels such as natural gas for
thermal power generation.
Field and factory equipment manufacturers of the private sector - some of
them will participate directly of the process of development of the new
technologies and implementation of the project, but even others will benefit of
this new market built up by trash recovery and use systems.
The electric sector – the electric sector is facing a situation in which big
investments would be necessary to supply the energy demand increase of the
coming years. This source of energy coming from the sugarcane mills, which
is close to cities and distributed all over the most populated region of the
country, specially São Paulo State, is a welcome help to the present situation.
Final consumers of energy – the contact with possible final consumers for the
energy to be sold is to be established as an alternative to get better prices for
both, the sugarcane mill (producer) and the final consumer.
Governmental institutions - such as MCT (Ministry of Science and
Technology), BNDES (National Bank for Economic and Social
Development), MME (Ministry of Mines and Energy), SMA (The Secretary
of Environment of the State of São Paulo) and others that are involved in
developing natural and sustainable energy resources;
Sugarcane producers – there is a big number of cane growers that produce
cane and deliver it to the mills. Today many of them are having problems
with the trash left in the field. With trash recovery they can have a solution for
these problems and may also make a profit of the trash delivered to the mill.
Centro de Tecnologia Canavieira – CTC – the Center will administrate the
project and execute or coordinate all development activities. Besides that, it
will use all the information and professional experience gathered up to now to
conduct project studies and its implementation. This project will materialize
the results of more than 14 years research in the area of trash recovery, its
agronomic impacts and use at the mill. With this project the center will place
a display case that will make it easier to disseminate trash recovery and use.
Sugarcane research institutes worldwide – several other institutions that have
the purpose of transferring and developing technology to the sugarcane sector
or that are dealing with RE will receive project information and will have the
opportunity to develop the subject of trash recovery and do several works in
this area and even implement similar projects. We can name some of these
institutions: SRI (Sugar Research Institute - Australia), MSRI (Mauritius
Sugar Industry Research Institute), SMRI (Sugar Milling Research Institute South Africa), Cenicanã – Colombia, Sugarcane Research Unit USDA –
USA, MINAZ (Ministry of Sugar – Cuba) and others.
International and Regional institutions and networks - they can act as
cooperation platforms, such as CENBIO (Brazilian Reference Center in
Biomass), UNICA (Union of the Cane Agro-industry of São Paulo), STAB
(Brazilian Society of Sugar Technologists), ISSCT (The International Society
of Sugar Cane Technologists) and others, that can receive the information and
disseminate it among the sugarcane sector and the RE community.
23



International financing institutions - active in RE area, such as the European
Community.
Domestic financing institutions - such as national banks that actuate in the
area of energy and sugarcane sector;
Universities – such as UNICAMP (University of Campinas – Brazil), IPT
(São Paulo Institute of Technology – Brazil), ESALQ (Agricultural College
Luiz de Queiroz - University of São Paulo – Brazil), UNIFEI (Federal
University of Itajubá – Brazil), Princeton Environmental Institute - Princeton
University – USA, University of Delft – Netherlands, University of Utrecht –
Netherlands and others.
D – FINANCING
D.1 Financing Plan
88. The Full Size Project is expected to total US$ 68,800,000 - 70,800,000, of which between
US$ 6,000,000 and 8,000,000 will be requested from GEF on the basis of findings during
preparation. An additional PDF B total funding of US$ 650,000 will be necessary for the
preliminary studies, of which US$ 350,000 will be requested from GEF.
89. The US$ 6-8 million requested from GEF are planned to be used in the following form:
a. Between US$ 3,200,000 and 5,200,000 for feasibility studies, market
development support and matching services for a total of 10 mills
corresponding to US$ 320,000 to US$520,000 per mill on average for a
complete service including deal closing support. The first 3 mills are expected
to be more resources demanding than the following ones, as experience built
up in the first cases will reduce costs of subsequent assistance. CTC will cofinance feasibility studies, especially in technical aspects. It is also important
to note that envisaged matching services are an integral part of the package.
The aim of the project is to actually close financial deals and ensure on the
ground investment.
b. US$ 1,000,000 for deal brokering activities for 8 mills initially focused on 3
mills.
c. US$ 1,300,000 for dissemination of project results at the national and regional
level. CTC will use its network to disseminate project results not only in
Brazil but also during international conferences worldwide.
d. US$ 500,000 for coordination, monitoring, and evaluation during the 5 years
project period.
