Post feed-in tariff futures for pioneer renewable plants: Biogas
Florian Stoltzenberger’s first encounter with the concept of biogas was in the movie Mad Max Beyond Thunderdome. It was 1990 and, at the time, he was looking out for an extra income stream for his pig farm. Inspired by Mad Max, he began to research biogas technology and grew interested in trying it out himself.
In 1993, Stoltzenberger built a biogas plant from scratch (few components were available at that time), and he started using pig manure, flotate fats and biowaste from food production as substrate. Today, the electric power he generates is fed into the public grid and the thermal energy is used for grain drying as well as heat supply for company buildings and houses on the farm.
As one of the earliest exponents of biogas electricity generation in Germany, Stoltzenberger is one of the first to reach the end of his 20 year feed-in tariff agreement. As of 1 January 2021, he has had to directly market his energy.
There are approximately 9,500 biogas plants operating in Germany. They are generating around 11 percent of Germany’s gross renewable electricity output (2020). On 31 December 2020, 1000 plants came to the end of their 20-year feed-in tariff allocation, leaving many in trouble. Fachverband Biogas predicts that about 200-250 plants will have to close.
When the energy ministry announced a reform of the Renewable Energy Act (EEG) in 2016, including a limited growth path for biomass installations, the government reasoned that it didn’t make sense to support the most expensive form of renewable power when others were still gradually falling in price.
Neither biogas technology nor the costs for substrate, which also depend on the land price and the limited amount of space to grow energy plants, are expected to become much cheaper in the future.
Few farmers interested in auctions for reduced feed-in payment
Since 2017, all biogas plants over 150 kW capacity have had the opportunity to bid for government contracts in auctions; about 300 plants have participated so far, of which around 260 have received contracts. The maximum auction price for biogas is lower than the old feed-in tariff, so many biogas plants haven’t bothered to compete for part of the tender. But without a contract, those losing the feed-in tariff may find it difficult to survive at all.
Florian Stoltzenberger is one plant operator who has successfully bid for a government contract to continue generating biogas. He has 650 fattening pigs on 250 hectares in the northeast of Baden Württemberg on the border with Bavaria and for the last 20 years biogas has been a mainstay of his business. He has been innovative, using manure from neighbouring farms and developing plans to use spelt husks from a nearby agricultural business as substrate. With the loss of the feed-in tariff, Stoltzenberger can no longer depend on biogas as a principle revenue stream on his farm, but he is in a fortunate position compared to smaller plants and those that have not won government tenders.
Biogas can be compared to the fire service: it’s worth the investment so it’s there when you need it.
The 2021 EEG stipulates that all plants bigger than 150 kW can participate in the auctions. The maximum bidding offer for existing biogas plants is 18.4 cents per kilowatt-hour (ct/kWh). For new plants, the maximum bidding offer is 16.4 ct/kWh. A flexibility premium of 65 euros per kilowatt of installed capacity per year is also available, allowing plants to earn more by expanding to meet demand when needed. The opportunity to earn more from peak prices has been available since 2014 but has not been widely taken up by biogas plants. Only around 150 out of a total of 9,359 plants are run flexibly according to demand and to support grid stability, a 2020 report commissioned by the agency for renewable resources (Fachagentur Nachwachsende Rohstoffe – FNR) has found.
Making use of their flexibility could be the Raison d'Être for biogas plants
According to the German Biomass Research Centre (DBFZ), currently around 3,300 biogas and biomethane plants with an installed capacity of around 2.2 gigawatts receive a so-called flexibility premium under the EEG. With this premium, feeding electricity into the grid in high-demand periods promises additional revenues, but only a small fraction has already been operated on this basis, an analysis conducted by Agrarservice Lass GmbH has found. So although biogas in theory has the considerable advantage over other renewables, such as wind and solar power, that its output can be steered and geared to times of peak demand and low availability of other renewables, most biogas plant operators are still relying on the fixed remuneration they get for feeding electricity into the grid permanently.
When it comes to the post feed-in tariff future, smaller plants are in a more precarious position than larger installations; those smaller than 150 kW (of which there are approximately 3,000, according to the German Biogas Association (Fachverband Biogas), which lost the feed-in tariff at the end of 2020, have been granted a short extension in feed-in payments until the end of 2021.
Andrea Horbelt of Fachverband Biogas says she hopes the government will take note of the closures that result from the loss of the feed-in payments. Unlike for wind and solar, biogas has costs (such as the cultivation of substrate crops) which make it more expensive to generate power. However, the advantage of biogas is that it offers reliable energy regardless of the weather. She says that biogas can be compared to the fire service: it’s worth the investment so it’s there when you need it.