What is the outlook for Biogas Industry in France?
After six long months of waiting, the updated draft multiannual energy programme (programmation pluriannuelle de l’énergie or PPE) was published on Friday, 25 January on the eve of the Biogaz Europe exhibition. The programme defines France’s energy trajectory, particularly in relation to reducing greenhouse gas emissions and promoting renewable energy. This update is not without consequence for the Biogas sector.
A sector that posted strong growth in 2018
At end September 2018, the combined power of the 426 anaerobic digestion units (54 more than in 2017) generating electricity from biogas totalled 156 megawatts (MW), 14% ahead of the 2018 target laid down in the August 2015 “Energy Transition for Green Growth” Act (hereinafter “the Act”).
Sixty-seven units (23 more than in 2017) were injecting biomethane into the national gas grid, with a total capacity of 1 terawatt hour (TWh) per year, equating to 62% of the 2018 target of 1.7 TWh per year laid down in the Act, with anaerobic digestion units accounting for four fifths of the total supply and generating 880 gigawatt hours (GWh) per year.
Targets downgraded and a constrained sector seeking to be competitive
For the Biogas n sector, this draft has downgraded the targets laid down in the Act. The target share of biogas injected into national natural gas transmission networks has thus fallen to 7% of natural gas consumption out to 2030, compared with 10% laid down in the Act.
Furthermore, the draft makes central government budgetary support for injected biomethane (€7.9 billion) henceforth contingent on reducing the cost of projects by 30% in five years (and by as much as 37% by 2028). These projects will be the subject of two invitations to tender worth 350 GW a year over the next give years.
Lastly, the draft maintains the one-stop-shop biomethane purchase price for small projects, though without defining any threshold.
A sector divided over the multiannual energy programme
Sector players attending the exhibition had a variety of different responses to the draft multiannual energy programme.
Farmers, who represent the highest number of farm-based or territorial projects, fear that the updated programme will put the brakes on the sector at a time when anaerobic digestion is one of the levers for keeping farming alive.
Industrial operators like Grdf, GRTgaz and Engie appear willing to rise to the challenge of industrialising a sector that is targeting non-subsidised cost parity between biomethane and natural gas, relying on the following:
- Innovation and upscaling to increase the number and volume of projects and thus help lower costs
- Creating platforms like “Certi Métha” to shorten the lead time from R&D to industrial application at sites where new equipment or processes can be tested under real-world conditions
- Professionalisation, for example through the expected 2019 creation of the “Quali Métha” label covering the design and construction of anaerobic digestionfacilities
- Capitalising on French expertise built up over 12 years in highly specific areas (smaller operations than in Germany and Denmark, range of new entrants and modes of incorporation, etc.)
Enea Consulting used the Biogas Europe exhibition to present its latest research on how to make the biomethane sector more competitive. It highlights two areas of work:
- Promoting non-energy services and positive externalities (growing plant cover to foster biodiversity, replacing chemical fertilisers with digestate, etc.) by actioning a number of levers: maximising methanogenic capacity and biogas recovery, limiting input costs, etc. In total, these various monetisation options could represent between €40 and €80 per megawatt hour.
- Identifying a number of levers to make biogas production more competitive, leading to a total cost per megawatt hour of between €66 and €82 by 2030. In these conditions, the multiannual energy programme target of €67 per megawatt hour seems ill-suited to the French model and hard to achieve by 2023…
Fairly encouraging but mixed feedback
Of the 15 or so cogeneration sites in Brittany analysed as part of the Prodige programme, half have either stepped up their capacity or are planning to do so. However, for 20% of units, economic performance is insufficient in the first year.
A number of project owners have spoken out about the importance of having an independent supply of inputs, given increasingly intense competition in this area, and putting in place full-service engine contracts to optimise their unit’s output.
The owner of the Agribiométhane project – which has launched a “BioNGV” station distributing its own-brand “Agri’pur” biofuel – emphasised the conditions needed to make projects of this type more widely acceptable (green fuel; lower prices; no pollution).
Biomethane transportation projects, which aim to pool the output from multiple low-power production facilities located away from gas grid connection points, are awaiting a new decree to be published in April 2019.
Solar power syndrome?
With this draft multiannual energy programme, has the government succumbed to solar power syndrome in response to the soaring number of projects waiting to inject their output into the grid? At the end of the third quarter of 2018, there were 556 projects totalling 12 TWh per year, up 46% in the year to date. This capacity exceeded the initial 2023 target of 8 TWh laid down in the Act.
Against this backdrop, sector players are continuing to play a proactive role during the discussion and consultation phase before the final multiannual energy programme is adopted by decree in mid-2019, thus contributing to France’s energy transition.