Modeling electricity consumption from sugarcane bagasse in Brazil: 2013 to 2021

Abstract

Biomass represents 9% of the installed electricity generation capacity in Brazil. If only sugarcane bagasse is considered, it represents 7.5% of the country’s electricity supply. Thus, seeking a broader economic vision, the main objective of this research is to analyze the behavior of electricity consumption generated through sugarcane bagasse in Brazil, from 2013 to 2021. To do this, it used a model in dynamic panel using as independent variables the price of electricity, per capita income, sugarcane production, price of ethanol (competing product), total electricity consumption in each state and the level of rainfall. The analysis sought to capture differences in bioelectricity consumption between states considered richer and poorer. After confirming the indication of the absence of a unit root in bioelectricity consumption, the model was estimated using the generalized first difference moment method (FD GMM), which was more robust to the data. The results suggest that the consumption of sugar-energy electricity has been decreasing, on average, 0.82% per year in the period analyzed. However, the research also showed that the increase in electricity prices had a positive effect on the consumption of sugar-alcohol bioelectricity, offsetting the effect of the downward trend in recent years. From a regional point of view, the research also showed a downward trend in consumption for the states considered more developed and a slight upward trend for the poorest regions. This implies that price and income, analyzed together, point to the existence of a systematic effect between income levels on the price elasticity of demand for electricity from sugarcane. The finding is important for those responsible for conducting energy policy as it indicates that different income levels between regions must be taken into account when proposing public policies to contain or encourage electricity consumption from renewable sources.