German BioEnergy Association (BBE)

German BioEnergy Association (BBE) November 14th, 2010, London, UK Thomas Siegmund German BioEnergy Association (BBE)

Structure BBE and the CrossBorder Bioenergy project Biogas the all-rounder Success factors of biogas projects - The political frame ambitious targets as market driver - Sound and reliable support schemes - The right project design Biogas market share in Germany Conclusion

The German Bioenergy Association The German BioEnergy Association BBE is the umbrella association of the German bioenergy market and was founded in 1998 to bundle the different sectors and initiatives of the bioenergy market to speak with one voice. Actually there are approx. 25 specialised associations, 8 R&D institutes and 110 companies member in BBE.

The German Bioenergy Association Excerpt of member associations VDBH And many more

CrossBorder Bioenergy Aim of the project The objective of CrossBorder Bioenergy is to help SMEs to evaluate bioenergy markets in Europe in view of cross-border investments, thereby making SMEs less dependent on uctuating domestic market conditions and strengthening the whole bioenergy industry. Five dierent bioenergy market sectors are considered: 1. Biogas 2. Small scale heating 3. Commercial heating with biomass & district heating 4. Solid biomass for electricity 5. Biofuels for transportation

CrossBorder Bioenergy Methodology For each of the 5 market sectors, criteria to identify market attractiveness are defined by representative companies. A method is worked out to process these criteria and find appropriate indicators, and a comprehensive template is produced. This template is used to collect data in EU 27 countries through statistics, enquiries, support schemes, national action plans, etc.

CrossBorder Bioenergy Expected outcomes 5 sector handbooks on how to evaluate international markets 5 market handbooks with assessment of market attractiveness for different technologies Online-database as GIS-tool with comprehensive market informations B2B-platform for different bioenergy stakeholders to enhance cooperation

CrossBorder Bioenergy Project Consortium European Biomass Association (AEBIOM) German BioEnergy Association (BBE) The Bioenergy Association of Finland (FINBIO) Swedish Bioenergy Association (SVEBIO) Hungarian Biomass Competence Center (HBCC) Slovak Bioenergy Association (SKBIOM) Latvian Bioenergy Association (LATBIONRG) Italian Agriforestry Energy Association (AIEL) Danish Bioenergy Association (DI Bioenergi) Austrian Biomass Association (ABA) eclareon Consultants Imperial College London More information: German Bioenergy Association (BBE) Thomas Siegmund Tel.: +49.(0)228.81002-23 siegmund@bioenergie.de Skype: thomas.siegmund

Biogas the all-rounder Biogas the all-rounder Source: German Biogas Association

Biogas the all-rounder Biogas the all-rounder Biogas storage electricity heat fuel natural gas grid The biogas is burned in combined heat and power units (CHP) to produce electricity. Beside the CHP heat is produced as a byproduct. With the biogas from a hectare maize silage drives a natural gas car approximately 70,000 kilometres (nearly twice the length of the The usable biogas potential in Germany can replace up to 20 percent of the German natural gas consumption equator) Source: German Biogas Association

Biogas the all-rounder Excellent perspectives for biogas: grid management Biogas can be stored and utilized at any time, hence a clever management of fluctuant and non-fluctuant RES energy carriers contributes to a efficient and secure availability of RES electricity Source: Kombikraftwerk

Ambitious targets as market driver National targets of the EU RES Directive United Kingdom Sweden Finland The Slovak Republic Slovenia Romania Portugal Poland Austria The Netherlands Malta Hungary Luxembourg Lithuania Latvia Cyprus Italy France Spain Greece Ireland Estonia Germany Denmark The Czech Republic Bulgaria Belgium 15 % 20 Mtoe 18 % 35 Mtoe 0 5 10 15 20 25 30 35 40 45 50 RES final energy 2005 RES final energy 2020

Ambitious targets as market driver German targets for market sectors 30 % RES Electricity in 2020 12 % RES in Transport in 2020 14 % RES Heat in 2020 } 18 % Final energy demand 35,49 Mtoe 8 % bio-electricity 10 % predominantly biofuels 10 % heating and cooling with biomass } 11 % Final energy demand

[ktoe] Ambitious targets as market driver Expected development of RES sectors in DE 20.000 18.000 18.653 16.000 14.000 14.431 12.000 10.000 8.000 6.000 5.301 7.706 6.388 4.000 2.000 0 2.087 '20 RES-E RES-H RES-T '05 '05 '20 Source: BMU

