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Biogas production and the EEG in Germany

Jana Schultz, Jip Dekker

Introduction

In Germany, a series of laws was issued to promote energy production from renewable resources. These series of laws is called Renewable Energy Resource Act or EEG. It includes a feed-in tariff to promote renewable electricity. The goal of EEG is the preferential infeed of electricity which is generated from renewable resources. These laws are frequently reviewed; the last version is from 2017 (Bundesministerium, 2019).

There are some policy measures defined which support the building of biogas plants. In 2018 in Germany there were 9.494 biogas plants in use (Fachverband Biogas, 2018).

Description of the Product and Technology

There are many biomass products which can be used for the production of biogas. For example, there are substrates from the agriculture, for example, liquid manure, corn or grass silage. , there are by-products from the agro-industry which can be used, for example, products from the beer production or potato industry (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

In 2016 48.9 % of the substrates used to produces energy were from renewable resources and of that 44.5 % was liquid manure (Fachagentur Nachwachsende Rohstoffe e. V., 2018). The remaining amount came from biological waste, and industry or agriculture residues.

Biogas is produced through anaerobic digestion. The gas is generated from organic mass under exclusion of oxygen. The organic mass is almost completely transformed into a gas, by numerous microorganisms. This generates thermal energy and new biomass. The resulting gas mixture is composed of 50 – 75 volume per cent methane and 25 – 50 % volume per cent carbon dioxide. Furthermore, other gases are produced, for example, hydrogen, which exists only in a very low concentration (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

The process of the production can be subdivided into four different stages. The first stage is called “hydrolysis”. Carbohydrates, protein and fats are cleaved into simple organic compounds. The next two steps are acidification and acetification, followed by the last stage called methanogenesis. In the last stage acetic acid, carbon dioxide and hydrogen are converted to methane by anaerobe methanogenic archaea (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

For a successful production of biogas specific conditions have to comply because the bacteria have certain requirements concerning their habitats. Without the fulfilment of these requirements, they are not active. The conditions differ according to the design and operating mode of the biogas plant, as well as the kind and concentration of the used biomass (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

In conclusion , there are many different processes for producing biogas.

Description of the Market

As already mentioned, in 2018 there were 9,494 biogas plants in use in Germany. The numbers of biogas plants strongly increased between 2008 and 2011 from 3,891 to 7,838 plants because of good financial conditions based on the EEG. This sector provides approximate 47,000 jobs (Fachverband Biogas, 2018).

                            

                  Source: Fachverband Biogas (2018). Biogas Market data in Germany 2017/2018. Retrieved from: https://bit.ly/2RQqEiK

In 2017 216.3 terawatt-hours of electricity were produced from renewable resources. This is one-third of the whole energy production in Germany (Bundesministerium für Wirtschaft und Energie, 2018). Thereof 50.9 terawatt-hours were produced from biomass. There were 29.3 terawatt-hours of electricity produced from biogas. Hence biogas accounts for 13.6 % of the total electricity generating from renewable resources, this makes biogas an essential factor for the creation of electricity from biomass. In the heating sector, 170.8 terawatt-hours were produced from renewable resources, of this amount 7.6% was produced with biogas (Umweltbundesamt, 2018).

At the beginning of 2018, there were approximate 9.5 Million households which supplied with biogas-based electricity (Fachverband Biogas, 2018).

Description of the Policy Measures  

There are different policy measures for biogas, these measures are regulated by and written down in the EEG. There are subsidies for the biogas producer. In the following, some of these measures will be presented.

In 2004 a feed-in tariff was passed for electricity produced from renewable materials. It works by establishing, long-term contracts with energy producers, offering them a fixed price per kilowatt-hours (Couture et al., 2010). The measure should provide an incentive to produce energy in a more sustainable way. This subsidy was scrapped in 2012, due to decreasing prices of photovoltaic energy and the subsequent lobbying of oil companies (Bundesministerium für Wirtschaft und Energie, 2019). 

In 2009 the subsidy for using liquid manure as a substrate for generating biogas was established. The aim of the measure is to decrease the amount of liquid manure on the fields because German soils are suffering from an excessive nitrogen input. Another aim is to strengthen small biogas plants in their economic efficiency to increase the economic efficiency of small biogas plants.

