A new German renewables law will create new biogas funding hurdles, however, the effect will only effect certain biogas plant sizes and types, and shouold be seen against a strong biogas market in the country. In the long-term delivering value to the taxpayer is essential and hopefully these measures will help do that. here is the original press release/ article:
Germany's amended renewable energy sources law (EEG 2012), which came into force in January, is unlikely to provide a significant boost to biogas capacity because stricter rules have made it more difficult to fund investment, the German Biogas Association told Platts.
The association represents around 4,600 members including biogas producers, plant makers, as well as agricultural and industrial biogas plant operators.
"In general, feed-in tariffs are lower than in the past, and some provisions make it more difficult to obtain credit," association spokeswoman Andrea Horbelt said. "We assume that a lower number of plants will be built because of stricter conditions which hamper rather than promote capacity expansion."
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However, the impact of the changes varies within the biogas sector and the new rules were influenced by the federal government's change in energy policy last year, which entailed green energy a prominent role in the future energy mix.
From 2012, biogas plant operators have to meet certain criteria to qualify for feed-in fees that are fixed for a 20-year period. Feed-in tariffs are usually well above the market price and the difference is passed on to end- consumers in form of a surcharge, although energy-intensive users are exempt.
Certain plant operators, for instance, will forfeit the feed-in fee if they fail to prove that at least 60% of heat from a block-unit power station has actually been used. This creates uncertainty and makes banks reluctant to provide loans, Horbelt said. Under the previous system, which was more complicated but more generous, biogas companies were certain of receiving a fixed feed-in fee and could claim various extra bonuses for meeting additional criteria.
Medium-sized biogas plant projects are likely to be those most affected by the combined effect of lower feed-in fees and tighter eligibility criteria, Horbelt said.
By contrast, higher feed-in fees for small plants with a capacity of up to 75 KW could encourage growth in this sector which so far attracted little investment because costs per installed KW are generally higher than for larger plants, Horbelt said. Fees in this segment have risen to 25 euro cents/KWh (32 US cents/KWh) from around 22 euro cents/KWh.
Operators of large plants of 750 KW and over will also see a rise in fees, though future business will very much depend on feeds into gas networks after biogas has been treated to adjust its methane content to that of natural gas.
"We expect that capacity will be added [in this area],? Horbelt said.
But owners of new large plants which will be connected to the grid from 2014 onward will face an additional challenge: They will have to market biogas directly to power traders and receive revenues at exchange-based, market prices instead of feed-in fees. The government will, however, compensate them for the difference between the fixed feed-in tariff and the market price.
"The system is more complicated and carries more risk," the spokeswoman said. "The [old] EEG was tried and tested; it created a functioning market system, and there is the risk that the [spirit of the] EEG is being eroded, that this will lead to a development away from the EEG and the investment certainty it previously offered."
Existing plant operators still qualify for fixed feed-in tariffs but can opt to shift to the market premium-based model -- a move that would only be lucrative if market prices were to rise to above the fixed feed-in tariff.
In 2011, the use of biogas for power production expanded by around 21% year-on-year to 17.5 TWh, according to preliminary data from the Working Group on Renewable Energies (AGEE). A further 16.5 TWh was used for heat production.
The government plans to boost biogas-based injections into the national gas grid to 6 billion cubic meters/year by 2020 and to 10 Bcm/year by 2030. By the end of 2010, grid injections from 44 biogas plants amounted to nearly 270 million cu m, based on data by the grid regulator BNetzA, which last summer forecast biogas feeds in 2011 would reach 436 million cu m.