GWh Ambitious targets as market driver Where are expected new markets in Europe? Bioelectricity increase 2005 2020 [GWh] 40.000 35.000 30.000 25.000 20.000 15.000 10.000 5.000 - AT BE draft BU CY CZ draft DK EE FI FR DE draft GR HU IR IT LV LT LU MT NL PO draft PT RO SK SI ES SE UK Large new bioelectricity markets in DE, UK, IT, PO, NL + 139 TWh for 20 countries

Ambitious targets as market driver Where are the expected new markets for Biogas in Europe? Electricity generation with biogas 2005 2020 [GWh] Source: European Biogas Association

Ambitious targets as market driver Where are the expected new markets for Biogas in Europe? Heating and cooling with biogas 2005 2020 [ktoe] Source: European Biogas Association

Ambitious targets as market driver Where are the expected new markets for Biogas in Europe? Biogas as transport fuel 2005 2020 [ktoe] Source: European Biogas Association

Structure BBE and the CrossBorder Bioenergy project Biogas the all-rounder Success factors of biogas projects - The political frame ambitious targets as driver - Sound and reliable support schemes - The right project design Biogas market share in Germany Conclusion

Sound and reliable support schemes - Higher E-production costs - Higher entrepreneural risk - Payment period long enough to incite investments? Level of Remuneration Sufficient? - Cost based? - Market based? Differentiated by - Technology? - Capacity? - Feedstock?... Planning security Purchase obligation EEG - Access to market necessary - Avoidance of blockades Guaranteed grid access - Guaranteed market - Prioritized RES-E transmission? - Fair cost allocation to grid operators?

Sound and reliable support schemes The Renewable Energy Source Act (EEG) Planning security: EEG obligates electricity grid operators to purchase RES electricity, to integrate RES with priority into the e-grid and to pay a minimum remuneration rates for it for a 20-year period The remuneration fees for newly installed power plants are lowered by 1% each year to foster technology development and cost degression Technology differentiated support for all RES enables early development of future RES technologies (learning curves, economies of scale etc.) EEG remuneration is allocated to all consumers (~4 EUR/month), hence polluter pays principle fulfilled while acceptance grows due to low costs EEG is evaluated and amended regularly to react to market developments

Sound and reliable support schemes The Renewable Energy Source Act (EEG) Overview EEG 2000: 13 articles ( ) regulating all RES electricity Capacity <= 500 kw <= 5MW <= 20 MW Fee for bioenergy 10,23 Cent 9,21 Cent 8,7 Cent EEG 2009: 66 articles ( ) regulating all RES electricity Remuneration system biogas <=150 kw <=500 kw <= 5 MW Basic compensation 11.67 Cent 9.18 Cent 8.25 Cent Clean air bonus Old plants 1.0 Cent 1.0 Cent New plants 1.0 Cent 1.0 Cent Energy crop bonus 7 Cent 7 Cent 4 Rural conservation bonus 2 Cent 2 Cent Manure-bonus 4 Cent 1 Cent Technology bonus (without Gasinjection) 2 Cent 2 Cent 2 Cent Bonus for Gasinjection New plants Depending on the size of the gas treatment 1/2 Cent Old plants 2 Cent CHP-bonus 3 Cent 3 Cent 3 Cent

The right project design Different concepts of biogas = different success factors and risks Mean Characteristics: < 50 kw el, owned by farmer, on-site of the farm, integrated into farm processes, financed with equity capital and credits, creditworthiness of farmer decisive for bank credit, farm property as guarantee, farmer acts as operator and feedstock supplier, limited possibilities for efficient heat use Mean Characteristics: Large Medium Small scale Mean Characteristics: Scale biogas Biogas (parks) Ø 350 kw 350 kw el, approx. 1 Mio. investment costs = usually too expensive for single farmer, el approx. Mio. investment costs usually too expensive for single farmer, owned and operated by project consortium (farmers, municipalities, waste disposer, plant owned and operated by project consortium (farmers, municipalities, waste disposer, plant manufacturers etc.), therewith more equity capital available, risk sharing by project manufacturers etc.), therewith more equity capital available, risk sharing by project financing, cash-flow decisive for financing (not credtiworthiness of farmer) financing, cash-flow decisive for financing (not credtiworthiness of farmer) Mean Characteristics: 1-2 MW el, or several units (e.g. biogas park Klarsee = 40 units á 500 kw el = 20 MW el ), high feedstock / farm land demand (Klarsee: 8.000 ha), feedstock with high energy content to lower transport costs and environmental impacts, farmer acts as feedstock supplier, owned and operated by industrial companies, financed by investment funds