There is also a market premium for those who place their biogas directly on the market. The producer will get the market premium instead of the feed-in tariff. The amount of the premium is calculated from the difference between the market price and the feed-in tariff. This measure should provide an incentive to switch to direct marketing. The subsidy also should compensate the price risk on the market and the contractual risk (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

In 2012 a flexibility bonus was established for the producer who has an overcapacity. The measure should provide an incentive to invest in a second biogas plant and storage for gas or heat (Bundesministerium für Wirtschaft und Energie, 2019). The aim is to orient the producer to market signals and to make the producers  more flexible. Flexibility in power generation capacity is expected (Bundesministerium für Wirtschaft und Energie, 2015).

The last one is a privilege for using green power. It is a complete exemption from EEG reallocation charge for energy supply companies. But only if they purchase a certain proportion of their electricity from renewable resources (Fachagentur Nachwachsende Rohstoffe e. V., 2016).

Evaluation of the Effects of the Measures

The described measures helped to create and establish a market for biogas in Germany. Since 2012 the financial support from the government has been declining. The feed-in tariff has been reduced and the subsidy for using liquid manure has been stopped. The cause for the stop was an over-funding. In addition to the reduced subsidies, the prices for the substrates rose and it came to a change in the risk classification by financing banks because some plants did not achieve their profitability (Bundesministerium für Wirtschaft und Energie, 2015). In consequences of this, the number of new-building biogas plants decreased because it is no longer economically viable without the subsidies.

All in all the measures opened a market for biogas, but without them, there is stagnation or a decreasing of plants. There were also misjudgments in the financing and profitableness of the biogas plants.

References

Bundesministerium für Wirtschaft und Energie (2019): Eckpunkte der EEG-Novelle 2012 sowie sonstige Neuerungen für erneuerbare Energien. Retrieved from: https://www.erneuerbare-energien.de/EE/Redaktion/DE/Dossier/eckpunkte_der_eeg_novelle.html?cms_docId=75590, last access: 22.01.2019.

Bundesministerium für Wirtschaft und Energie (2018): Erneuerbare Energien. Retrieved from: https://www.bmwi.de/Redaktion/DE/Dossier/erneuerbare-energien.html, last access: 22.01.2019.

Bundesministerium für Wirtschaft und Energie (2015): Markt Analyse Biomasse. Retrieved from: https://www.erneuerbare-energien.de/EE/Redaktion/DE/Downloads/bmwi_de/marktanalysen-photovoltaik-biomasse.pdf?__blob=publicationFile&v=5, last access: 22.01.2019.

Couture, T. D., Cory, K., Kreycik, C., & Williams, E. (2010). Policymaker's guide to feed-in tariff policy design (No. NREL/TP-6A2-44849). National Renewable Energy Lab. (NREL), Golden, CO (United States).

Fachagentur Nachwachsende Rohstoffe e. V. (2018): Basisdaten für Bioenergie in Deutschland, Gülzow-Prützen. Retrieved from: http://www.fnr.de/fileadmin/allgemein/pdf/broschueren/Broschuere_Basisdaten_Bioenergie_2018_web.pdf, last access: 22.01.2019.

Fachagentur Nachwachsende Rohstoffe e. V. (2016): Leitfaden Biogas. Von der Nutzung zur Gewinnung, Gülzow-Prüzen. Retrieved from: http://www.fnr.de/fileadmin/allgemein/pdf/broschueren/Leitfaden_Biogas_web_V01.pdf, last access: 22.01.2019

Fachverband Biogas (2018): Biogas Market data in Germany 2017/2018. Retrieved from: https://www.biogas.org/edcom/webfvb.nsf/id/DE_Branchenzahlen/$file/18-07-05_Biogasindustryfigures-2017-2018_english.pdf, last access: 22.01.2019.

Umweltbundesamt (2018): Erneuerbare Energien in Zahlen. Retrieved from: https://www.umweltbundesamt.de/themen/klima-energie/erneuerbare-energien/erneuerbare-energien-in-zahlen#textpart-1, last access: 22.01.2019.

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