legislative framework

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Selected aspects of legislative framework in EU countries influencing small-scale biogas development www.bioenergyfarm.eu

Current development status 2

Current development status The maximum electric power 3 60 40 of installations defined as microscale in a given country France 100 kwe 5 70 550 52 Belgium Netherlands 30 kwe 50 kwe 15 Denmark 100 kwe 70 Germany 75 kwe 9 Poland Italy Spain 40 kwe 100 kwe 100 kwe Estimated number of operating agricultural micro-scale digesters 3

Current development status 35 30 share of renewable energy in gross final energy consumption, % 25 20 15 10 5 0 2012 TARGET Share of renewable energy in gross final energy consumption under 2020 Energy Strategy. Source: European Environment Agency. 4

How MSD fits into European energy strategy? 5

How MSD fits into European energy strategy? COMPETITIVE energy SUSTAINABLE energy SECURE energy increases the competitiveness of the power generation market contributes to enhanced security of power supply is produced by farmers for their own needs, from fuel available for free - manure causes emission reduction achieved through the avoided use of fossil fuels contributes the reduction of methane and nitrous oxide emission from manure storage creates new work places to technology providers, plant developers, and technical support fuel and fertilizer is available for free, thus more capital remains in the region decentralized energy production, avoiding supply uncertainty and decreasing the impact of exchange rate variations All these aspects are included into the price of 1 kwh of green electricity from biogas, whereas the price of black electricity most often do not include external costs. 6

Identified barriers and support mechanisms 7

Identified barriers legal procedures, which are too complex and are too costly for this kind of simple installations difficulties with financing investments, because of: o unstable legal framework (changing tariffs and support schemes) o high investment cost even if profitable in a longer time perspective, microscale digesters require an initial investment that turns out to be too much, especially when the exact payback time is difficult to determine due to changing tariffs and support schemes o external and environmental profits often not included into tariff calculation most politicians are not yet aware of the huge potential of biogas in the energy turnaround 8

price [ /MWh] Identified barriers & support energy pricing 350 300 250 200 150 100 50 0 wholesale market electricity price households electricity price Belgium Denmark France Germany Italy Netherlands Poland Comparison of households electricity price with wholesale market electricity price. 9

EU-28 Euro area (EA-17) Denmark Germany Italy Belgium Netherlands Poland France /kwh Identified barriers & support energy pricing 0,30 0,25 0,20 0,15 0,10 0,05 0,00 VAT Taxes and levies other than VAT Basic price (without taxes and levies) Electricity prices for household consumers, first half 2013 10

price [ /MWh] Identified barriers & support energy pricing 350 300 250 200 150 100 50 0 Belgium Denmark France Germany Italy NetherlandsPoland certificates secure payment feed-in tariff wholesale market electricity price households electricity price Comparison of possible revenues from electricity production surplus sale into the grid (or produced electricity) to purchased electricity price (06/2015) 11

Identified barriers & support Support mechanisms Mechanism BE DK FR DE IT NL PL Investment subsidy X* X X X Secure payment added to the revenues of producing or selling the electricity on the market X Secure payment added to the revenues of selling the heat on the market Secure payment added to the revenues of selling the biomethane on the market Subsidy in form of certificates for producing or selling the electricity on the market Feed-in tariffs (guaranteed payment) for selling the electricity on the market Feed-in tariffs (guaranteed payment) for selling the heat on the market Feed-in tariffs (guaranteed payment) for selling the biomethane on the market X X X X X X X X X X X X Tax aid systems X X X X X X 12

Self-consumption or integration with the grid? How it influences support mechanisms? 13

Integration with the grid 7 kw 3 kw Electricity consumption in the selected measurement period (August - November) - ca. 2800 h source:ozerise.pl/ 14

Power demand Integration with the grid Daily variability of energy consumption on the farm vs self-sufficiency hours Electricity consumption in the selected measurement period (one day, Dairy farm) source: ozerise.pl/ 15

Energy consumption Week) Integration with the grid Seasonal variability of energy consumption on the farm vs self-sufficiency Weeks source: ozerise.pl/ 16

Integration with the grid 80 Complex billing system = unpredictable payback 70 60 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 17

Conclusions 18

Proven solutions Catalysts Simplicity and adequacy of support schemes (FiT and tax) Environmental bonuses (i.e. for manure management) (Germany, Sweden, Italy) Higher costs of bio-waste utilization and of electricity Inhibitors Instability and unpredictability of the support schemes and country strategies Complexity of legal procedures (environmental and construction permits, etc.) Reluctant cooperation with grid operators 19

Summary The market of micro-biogas installations show the potential for further costoptimization. But to maintain the process of technology development and maturation there is a need for maintaining the perspective market Stable and simple support (FiT) for biogas should include larger installations (min. up to 40-100 kwe) because of significantly increased cost effectiveness Environmental and stability bonuses are needed for equaling the energy price from different RES Investment subsidy without FiT doesn t work. FiT without investment subsidy works well on the longer run costs optimization Access to the grid with full TPA including distribution costs an idea worth consideration 20

Thank you! 21

Thank you! Speaker: Marek Amrozy e-mail: mamrozy@nape.pl Address: ul. Świętokrzyska 20 00-002 Warszawa Tel: (22) 50 54 661