Cosan Bioenergia

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In 2008, Cosan SA Bioenergia began constructing three Bagasse Co-generation plants at three of its sugarcane mills in Sao Paulo state with a total installed capacity of 200MW. The three facilities (Costa Pinto 75MW, Rafard 50 MW and Bonfim 75 MW) were approximately 23% captive and produced electricity for their own operation as well as the national grid. Crushing sugarcane with high pressure boilers produces a surplus of Bagasse which could be used as a clean energy source. The facilities included transmission lines, but they were not far from distribution centers by Brazilian standards. Cosan SA Bioenergia, a subsidiary of Cosan SA, was created to invest in co-generation projects. Cosan SA, the parent company, was primarily involved in agricultural products and bio-fuels. In December 2005, the federal electricity regulator Aneel awarded Cosan SA Bioenergia the right to sell and supply excess electricity generated from their Costa Pinto and Rafard sugarcane mills by means of biogas technology. A 15 year power-purchase agreement (PPA) was included with the following terms: the right to sell approximately 271,500 MWh per year at the current average price of R$161.10 (US$75.8) per MWh, beginning with the 2009/2010 harvest for a period of 15 years, adjusted annually for inflation according to variation in the IPCA. Again, in October 2006, Cosan SA Bioenergiawon another public bid to sell energy at its Bonfirm facility to a pool of 24 electricity distributors with the following terms: approximately 183,960 MWh per year at an average price of R$140.91 (US$66.3) per MWh, beginning with the 2011/2012 harvest for a period of 15 years, adjusted annually for inflation according to variation in the IPCA. Energy not included in the two PPA’s was to be sold on the spot market. The total project cost was estimated at Real 428.5 million (US $234.2 million). In May 2008, BNDES approved approximately R$ 369 million credit (US $201.6 million) for Cosan SA Bioenergia, consisting of 85% of the project cost. The remainder was to be financed from Cosan SA’s own resources. The debt to equity ratio was 85 to 25. The Costa Pinto and Rafard plants became operational in December 2008, while the Bonfim unit became operational in June 2010. In addition to selling electricity to the grid, another source of revenue for the plants was carbon credits available due to the clean energy status of the facilities. Cosan SA estimated that with their energy sales agreements in place in 2008, they would generate approximately 376,000 tons of carbon credits a year starting in 2009.