German BioEnergy Association (BBE)

German BioEnergy Association (BBE) Biogas- and Biomass CHP-Market Buyer s Trip to Germany for Canadian Companies January 31 st, Bremen

Structure The German BioEnergy Association Targets, Status Quo and potential of bioenergy in Germany The Renewable Energy Source Act (EEG) as market driver Bio-electicity market development - Biogas - Biomass CHP

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 130 companies member in BBE.

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

The German Bioenergy Association The whole is more than the sum of its parts! More power and perception in public and policy by one voice!

Targets, Status Quo and potential of bioenergy in Germany 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 18 % 0 5 10 15 20 25 30 35 40 45 50 RES final energy 2005 RES final energy 2020

Targets, Status Quo and potential of bioenergy in Germany Meseberg Resolution of German Government 2007 (amended in 2008) 30 % RES Electricity in 2020 12 % RES in Transport in 2020 14 % RES Heat in 2020 }18 % Final energy demand 8 % bio-electricity 12 % predominantly biofuels 9,7 % heating and cooling with biomass }11 % Final energy demand

Targets, Status Quo and potential of bioenergy in Germany RES share on primary energy demand 2008 (total: 14.000 PJ) Primary energy contribution 2008 [%] 0,5 13,1 22,2 1 11,1 7,1 5,3 11,6 34,9 Natural Gas Renewable Energies Nuclear Mineral Oil Lignite (Soft Coal) Hard Coal other RES Wind 0,3 Bioenergy Hydro Source: BMU

Targets, Status Quo and potential of bioenergy in Germany RES share on final energy demand 2008 (total: 8.828 PJ) RES share on final energy demand 2008 [%] 0,9 1,6 90,3 9,7 6,8 0,4 non-res RES other RES Wind Bioenergy Hydro Source: BMU

Targets, Status Quo and potential of bioenergy in Germany RES market share on final energy 2008 RES Heat 7,7 % RES Transport Fuels 6,1 % RES Electricity 15,3 % 92 % 100 % 30 % RES in total: 9,7 %, thereof bioenergy: 6,8 %

Targets, Status Quo and potential of bioenergy in Germany Bioenergy final energy share and technical potential (BBE-scenario) Heat Transport Fuels Electricity 2007 6,2 % 7,1 % 3,8 % 2008 7,3 % 6,1 % 4,2 % 2020 10,0 % 12,0 % 10 % 2030 15,0 % 13,2 % 17,7 % Government estimates bioenergy contribution on final energy demand at 11-15 % in 2020

Targets, Status Quo and potential of bioenergy in Germany Energy wood potential Energy wood utilization in 2007 [million m³] Storage and use of domestic forest wood [million m³] 120 70 27 Total in 2007: 52 million m³ 24 Total forest area: 11,1 million ha 1 3.400 Wood logs Wood Pellets Wood Chips/Waste Wood Growth Utilization Storage Government estimates forestall energy wood potential in reserve amounting to 12-19 million m³ [65-116 PJ] depending on cultivation system chosen (in draft papers of nbap: 120-190 PJ) Source: DEPI/Federal Forest Inventory 2004

Targets, Status Quo and potential of bioenergy in Germany Energy crop potential: 2,5 4 million ha in 2030 Available farm land [million ha] 1,8 5 2007 10,2 energy crops crop land grassland Mio. ha 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 2010 2020 2030 Assumptions: rising efficiency in agriculture (1,5% = 180.000 ha/a released), market reforms (dairy) release >10.000 ha, abolishment of set-aside land = 400.000 ha, increased biomass yields to 180-230 GJ/ha etc. etc. = 450-1.150 PJ for energy purposes in total in 2020 Source: BMELV/BMU

Targets, Status Quo and potential of bioenergy in Germany Overview of technical potential in 2020 16.000 14.000 12.000 10.000 [PJ] 8.000 6.000 4.000 2.000 Forestry Agriculture Gross potential 300-400 PJ 450-1.150 PJ 0 Forestry Agriculture Grassland Residues Total PE2008 PE2020 Grassland Residues 100 PJ 550 PJ Total 1.400-2.200 PJ } PE consumption D in 2008: 14.000 PJ 10-15% PE consumption D in 2020: 10.850 PJ 13-20%

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) Since March 2000 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 Since 2009 operators can choose monthly whether they obtain EEGremuneration or place their RES-E on free markets EEG remuneration is allocated to all consumers, hence polluter pays principle fulfilled EEG is evaluated and amended regularly to react to market developments

