An analysis of current and future electricity production from biogas in Germany

Abstract

With the development of renewable energy sources in Germany the use of biogas for electricity and heat production has rapidly expanded since the year 2000. This expansion has been encouraged by several Federal governmental incentives and in particular by the electricity Feed-In-Tariffs introduced in the Renewable Energy Sources Act (EEG). Agricultural plants valorizing energy crops now constitute almost 80% of total biogas installations. However volatile energy crops and electricity prices, combined with continuously evolving framework conditions, are a source of uncertainty for German plant operators. In this context, investment decision making for biogas plant projects is a difficult task that requires the development of decision support tools. In order to provide an assistance to plant operators two models are developed in this work. The first one deals with the analysis of the current electricity production from biogas in Germany (simulation model) and the second one with mid-term developments up to the year 2030 (optimization model). The simulation model is based on a process modelling approach which calibrates and simulates reference biogas plant types by considering a variable and differentiated biomass input. The analysis concerns the three major installation types in Germany valorizing energy crops, biowaste and manure. An integrated economic evaluation tool leads to the identification of the most profitable biogas plant sizes taking into account various subsidy schemes. Under EEG 2014 a paradigm shift is observed. Small-scale manure and large-scale biowaste plants appear as the most profitable installations whereas agricultural plants are no longer profitable mainly due to the cut in the subsidy for energy crops implemented in 2014. The optimization model based on a plant operator perspective aims to determine the economically optimal capacity development for the three main installation types at the Federal State level and under various scenarios. The results highlight the influence of regional biomass potentials, revenues and electricity production costs as well as plant flexibilization and decommissioning. Future capacity expansion should mainly concern small-scale manure plants and biowaste installations rather than agricultural plants which, on the contrary, should undergo only modest development. Based on the model results recommendations for plant operators and policy-makers are formulated. Maintaining current subsidy levels for biowaste and small-scale manure installations appears necessary in order to ensure the profitable and sustainable development of German biogas plants. Strategy planning and flexible plant operation as well as the increased valorization of residues in agricultural plants represent key challenges. An improved mobilization of biowaste potentials combined with better heat valorization would contribute to the creation of local and circular bio-economies in line with the planned national energy transition. The transferability of the methodological framework used in this work to other countries and bioenergy pathways is further analysed. A model implementation is possible especially in countries showing stable legal framework conditions for bioenergy (e.g. Feed-In-Tariffs) and benefiting from lessons learned and best practices from past projects.