Incentive policies for natural gas-fired cogeneration in Brazil's industrial sector - case studies: chemical plant and pulp mill

Although recent restructuring of Brazil's power sector has increased the st akes held by private enterprise in the sector, the role of combined heat an d power generation (CHP) is still undefined. Currently, this generation alt ernative is used only in a few industrial plants, being faced with an unfav orable institutional panorama. Issues related to the buyback rate, backup e nergy contracts and transmission rates are just some of the main barriers t o cogeneration development in Brazil. This article assesses the economic pe rformance of three natural gas-fired cogeneration systems at two specific i ndustrial plants, one in the chemical sector and the other in the pulp and paper sector. As shown by international experience, these two sectors make intensive use of self-produced power. The results show that small and mediu m-size units, less than 20 MWe, are feasible for electric-intensive industr ial plants, due to the current high risk of power outages of the Brazilian electrical system. Large units are only feasible with the adoption of incen tive policies for selling off surplus power generated by the self-producer. (C) 2001 Elsevier Science Ltd. All rights reserved.