Sao Jose da Estiva Biomass Plant

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The company Usina Sao Jose da Estiva S.A. Acucar e Alcool, a wholly-owned subsidiary of the Brazilian group W.J. de Biasi, was granted the authorization to build and operate a sugar-cane-residue fueled power plant located in the state of Sao Paulo (42.5 MW in total capacity). The 30-year contract was signed with the regulatory agency ANEEL in April 2000. The sponsor created a special purpose company named UTE Sao Jose da Estiva S.A. to manage the project. The power plant was initially established as a captive unit, but only in 2000 it received the approval from the regulatory agency to expand capacity and to sell electricity to the grid. The power plant had initially a capacity of 6.9 MW, which was expanded to 19.5 MW in 2002. In 2009, the sponsor received another authorization to expand its capacity to 42.5 MW, allowing a greater amount of electricity to be exported to the national grid. As of February 2012, construction works were concluded. The value of the investment committed to the project was not available. The electricity produced with the expansion of the capacity was set to be sold under two power purchase agreements: the first with the electricity distribution company CEMAT, valid until 2016, and the second with Grupo Rede, valid until 2022. Additionally, any energy surplus not sold was set to be negotiated in the free market with purchasers not yet established. The company was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures.