Brazil has launched the PROINFA program, a regulatory mechanism to incentivize renewable electricity generation. In the light of this new framework, the best economical option for cogeneration was analyzed using one of the biomass resources available in Brazil-Babassu. Thus not only the possible power production but also the potential of such a regulatory tool to enhance the electricity production based on this biomass source, was analyzed. The power production was based on a steam power cycle cogeneration technology within the Babassu palm oil extraction industry in Brazil (Orbignya ssp. (Palmae)). Was used as base for this study: the energetic matrix for the oil extraction plants (for the two main profiles: oil extraction and refining only, and greater vertical integration with the production of other associated products obtained from the Babassu palm oil), utilization of an extraction-condensation turbine, and steam production operating at three levels of temperature and pressure (2.06 MPa/350 degrees C, 4.56 MPa/420 degrees C and 6.2 MPa/450 degrees C). To analyze the economic performance, the framework drawn up by the PROINFA was taken. From the analysis, the best economical/ technical option for the design of the cogeneration system was found to be in industrial units with extraction and treatment of crude Babassu oil-steam generation at 4.56 MPa and 420 degrees C and, for units with a more vertically integrated production scheme-steam generated at 6.2MPa and 450 degrees C. As a result, it became clear that the given framework may help the development of new renewable energy sources, but it does not give the necessary threshold to start new projects, neither does it incentive the maximization of the power production for this specific biomass resource. (c) 2006 Elsevier Ltd. All rights reserved.