90.
Funding for innovative equipment will not be made available by the GEF. Brazilian
partners will be associated throughout the project and will fund incremental investment to
the limit of US$ 1M per mill. However, it is possible that the cost of these equipments
(shredder, adapted harvesters, cleaning station) will be covered by electricity sales
income. It is also expected that a reduction of 20% in investment costs and reduced
transaction costs after 3 investments will secure full commercial viability of the trash use
option.
24
91.
PDF B funds will be required to gather the necessary information, make preliminary
global project design, feasibility verification and provide necessary documentation and
data to convince sugarcane mills to join the project. Estimated necessary funds of US$
350,000 will be requested from the GEF (according to description in Part II).
D.2 Co-Financing
92. For the Full Size Project a total of US$ 62,800,000 will be leveraged from the following
sources:
 Sugarcane mills will provide counterpart funding of a total of US$
55,800,000. Out of this total, US$ 19,800,000 (US$ 6,600,000 per sugarcane
mill, considering 3 units) is incremental in as far as it is directly related to
trash use for energy purposes. This accounts for resources, such as equipment
and supplies in the field and factory (turbo-generator condensing system,
cleaning station, trash shredders, feeding conveyors, harvesters’ modifications,
truck transport, etc.) that will be purchased during project implementation.
This will also include operational and administrative activities. In addition the
sugarcane mills will have to bear the costs related to equipment such as new
boilers, needed to make the trash use option viable in terms of steam
production, accounting for at least more US$ 36,000,000 in investment
(average of US$ 12,000,000 per mill, considering 3 mills). This figure will
have to be reviewed, depending on the selected sugarcane mills, their actual
and future power system configuration. This investment can be already
planned as part of the mill modernization process (baseline) or just to cope
with the extra steam production needed for trash use (incremental).
 CTC will provide technical knowledge, engineering and management for
project implementation equivalent to US$ 750,000.00 per year in men-hours,
totaling at least US$ 3,750,000 during project life.
 MCT/FINEP is committed to provide any additional funding necessary to
make these new investments viable to a maximum amount of US$ 1 million
per mill (in a total of US$ 3 million for 3 mills). This figure is considered
reasonable to secure that envisaged solution will be 100% commercially viable
after project end.
 Manufacturers will provide help in equipment development and prototype
manufacturing (agricultural and industrial). This contribution is difficult to
estimate at this point, but a minimum of US$ 250,000 is expected.
93. For PDF-B an equivalent to US$ 300,000 in engineering and technician men-hours will
be dedicated by CTC (according to description in Part II).
E – INSTITUTIONAL COORDINATION AND SUPPORT
E.1 Core Commitments and Linkages
94.
This project is in line with the Country Cooperation Framework 2002-06 that
establishes that UNDP/Brazil will continue to play a major role in designing strategies
for local capacity development, ensuring sustainability of institutions, mechanisms,
structures and communities working for environmental issues. In addition, it is in line
with the Multi-year Funding Framework for 2004-07 Goal 3 on Energy and
Environment for Sustainable Development., outcome 3.3 on Access to Sustainable
25
Energy Services that envisages the introduction of low emissions energy technologies,
in particular renewable energy, into the national energy matrix.
95.
The proposed project will be a continuation of efforts carried out through other
UNDP/GEF energy programs and initiatives world wide, especially projects
BRA/96/G31 and BRA/92/G31 in Brazil, and it will build on the lessons learned and
knowledge developed during their execution.
96.
It will complement the recently presented IFC project in which the STAP reviewer
mentioned the need to address better use trash as fuel. Response from the team was
emphasizing the perception of risk associated to trash use.
E.2 Consultation, Coordination and Collaboration between IAs, and IAs and ExAs.
97.
The follow-up phase for the World Bank/GEF BIG-GT project was officially cancelled
last year. This project will coordinate activities and dissemination of best-practices with
other UNDP/GEF projects on the use of renewable energy in the region. Proper
coordination will be sought between IAs and ExAs during PDF B activities.
E.3 Implementation/Execution Arrangements
98.
The project will be implemented by the United Nations Development Programme
(UNDP) and executed by Centro de Tecnologia Canavieira (CTC), formerly Centro de
Tecnologia Copersucar, which has successfully worked with UNDP Brazil and the
Ministry of Science and Technology (MCT) in Project BRA/96/G31.
