The Committee on Mines and Energy at Brazil's Chamber of Deputies approved Wednesday a proposal requiring energy distributors to contract at least 700 MW of biomass power capacity annually.

Under bill 3529/12, there will be regular auctions for biomass power over a period of 10 years. To participate in the tenders, energy companies will need to prove that at least 60% of their equipment and services are "made-in Brazil".

The government expects the generation of electricity through biomass to become complementary to hydropower, said deputy Paulo Magalhaes, the measure rapporteur. Under the bill, the power purchase agreements (PPA) will have a term of 20 years from the start of supply to Brazil's National Interconnected System (SIN).

Among several benefits proposed, the revenue from the sale of biomass electricity from producers to consumers located in the same place will be exempted from the PIS/Pasep and the Contribution to Social Security Financing (Cofins) taxes.

The proposal will now be reviewed conclusively by the Finance and Taxation, and the Constitution and Justice and Citizenship committees.