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) CHP bonus The remuneration for RES electricity contains a basic fee + several bonuses, thereof one bonus for CHP to improve efficiency and heat use With 3 Ct/kWh in 2009 amended EEG 2009 provides higher CHP-bonus (2 ct/kwh in EEG 2004 ) New biomass power plants > 5 MW el can only claim EEG remuneration if operating in CHP Biomass power plants already in operation before 2009 and producing electricity only can claim CHP bonus 2009 if they start CHP after 31.12.2008 for the first time (if already CHP before 31.12.2008, higher bonus applies only for the first 500 kw)

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) technology bonus RES-E plants using one of the following technologies and where heat is used according to a positive list or an electrical efficiency of at least 45 % is achieved can claim an additional bonus of 2 ct/kwh: - conversion of the biomass by means of thermo-chemical gasification - fuel cells, gas turbines, steam engines, Stirling engines - Organic Rankine Cycles ORC and Kalina cycles - thermo-chemical conversion exclusively of straw and other stalk biomass

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) energy crop bonus I Energy crops shall mean plants or parts of plants which originate from agricultural, silvicultural or horticultural operations or during landscape management and which have not been treated or modified in any way other than for harvesting, conservation or use in the biomass installation RES-E generation with energy crops will be compensated with 6 ct/kwh for solid and 7 ct/kwh for gaseous biomass for the first 500 kw of output, and subsequently 4 ct/kwh for the following kilowatts up to 5 MW. Liquid biofuels can only claim energy crop bonus for the first 150 kw output Guarantee of Origin for resource necessary (type, quantity and unit, origin) No other RES-E plant using other resources than energy crops on site

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) energy crop bonus II In the case of biogas the fermentation of the energy crops or manure can be combined with purely plant-based by-products within the meaning of a positive list, but bonus applies only to imputed RES-E generation from e.c. RES-E from biogas can be raised by 4 ct/kwh for the first 150 kw and by 1 ct/kwh for the following 350 kw if at least 30% manure is used RES-E from biogas can be raised by 2 ct/kwh for the first 500 kw when mainly plants or parts of plants from landscape management are used

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) biogas feeding Biogas withdrawn from a gas network which was injected within the territorial application of EEG in the same quantity before, can be compensated by EEG, if used in CHP Upgrading of biogas to natural gas standards can be compensated by technology bonus with 2 ct/kwh for processing units with a max. capacity of 350 m³/h crude gas and with 1 ct/kwh for a max. capacity of 700 m³/h For the technology bonus a maximum methane emissions into the atmosphere of 0,5 % and a maximum electricity consumption of 0,5 kwh per cubic metre of crude gas during processing mustn t be exceeded Process energy has to come from RES or waste heat

The Renewable Energy Source Act (EEG) as market driver The Renewable Energy Source Act (EEG) Overview Basic compensation Clean air bonus - new Energy crop bonus <=150 kw <=500 kw <= 5 MW 11.67 Cent (+ 1 Cent) 9.18 Cent (unchanged) Old plants 1.0 Cent 1.0 Cent New plants 1.0 Cent 1.0 Cent 7 Cent (+ 1 Cent) 7 Cent (+ 1 Cent) Rural conservation bonus - new 2 Cent 2 Cent Manure-bonus -new 4 Cent 1 Cent 8.25 Cent (unchanged) 4 (unchanged) 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 Renewable Energy Source Act (EEG) as market driver Advantages of EEG to investors and RES market development Mid and long term planning and investment security (20 years) No volatile prices / calculable cost for consumers public acceptance of RES Low costs for consumers due to allocation to all users (~3 EUR/month) polluter pays principle Technology differentiated support for all RES early development of future RES technologies (learning curves, economies of scale etc.) Incentives for technology development and efficiency enhancement by degression for new plants each year

Bio-electicity market development Bio-electricity generation in Germany 2008 [GWh] 1,42 1,45 1,54 1,57 1,87 2,02 2,20 2,48 2,80 3,02 4,13 5,07 6,42 6,90 9,36 14,10 18,00 23,80 28,70 35,00 30,00 25,00 20,00 15,00 10,00 5,00 0,00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Bio-electicity market development RES electricity generation in Germany 2008 [TWh] 4,3 9,4 10,0 28,7 TWh bio-based electricity generation 2,5 40,3 6,8 21,8 solid biomass liquid biomass hydro power photovoltaic biogas biowaste, sevage- and landfillgas wind energy

Bio-electicity market development - Biogas 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 produce heat as a by-product. 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

Bio-electicity market development - Biogas Biogas the all-rounder Source: German Biogas Association

Bio-electicity market development - Biogas Biogas production in Europe 2007 landfill gas sewage gas agricultural plants, others Source: EurObserv ER