99.
CTC – Centro de Tecnologia Canavieira is a Civil Society Organization of Private
Interest (OSCIP) that works as a Private Development Organization, formally registered
in Brazil through CNPJ no. 06.981.381/0002-02. It was created in 1978 as CTC Centro de Tecnologia Copersucar with the main purpose of providing technology to
Copersucar member mills. In August 2004 the center was opened to other mills
interested in sharing the technology and the means to maintain the centre, with a change
to CTC - Centro de Tecnologia Canavieira, that has now 97 associated companies (84
sugarcane mills and 13 sugarcane growers associations) totaling 140 million tons of
cane and a planted area of 1,550 thousand hectares (representing 40% of the produced
cane in Brazil), with a budget of US$ 12,000,000 per year and a total of 348 employees
(61 engineers, 98 technicians, 151 field workers, 38 operation and administrative). CTC
has been dedicated since its creation to all the activities related to sugarcane varieties
development, equipment and processes for sugarcane production, ethanol and sugar
processing, and energy production, through the development and implementation of
technologies and projects.
100. CTC has, for several years, worked closely with international cooperation agencies
such as Winrock International, European Commission, GEF, World Bank and
especially the UNDP. CTC has, among other projects, developed UNDP/GEF full size
Project BRA/96/G31 - Biomass Power Generation: Sugar Cane Bagasse and Trash. It
also assisted UNDP Cuba in developing the basis for project Proposal for feasibility
study, T26-01 – Sugarcane biomass for power generation in Cuba. As CTC joins in the
same organization a wide range of specialists dealing with all the aspects of sugarcane
26
breeding, sugar and ethanol production and energy generation, it has been able to
facilitate processes that would have otherwise been very difficult to carry out. The
straightforward contact with the associated mills and long history of work with a wide
range of sugarcane mills turn to be a facilitating factor for project execution. The
implementation of the proposed full- size project will be build upon the know-how and
experience that CTC has obtained during its almost 30 years of existence in the research
and development activities related to sugarcane breeding, production, processing and
the execution of the above-mentioned projects.
101.
The implementation of the project will also depend much on a great commitment
assumed by the selected sugarcane mills. Besides the fact that the selected sugarcane
mills will be the great investors and also beneficiaries of the funds allocated by GEF to
the project, they will participate in the technical discussions and decisions since the
proposed changes will have direct impact on mill operations. Coordination and
administration of operational activities, necessary infield labor, maintenance, supplies
and several other activities participation will be demanded and should be offered by the
participating sugarcane mills involved in the implementation project. The selection
process for choosing the sugarcane mills with contacts, project intention discussions
and information exchange can start as soon as the concept is approved. However, the
commitment of the selected sugarcane mills can only be requested after PDF studies are
undertaken and process and economic feasibility studies demonstrate viability of the
project. Besides that, a power purchase contract intention or even its signature should be
carried on during this process, if the energy is to be supplied to the grid, to guarantee
further investments.
27
PART II - PROJECT DEVELOPMENT PREPARATION
A – Description of Proposed PDF Activities.
102. PDF activities have the main purpose of defining project design, with estimates of investment
and cost figures to detail the business plan, including necessary investment, investors
financing, grant needed, changes in operational sugarcane mill activities (especially at the
field), and equipment/technology development needed. It will allow the sugarcane mill and
GEF to have a more clear view of the technical and economic aspects of the project, making
possible the decision regarding the viability and risks of implementing the project.
PDF Planned Activities:
103. Selection of sugarcane mills, sugarcane mills profile and project design - Survey with
sugarcane mills that are harvesting mechanical unburned cane and already generating power to
the grid or planning to invest in this area. Selection of some sugarcane mills to participate in
the initial studies (at least 3), defining characteristics of the mill, present field and industry
profile, sugarcane harvesting logistics, perspectives for trash use, including: availability of
trash and bagasse.
104. Market assessment for power generated all year around by sugar mills - Identification of
major consumers now deregulated, and looking for interesting options to cover their energy
needs. Compilation of PPA pricing practices as emerging in this new market. Thorough
assessment of willingness to pay of these potential clients as well as conditions in terms of load
curve and guarantied power.
105. Trials and evaluation of transport options for trash - Current evaluations clearly show that
the main barrier for trash use relates to transport at least in terms of cost. CTC will carry on the
ground testing of simple low cost options to reduce transport costs and therefore secure trash
economic viability for future investment.
