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Biogas: lower feed-in fees and tighter eligibility criteria

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11 January 2012
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."

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.

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.
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