Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012 Financing mechanisms for biogas projects in Central and Eastern Europe [Copyright: Schmack Biogas AG] BiogasIN HLC - Contribution of biogas to EU targets Mrovaske Toplice, Slovenia
Content Background - Biogas production in Europe Prerequisites for a successful biogas market development Main bottlenecks of financing biogas projects in CEE Overview about financing mechanisms Recommendations for a successful financing of biogas projects 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Background - Biogas production in the European Union Agricultural biogas plants are mainly f in Germany, Austria, The Netherlands, Czech Republic and Denmark Other biogases (agricultural material) Landfill gas Sewage gas Shares of biogases on the gross EU biogas production (Primary energy output of 8.3 Mtoe in 2009): [modified after Eurobserv Er 2010] 28/09/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Background Biogas production, 2020 targets and potentials Source: AEBIOM 28/09/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Background CEE has large potential for biogas production due to its significant agriculture sector and its large amounts of energetically untapped waste Investors have already tapped the high biogas potential in CEE countries Nevertheless, biogas markets are not fully developed since they share the main barrier: lack of suitable framework conditions for the set up of new biogas plants In the past permitting procedures and financing schemes were identified as main barriers for the development of biogas markets EU Directive 2009/28/EC on renewable Energies provides new light on biomass and biogas utilisation 28/09/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Successful biogas market development Example from Germany [modified after FVB 2010] Good financing oppurtunities were an important milestone for this development! 28/09/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Successful biogas market development Example from Germany Renewable Energy Source Act (EEG 2009) Main driver attract investments to create financing opportunities, since it ensures revenues for 20 years. This framework makes biogas projects in Germany calculable! 18/04/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Successful financing of biogas projects - Prerequisites Prerequisites for the development of financing opportunities were: 1) Development of good policies for biogas projects including the introduction of feed-in tariffs 2) Availability of a sound biogas industry with mature technical concepts and technologies (including turn-key plants) creating confidence by banks and investors 3) Calculability of the financial risk of biogas projects due to stable policies, legislation, and due to the accumulated knowledge about biogas in Germany 28/09/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Financing - Main identified bottlenecks 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012 Source: modified after Kojakovic et al. 2012, Sioulas et al. 2011
Financing mechanisms for biogas in CEE Overview support instruments Support instruments/ Country Generation focused Investment focused Feed-in tariffs Quota system Fixed premium tariff Investment incentives Tax incentives Low interest / Soft loans Germany Italy Netherlands Denmark Austria Bulgaria Croatia Czech Republic Greece Latvia Romania Slovenia Source: Hahn et al. 2010, Sioulas 2012; BMU 2012 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Guaranteed payment period for the generation based support Guranteed payment period should be 15 years, or more Source: BMU 2012, Sioulas 2011 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Payment level for the produced electricity from biogas 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Payment level Why do we need a separation? Consideration of the economy of scale effect Support of new technologies or the use of specific substrates Source: modified after Haas 2011 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Payment level What is considered? Country / Payment Differentiation Plant size Feedstock type CHP Distance Biogas upgrade Germany Italy Netherlands Denmark Austria Bulgaria Croatia Czech Republic Greece Latvia Romania Slovenia 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing mechanisms for biogas in CEE - Overview Degression of the guaranteed payment 28/09/2012 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Financing biogas projects in CEE - International financing instruments European Union support funds EU Structural Funds (European Social, Regional Development and Cohesion Fund) EU Agriculture Fund for Rural Development European Union support programmes IEE and 7 th framework programme Financing different kinds of scientific research, information dissemination and knowledge exchange activities No investment in technologies but some of them provide initial financing Competitive and innovation FP support inovative activities Other international support mechanisms (EEA and Norway grant, Western Balkan Financing Programmes) 18/04/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Conclusion and Recommendations High biogas potentials in CEE Mature biogas plant technology is available Biogas as tool to reach the RE targets for 2020 with benefits for the rural development Making biogas projects calculable for investors and financing bodies Feed-in tariffs for a sufficient long period (> 15 years) Subsidies can help to stimulate a first market development Different price levels are a good tool to increase the development of small scale biogas plants Create confidence in the biogas market A stable legislative framework in the field of renewable energies Establish information centers and campaigns to share knowledge among all stakeholders Simplify permission procedures for biogas plants 18/04/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012
Thank you very much! M.Sc. Henning Hahn Division Bioenergy System Technology Fraunhofer - Institute for Wind Energy and Energy System Technology Phone: +49/(0)561/7294-261 Henning.Hahn@iwes.fraunhofer.de advancing energy systems 18/04/2011 Contract No. IEE/09/848 SI2.558364 Project duration 01/05/2010 31/10/2012