106. Equipment performance, costs and quantity, investment, implementation and operational
costs - Define equipment performance, purchase cost and operational costs (including
estimates for the equipment to be developed). Perform simulation of the operation to quantify
equipment needed. Estimate field benefits. Define all the activities involved in project
implementation and their cost, separating the activities related to the fact that this is a pioneer
project from the ones that should be performed in any other implementing project of this
nature. In addition, consequences of burning this new fuel – trash – in the boilers should be
carefully verified. The significant differences in moisture content, mineral impurities and
alkalis content observed when we compare trash and bagasse suggests that some parameters
such as boiler operation, degradation of the furnace/boiler, NOx and particulate should be
monitored. During project BRA/96/G31 some tests were performed burning only trash in a
boiler, but only for a few hours. It is important that longer period tests can be performed. Some
experience exists also in Australia and will be compiled. The PDF will estimate project
investment and total operational costs to run the activities planed during project
implementation and after. The costs involved in project design (CTC), implementation (CTC &
28
mill), equipment development (CTC & manufacturers) and administration (CTC & mill) will
be described.
107. Project financing and environmental impact assessment – Compute pre-feasibility elements
to verify financial feasibility. Perform trash/energy cost sensitivity analysis and risk analysis.
Consider alternatives for guaranteed energy production, use of energy by sugarcane mill annex
refineries and contacts with possible industrial consumers and the energy utilities. Start
discussions and get intentions for a contract for power purchase with definition of energy price.
With energy price and cost, calculate economic parameters such as investment pay-back time,
interest rate, etc. Estimate possible carbon credit due to GHG emissions avoided.
108. Disseminate results and secure ownership by project stakeholders - A first event will be
organized at the outset of the PDF-B to inform all relevant stakeholders of project envisaged
outcomes, preparatory activities and GEF related requirement. Results of previous activities
will serve as a basis for organizing a seminar of which purpose will be to design the full size
project and secure co-financing.
109. GEF Project Document - Produce a report gathering all PDF information. Produce a
summary to be submitted to sugarcane mills board and to GEF analysis. This document will be
used to convince the sugarcane mills considered in the study and others to adopt the project
and secure co financing.
B – PDF Block B Outputs.
110. The main output is the GEF Project Document, containing basically:
1.
2.
3.
4.
5.
6.
7.
Description of trash recovery, handling and use processes and type of equipment involved
necessary innovations and new equipment to bring down costs.
Description of the transport option together with cost for this particular component
Pre-feasibility studies with energy costs and financial return estimation based on sale prices.
A market study together with market development and dissemination strategy to be
implemented during the full size project.
A description of needs as expressed by the mills with relation to deal brokering
Environmental benefit and incremental cost analysis.
A project document with executive summary together with co financing commitment and
stated intentions for private investors.
C – Justification
111. Nowadays, excluding a few exceptions, the sugarcane sector has faced various challenges in
energy generation at the mills. This has been caused basically by the following factors:

After the energy shortage period, when energy prices got to interesting figures for the
sugarcane mills, prices went down again due to the excess of available energy that
occurred as a result of benefits incorporated during the rationing period (reeducation
of the public and use of more efficient equipment). The price for the energy never
29



rose to those figures again, even with some expectations of energy shortage in the
near future if investments are not made at the present.
The PROINFA - Incentive to Alternate Sources Program - created a market reserve
for biomass. There were good expectations, but the defined prices for the energy were
in general considered not profitable for new investments at sugarcane mills.
Trash recovery tests and studies carried on indicated alternatives that were not
operationally or economically viable.
The project is based on three propositions:
o The alternative of trash recovery with trash (whole harvesting), that is the
operationally accepted route can also be economically viable (with adequate
trash recovery cost).
o There are benefits to removing trash from the field and benefits of trash
separation at the mill site.
o Energy prices can be interesting for year round energy generation when
compared to energy generation cost.
112. Therefore, a PDF-B study with preliminary analysis of the propositions of the project is very
important to confirm these three points. More than that, it is crucial to generate sufficient
information to change sugarcane mills negative perspectives regarding energy generation and
convince some of them of participating of the project with the necessary commitment.
D – Budget and Timetable.
