Market participants are finding some biomethane prices ranging from around parity to natural gas to much higher levels, particularly when used as a substitute for diesel.
A recent study on biomethane potential in Sao Paulo commissioned by the state's industry federation Fiesp lists four different price methodologies — including Argus' — that result in a range of prices.
Argus' biomethane parity price with natural gas delivered in pipelines ranged from R2.47-2.80/m³ ($0.43-0.48/m³) as of 7 November, while the study said the market's perception for prices in 2023 and 2024 can range from R2.5-4/m³. The study does not specify where the biomethane would be delivered.
The higher end of the price spectrum tends to be related to the use of biomethane as an alternative to diesel fuel in trucks and buses. The study shows that measures linked to replacing diesel with gas in transport can boost distributed demand for biomethane in the territory and make it even more competitive for the industry.
The study also indicates that plants in Sao Paulo could supply up to 6.4mn m³/d, up from 400,000 m³/d. From these 181 potential plants, 84pc would use feedstock from the ethanol and sugar sector and 16pc from landfills. But the research shows a mismatch between the potential supply and demand, with production concentrated in the north and the main consumer centers in the southeast. This creates a logistical challenge for the sector's development in the state.
Other challenges were also listed in the study, such as competitiveness between biomethane and other power sources; the establishment of certificates to value the environmental attributes of biomethane on a large scale; the regulations of multiple suppliers; and a still-in-development consumer market for the molecule.
The research concludes that there is no silver bullet to solve these obstacles and suggests coordinated measures targeting supply, logistics and demand.
The government's role is also fundamental to define appropriate incentives and well-articulated public policies aiming at mitigating these barriers and developing long-term goals, the research said.
