2023-08-03 06:30:37
Weakened by economic constraints, the anaerobic digestion sector has just received support from the public authorities. Thanks to adjustments to the conditions of application of the purchase price, the injection of biomethane should find a new dynamic.
In difficulty for several months, the anaerobic digestion sector has just benefited from a boost from the State. This rebalancing of public support is justified in view of the importance of biogas in the future energy system.
France is indeed planning a strong development of biogas production for its transition. The recovery of biogas has historically been done by cogeneration of electricity and heat, then the injection of purified biogas into the gas networks has been favored thanks to public support (purchase price, right to injection) .
The ambition is to inject 44 TWh/year of this biomethane in 2030. A major objective when we know that the sector started from scratch in the 2000s and struggled to install methanisation in the agricultural landscape, both for lack of a specialized industrialist than new habits to adopt for farmers or prejudices to overcome for local residents. Until the crises of 2020-2022, a good momentum had nevertheless set in, allowing the sector to exceed its 2023 target (6 TWh) from 2022. Today more than 10 TWh/year are injected.
More administrative flexibility
But the last two years, like other activities, the biogas industry has suffered from the inflation in the cost of materials and energy. This increase in expenditure came up once morest the obligation to reduce production costs imposed by the public authorities with a regular reduction in the purchase price at which biomethane is valued. “The economic conditions were becoming too difficult for existing facilities and new projects. Faced with the risk of not achieving the 2030 objectives of the Multiannual Energy Program, the Directorate General for Energy and Climate (DGEC) has taken up several proposals from players in the sector, by publishing a decree and two decrees on June 13, 2023.explains Raphaël Boukobza, lawyer at the ATEE Biogas Club.
The decree provides two flexibilities to methanization facilities. For current or future projects, if a dispute (opposed by local residents, for example) prevents the installation from starting up, operators can now wait for the actual commissioning to take advantage of the biomethane purchase price. This was not the case previously, because the time for litigation – sometimes in years – was deducted from the 15-year period of access to the tariff. The period is unlimited for contracts signed following November 24, 2020, and it is three years for those signed before.
The other facility is to give anaerobic digestion operators the possibility, for the next two years, of changing once a year the estimate of their maximum production capacity (Cmax) that can benefit from the feed-in tariff. Before, this was only possible once every two years. Now more flexibility will be possible, especially for operators to increase production when the national gas supply is tight, such as last winter.
Tariff improvements
The two decrees, for their part, improve the pricing conditions for the recovery of biomethane. One states that if Cmax is exceeded, the biomethane – which then no longer benefits from the feed-in tariff – will be valued at the daily price observed on the wholesale natural gas market. It is up to the operator to see if this price suits him, but he thus has an economic outlet.
The other decree leads to an improvement in the purchase price through various adjustments.
The annualization of Cmax rather than its monthly payment. This long-awaited measure makes it possible to avoid flaring of biogas in the summer when there is a peak in gas demand on the network. This annualization will also give more flexibility to producers with production concerns. An increase of approximately 5% in the tariff by canceling the past degressions of 0.5% per quarter since November 2020. This rate of degressivity is nevertheless maintained so that the sector continues these efforts to be competitive. The possibility of combining financial aid from Ademe with the purchase price, whereas previously a discount of €5/MWh applied. The pre-tax internal rate of return of the project must nevertheless remain below 10%. Better consideration of changes in costs in the tariff formula thanks to an update twice a year instead of once, and the addition of indexation on the cost of energy. The possibility for methanization facilities to self-consume part of their biogas for pasteurization, sanitization and pre-treatment of products entering the methanizer. In this case, the purchase price will benefit from a bonus proportional to the volume of self-consumed gas.
“With all these measures, the sector estimates that the revaluation of purchase prices is around 18%. It provides encouraging prospects for existing facilities and for the development of biomethane injection projects.” completes Raphaël Boukobza. The representatives of the sector (Renewable Energies Syndicate, France Gaz, France Gaz Renouvelable, ATEE Biogas Club) even believe that with the launch of new calls for tenders and the establishment of biomethane production certificates, France might produce 70 TWh of biomethane in 2030, i.e. 20% of its consumption. To be credible, it will also have to make efforts in terms of energy efficiency. Moreover, the recent order encourages facilities to limit their electricity consumption to 15% of the energy they produce, and to no longer use gas of fossil origin. When you are virtuous, you have to be so until the end…
Different levels of biomethane purchase prices depending on the year and type of installation. Source: GRDF.
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