The right project design The relation of plant size and organisation structure An increasing size of a biogas plant is linked with a shift of the organisational structure (e.g. concerning risks, benefits, financing, etc.), therewith also of the success factors. Biogas project have to be customized to day-to-day business of operator. Chances: Risks: + efficiency, + profit, - costs/kwh, etc. + feedstock, + farm land, + storage capacity, etc. Plant size

The right project design Success factors in relation to project phase Planning Experienced planning office involved due to complexity of a biogas plant? Sufficient space available for pits, digestion unit, CHP-module, storage? Sufficient capacity to store manure and residues for at least 6 months? Infrastructure existing to deliver co-substrates by truck at all seasons? Residents integrated to avoid opposition (traffic, odour, prejudices)? Enough time calculated for licensing procedures? Assurances effected, e.g. for fire, installations, losses due to stillstand? Early information and involvement of grid operator?

The right project design Success factors in relation to project phase Planning Construction Quality of chosen components, suitable for planned purpose? Technology provider experienced with concept (technology, size, feedstock)? Sound relation between digestion volume and CHP capacity (efficiency)? Size of biogas plant in line with business structure on-site? Time of operation at full-load optimized (e.g. 6.000 h/a)? Margin of safety?

The right project design Success factors in relation to project phase Planning Construction Start-up Operation Know-how of operator given (biology, sensibility, maintenance, etc.)? Working time factored-in (feedstock management, administration, control)? 10h/week or 1/3 manpower necessary to operate a biogas plant Longtime feedstock supply secured (no changes in stock farming, growing of energy crops, quality, amount and price of feedstock etc.) Sale of electricity and heat secured? Disposal of residues guaranteed (farm land, contracts, time exposure etc.)

Biogas market share in DE RES share on final energy demand 2009 [%] 0,2 0,8 0,5 1,6 7,5 Bioenergy Wind Solar Hydro other RES Source: BMU

Biogas market share in DE RES market share on final energy 2009 RES Heat 9,6 % RES Transport Fuels 5,4 % RES Electricity 16,1 % 8,7 % 8,7 % 5,4 % 5,2 5,2 % % 91 % Bioenergy 100 % Bioenergy 32 % Bioenergy Source: BEE

Biogas market share in DE Bio-electricity generation in Germany, 1990 2009 [TWh] EEG 2000 EEG 2004 EEG 2009 Source: BEE

Number Biogas market share in DE Annually installed biogas plants in relation to EEG amendments 900 Electricity Feed Act 07.12.1990 EEG 29.03.2000 EEG 21.07.2004 EEG 01.01.2009 800 700 600 500 400 300 200 100 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: German Biogas Association

Number of plants Installed capacity [MW] Biogas market share in DE Development of installed biogas plants and capacity in Germany 6.000 5.000 Electricity Feed Act 07.12.1990 EEG 29.03.2000 EEG 21.07.2004 4.984 1.800 1.600 1.400 4.000 3.891 3.711 3.500 1.200 3.000 Biogas plants Capacity 2.500 2.680 1.000 800 2.000 1.000 0 139 159 186 274 370 450 617 1.600 1.750 1.300 850 1.050 600 400 200 0 Source: German Biogas Association

[TWh] Biogas market share in DE Biogas electricity, feedstock and CO 2 -mitigation X 10 Mio. t CO 2 12 10,1 11,3 10 8,9 8 6 = X X X 6 4 2 6% 0 2006 2007 2008 2009 26% 14% 54% Manure Energy Crops Bio-waste Industrial residues Source: DBFZ

Conclusion Biogas as an all-rounder will be a key driver of RES market development providing energy in the heat, transport and electricity markets The exists no one size fits all -approach: The development of biogas markets requires sound and adopted strategies with regard to targeted markets, capacities and concepts Political will for biogas same than sufficient, reliable and long-lasting support schemes are key requirements to boost biogas markets, but also deep know-how and awareness of workload and risks on site of project implementation Biogas market in Germany is result of a long-lasting development and adjustments with a lot of lessons-learned.

German BioEnergy Association (BBE) Thank you for your attention Bundesverband BioEnergie e.v. (BBE) Thomas Siegmund Godesberger Allee 142-148 53175 Bonn Tel.: +49.(0)228.81002-23 Fax: +49.(0)228.81002-58 siegmund@bioenergie.de Skype: thomas.siegmund