Bio-electicity market development - Biogas Annually installed biogas plants in relation to EEG amendments Electricity Feed Act 07.12.1990 EEG 29.03.2000 EEG 21.07.2004 EEG 01.01.2009 820 780 630 20 27 88 96 80 167 233 200 250 300 150 300 211 180 prognosis 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: German Biogas Association

Bio-electicity market development - Biogas Allocation of the potential input materials by source energycrops 33% residual materials from the industry 5% municipal waste 11% manure, dung, straw, grassland... 51% Source: BGW-Survey

Bio-electicity market development - Biogas Number of biogas plants & installed capacity in Germany [MW] Source: German Biogas Association

Bio-electicity market development - Biogas Allocation of biogas plants and capacity in Germany 2008 1600 1400 1200 1000 800 600 400 200 0 400 350 300 250 200 150 100 50 0 Baden-Württemberg Bayern Brandenburg Hessen Mecklenburg-Vorpommern Niedersachsen Nordrhein-Westfalen Rheinland-Pfalz Saarland Sachsen Sachsen-Anhalt Schleswig-Holstein Thüringen Number Installed capacity [MW] Source: German Biogas Association

Bio-electicity market development - Biogas Biogas feeding projects So far 16 biogas feeding plants in operation Several projects in preperation Better conditions for grid access since 12.04.08 Planned to feed 60 bn kwh biogas into gas grid until 2020 and 100 bn kwh until 2030. Source: German Biogas Association

Bio-electicity market development - Biogas Biogas potential organic residues Organic municipal waste Commercial and industrial waste Crop residues (including straw) Material of landscape work Animal excremente and litter Biogas substrate including straw Biogas substrate excluding staw Energetic useful amount Dry matter Biogaspotential Tech. Potential Energy source Mio. t/a Mio. t/a Mio. m³/a PJ/a 7,65 1,5 580 12,5 3,1 4,7 0,5 1 300 575 6,4 12,2 19 27 9,3 10,5 3100 5200 65 113 0,8 1,6 0,4 0,9 280 560 6 12 162 15,5 4500 96,5 192 203 29 29 8800 11400 186 246 183 194 20 22 7000 8300 148 180 8000 Mio. m³ * 2,5 kwh el = 20 TWh el Current electricity consumption in Germany 2007 = 541 TWh el 20 / 541 = 3,7 % of the consumption could be covered with biogas from organic residues! Source: German Biogas Association

Bio-electicity market development - Biogas German biogas market 2008 in figures total installed electric capacity electricity production share of total RES electricity production production of biomethane turnover plant construction/engineering turnover electricity feeding export quota created jobs CO 2 reduction 2007 1,400 MW 11 million MWh 10 % 2.75 billion m³ 1 billion 1 billion ~20 % > 10.000 8.5 million t/a Source: German Biogas Association

Bio-electicity market development - Biogas Biogas trends in Germany I Smaller biogas to local sites using liquid manure as feedstock, heat use plants adapted (due to manure bonus) Much wider use of heat through various concepts: - direct local heat use (buildings, green houses, cattle sheds etc.) - feed-in into public district heating system - micro gas distribution system to satellite CHP (less expensive, lower loss of energy, 30% funding of investment costs) - heat storage - Organic-Rankine-Cycle (ORC)

Bio-electicity market development - Biogas Biogas trends in Germany II Feed-in into the natural gas distribution system - electricity and heat production in modern CHP units with high efficiency - use as natural gas equivalent Storage of biogas (e.g. combined power plant, balancing energy for wind & solar) Biogas as fuel (2 biogas filling stations in Germany) Upgrading biogas for CHP (due to clean air bonus) Gas engines instead of pilot injection engines (more efficient and less methane release)

Bio-electicity market development Biomass CHP Electricity from (solid) biomass 200 1400 180 1200 160 140 1000 number of plants 120 100 80 800 600 installed capacity [MW] 60 400 40 20 200 0 2000 2001 2002 2003 2004 2005 2006 2007 biomass plants Capacity 0

Bio-electicity market development Biomass CHP Electricity from solid biomass EEG 2000 initiated plants > 5 MWel capacity, operated by power suppliers Since 2005/2006 trend to smaller plants (< 1 MW), operated by wood- and paper companies Most plants (80 %) use steam turbines, but other technologies are emerging 36 % of new projects in 2007 with ORC! Efficiency: 25 33% if electricity only, 80 % if CHP (20 30 % electricity and 70 80 % heat)

German BioEnergy Association (BBE) Thank you for your attention Bundesverband BioEnergie (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