113. The total PDF-B needed resources add up to US$ 650,000. A tentative framework was detailed
in Figure-1 indicating GEF funds (US$ 350,000) and CTC funds (US$ 300,000) for PDF-B
execution. Several other resources will be engaged in the execution of the described activities,
that are not detailed and cost calculated. These include:



Sugarcane mills information gathering, participation in the technical alternatives discussions and
in all the costing estimates.
Sugarcane mills participation in initial trials, providing equipment, labor and supplies.
Possible participation of manufacturers in initial trials.
30
Figure 1 – PDF-B funding and framework
ACTIVITY DEFINITION
Month
0-2
Month
2-4
Month Month 6 GEF Funding
4-6
-8
US$ Dollars
CTC Funding
US$ Dollars
TOTAL
20,000
100,000
120,000
0
100,000
100,000
1
Technical specification
2
Transport and harvesting solution
3
Pre-feasibility study
100,000
20,000
120,000
4
Market study
100,000
0
100,000
5
Securing ownership
30,000
80,000
110,000
6
Environment and Implementation Cost study
40,000
0
40,000
7
GEF Project Document
60,000
0
60,000
350,000
300,000
650,000
TOTAL
31
CONSOLIDATED ATLAS BUDGET
Award: TBD
Award Title: PIMS: 3515 CC: Brazil: Energy Generation at Sugarcane Mills Using Trash and Bagasse
Project ID:
Project Title: Brazil: Energy Generation at Sugarcane Mills Using Trash and Bagasse
GEF Outcome/Atlas Activity
Outcome
GEF Project Document prepared
and submitted for financing
GRAND TOTAL
Responsible
Party
CTC
Source
of
Funds
GEF
ERP/ATLAS Budget
Description
71300
CTC
CTC
CTC
GEF
GEF
GEF
71600
74210
71200
Local
Consultants
Travel
Subcontracts
International
Consultant
Amount
2005 (US$)
Amount
2006 (US$)
Total
(US$)
50,000
150,000
200,000
30,000
30,000
0
30,000
46,000
14,000
60,000
76,000
14,000
110,000
240,000
350,000
32
ANNEX 1: Detailed Description of Main Activities
This Annex provides a detailed description of those activities that will be funded by GEF
resources. The remaining activities will be co-financed by the project partners.
Outcome 1: Ten mills are committed to invest in trash recovery and use through feasibility
studies and business plans
Output 1: Demonstrate technical viability of trash use
Activity 1.1.1- Optimize harvesting and transport (incremental)
Harvesting and transport operations considering trash recovery with the cane require the
development of new equipment to deal with both trash and cane. Studies carried on during
project BRA/96/G31 focused on alternatives to handle cane and trash, but considering only
commercial equipment. The field tests already performed were extremely useful to evaluate what
happens during this new harvesting and transport condition and point out the constrains to be
overcame and have already started discussions on the possible improvements. The optimization
of the system will consider:





Improvement (partial cleaning) or elimination (whole material harvesting) of the
harvester cleaning system.
Design of a new elevator to the harvesters in order to load cane and trash to
haulages.
Development of lighter trucks and trailers to transport cane and trash with
considerable volume increase. This solution has already been explored but requires
high investment. Hence CTC will continue to explore the solution for future
implementation.
Studies and developments to increase load density such as reducing cane billet
length and using truck body vibrators, already tested in the PDF phase due to the
financial weight of this component and the relative simplicity of envisaged
solutions
Increase the number infield bins pulled by tractor and of trailers pulled by truck and
trips per day as a result of the lower load already tested in the PDF phase due to the
financial weight of this component and the relative simplicity of envisaged
solutions.
Activity 1.1.2- Optimize cleaning, storage, chopping and feed in (Incremental)
The harvesting and transportation of cane and trash together to the mill require a separation of
cane and trash by means of a dry cleaning station at the mill site. Besides, it will be necessary to
design further trash processing operations such as trash storage, chopping and feed in. This
activity will include:

Improvements to increase actual cleaning station efficiency from 50% can possibly
be increased to 70% with the incorporation of recent developments in the cleaning
chambers.
33



Development of trash shredding equipment.
New handling systems to deal with trash and bagasse year around (mill internal
transport of trash and mixing to bagasse), avoiding any lack of feeding to the
boilers.
Adaptation/development of boiler feeding system to the new fuel (mixture of
bagasse and trash).
