Strategic cogeneration — fresh horizons for the development of cogeneration in Brazil

An earlier study (Szklo A, Soares J, Tolmasquim M. Economic potential of natural gas-fired cogeneration in Brazil: two case studies. Applied Energy 2000;67(3):245–67) that assessed the economic feasibility of gas-fired cogeneration systems in Brazil, indicated that the use of cogeneration in Brazilian malls tends to be small in the short-term. However, current experience is opening up the possibility of investments in cogeneration plants — despite their lack of economic feasibility — as part of the strategic actions of utilities in the energy market. The earlier study made no attempt to analyze this possibility, focusing solely on economic feasibility. This article supplements its predecessor by analyzing a type of cogeneration rated as strategic. This is a recent phenomenon prompted by the deregulation of Brazilʹs energy market. Within this new context, power utilities are taking up a defensive behavior as they battle to preserve their markets, in parallel to aggressive behaviors designed to expand and diversify their activities. This means that they may well invest in cogeneration for strategic reasons that may not be clearly reflected through an economic-feasibility assessment.