Output 1.2: Demonstrate economic viability of trash use
Activity 1.2.1- Estimate costs of additional investments, operation and maintenance (Mostly
incremental)
Define all operations involved in the field and factory to recover cane and trash, trash separation,
trash handling, trash processing, trash and bagasse storage, power generation (year round) and
connection to the grid. Determine equipment performance and size (for factory equipment),
equipment performance and number of equipment (for field equipment) through simulation
models. Determine purchase and operational cost.
For the new equipment or innovations, design and prototypes should have been developed and
trials carried during preparation and in Output 1.1, determining performance and cost
parameters.
A high investment must be made to implement the cleaning station at the mill site. This device is
a new technology and still expensive. However, all technical solutions to be implemented at the
field will aim at reducing the investment costs including this one. The reduced level of impurities
of cane should allow such minimization.
Activity 1.2.2- Precisely qualify and quantify agronomic benefits (Baseline)
The studies carried on project BRA/96/G31 regarding the benefits and problems of leaving or
removing trash from the field were mostly based on field experiments designed for the project.
Nevertheless, the expansion of unburned areas in commercial sugarcane fields in the last years
(due to the unburned cane harvesting phase-out legislation) showed some drawbacks of leaving
cane in the field that were not observed during project BRA/96/G31.
Today it is possible to get information from several mills, considering the effect of trash on
sugarcane yield, tillage operations, herbicide use, plagues and others for different regions and
field conditions (soil, variety, etc.). As an example, trash blanket herbicide effect, considered
sufficient to control weeds during first trials, is now selecting weed species that coexist with
trash and need herbicide control. These parameters should be properly addressed and the impact
in harvesting cost determined, considering trash recovery, with the gains or losses attributed to
the trash cost.
Activity 1.2.3- Estimate sale-price including guarantied power (mostly incremental)
After the conclusion of the previous activities it will be possible to determine all the involved
costs, leading to the determination of trash cost and further the energy cost. This activity will
benefit from analysis of the potential buyer’s market for the electricity produced (PDF and
activity 1.3.1 and 1.3.2). Financial indicators such as payback period and IRR should be in the
34
normal range both for the mills and the banking sector. The sugar industry has relatively long
term investment criteria and so do the partner banks. Financial analysis will be carried out
considering the necessary arrangements for guarantied power, with the determination of
minimum energy sale-price.
Activity 1.2.4- Elaborate financial simulation and corresponding business plan (mostly
baseline)
Despite the deregulation of the energy market after its privatization, energy prices were dictated
by energy companies, the only allowed buyers of energy. Except for the energy shortage period,
sale-prices for the sugarcane mill’s energy never got to levels compatible with the price of the
energy sold by the energy companies. This situation has not changed much even after the
creation of PROINFA.
Recent decrees have allowed major electrical consumers (at least 3 MW and 69kV) to become
free from public utilities and these consumers can be connected to the grid system in 13.8kV, if
they buy energy from renewable sources.
Nevertheless, one of the drawbacks of the energy produced by sugarcane mills has been the fact
that it is generated only during the harvesting season (6 to 7 months/year), hence not meeting a
potential consumer demand. Generating all year around will increase the number of potential
clients and also increase the sale price allowing justifying investment.
With energy generation year round, and the possible arrangements of energy producing
sugarcane mills, it will be possible to have guaranteed power. This will make this energy more
demanded with the possibility of good contracts with these “free consumers”. Arrangements
through the contact and workshops with interested consumers will be made, with the possibility
of pre-agreements or intention letters defining the energy sale-price.
Based on this set of activities, the project team and the mills will seek financing partners to
realize needed investment. The sugar industry is currently well endowed with financial partners
and the main barrier to be removed will be to explain to financers the rationale for this somewhat
innovative investment. The participation of GEF in the project will be a major asset in these
negotiations.
Output 1.3: Generate secure markets for electricity
Activity 1.3.1- Organize contacts between potential investing mills and electricity consumers
(incremental)
During PDF B the nature of potential buyers, their needs and their willingness to pay will have
been assessed. Based on these results, contacts will be arranged between the mills and the major
customers looking for alternative sources of energy. This matching activity will ground the
elaboration of business plans to ground mills investment decisions and will accompany candidate
mills to financiers.
Activity 1.3.2 Organize seminars to present results of feasibility studies (incremental)
35
At this stage of the project, and although mills in particular will have been involved in the project
work on a day to day basis, it will be important to provide elements of decision to the wide range
of stakeholders eventually involved in the investment projects be it the potential consumers,
Brazilian Government through MCT/FINEP, specialized lending institutions, the electricity
regulator or the transmission company. Hence the project will organize such an event not as part
of project dissemination activities but as part of deal brokering.
Activity 1.3.3- Organize working sessions among future partners (incremental)
The envisaged investments require developing a real trust-based relationship. Based on activity
1.3.1 and 1.3.2, it is expected that alliances between consumers and mills and interest of lending
institutions will emerge. These alliances once identified need to be built. Opportunity to organize
only two-way (mil + consumers and separately mill + bankers) working sessions will be
assessed. The level and nature of data exchange can then be greater. A strong partnership can be
built through these specific working sessions. CTC as executing agency and neutral broker will
foster such exchange and assist whenever accepted. CTC proactive role and expertise will be
most useful to these negotiations. The level of detail will include load curve of consumers and
match by mills, notional sale prices and guaranty clauses, split between fixed and kWh based
payment, financing methods and collateral requirement, etc.
Outcome 2: Investment takes place in at least three mills
Output 2.1: Project approval by financing institutional and energy buyers
Activity 2.1.1- Securing PPA for investment financial viability (Baseline)
The Project will consider PPA alternatives such as sales to final consumers directly and sales to
the electric utility. In order for the Project to be economically viable the PPA will have to meet a
certain minimum criteria, in terms of energy sale-price, credit conditions and so on. This Project
will require that PDF-B will lead to a clear view of this figure to indicate that the Project can get
approval by financing institutions and energy buyers. Minimum energy sale-price determination
will be carried out in further thorough analysis during the Project in Activity 1.2.3.
Activity 2.1.2- Securing additional funding sources from Brazil to support new technological
development if needed (incremental)
Most probably the feasibility results will be in favor of the trash option since the main cost
related barrier is transport and this issue will have been solved. However, due to the risk aversion
of mills on one hand and banks on the other, a risk premium will probably affect final financial
calculation. This premium directed to the innovative technological nature of the trash recovery
option will be covered by ad hoc subsidy funding such as the MCT and FINEP. Preliminary
contacts with MCT and FINEP confirmed that Biomass use is a national priority and MCT
indicated they interest and support of the initiative. The project will secure such funding when
required. In particular, associating these two institutions as well as others to be identified during
PDF to project development will facilitate such transaction.
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Activity 2.1.3- Lending documents are prepared and presented to potential lenders in
accordance with banking requirements (Baseline)
This activity on setting financing arrangements and finalize contracts. The general behavior
observed in the sugarcane sector in Brazil is the involvement of the sugarcane mill itself in the
business of electric power generation to be exported to the grid (most sugarcane mills are family
run and usually do not accept outside partners). Project resources will normally be derived from
BNDES (similarly to what occurred with previous cases of power generation projects at
sugarcane mills), through direct lending operations or through other financing agencies such as
state and private Banks that will structure project financing.
At the outset of this group of activities the sugar mills will have negotiated commercial and
financial conditions and will be in a position to actually invest in the complete package of
equipment needed to use the trash potential and to export electricity all year round to the grid.
Outcome 3: Monitoring & evaluation, dissemination and replication
Outcome 3 related activities are mostly incremental.
All through the project CTC will keep its members informed of project progress. While CTC will
dedicate efforts and resources to remove the main barrier for trash use which is mostly technical,
GEF support will serve to remove other barriers related to market development and will promote
this solution in other countries in the region.
To secure maximum environmental benefits, the project team will engage after project year 3 in
associating additional mills. These mills will benefit from GEF support in having access to all
information developed with the 3 first candidates and the project team will accompany them
through activities related to outputs 1.2 and 1.3. Logically these new mills will be closely
associated to outcome 3.
If during the course of the PDF, the level of GEF funding can be divided into a higher number of
mills without hampering the investment, the option will be presented in the project brief for GEF
approval. The current estimate is based on results on the Brazil GEF BIG GT projects and
preparatory activities (PDF) might open new opportunities to expand the envisaged scope of the
project. Similarly, if investment costing allows avoiding support from MCT and FINEP, the full
cost will be covered by sugar mills.
It is expected that contacts with the Brazilian authorities and in particular MCT will secure that
mills engaged in using trash will benefit from financing conditions more interesting than
commercial ones. The level of support from the specialized banking sector will be assessed
during PDF as well.
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