The capital cost of a 20 GWh/yr plant (1MW electrical equivalent) including biomethane upgrading technology, is in the region of €5.5m. Due to economies of scale, a 40GWh plant is about €8m.
Robust commercial and funding structures offering 15-20 year contracts have been pivotal to the development of the renewable gas industry across Europe. Power purchase agreements from large gas consumers in the manufacturing and processing sectors will also assist.
The RGFI / KPMG analysis shows that a total income of around €8.8 c/kWh is required to make a farm-scale 20 GWh/yr biomethane plant viable. At current energy prices, this would mean a socialisation in the cost of producing biomethane of between 5c/kWh and 6c/kWh.
The cost-benefit analysis of supporting an indigenous renewable gas industry found that for every €1 of support provided, €1.26 would be returned due to wider benefits to the economy.
In order to achieve RGFI’s vision of replacing 12% of current natural gas consumption with renewable gas, approximately 227 agri- and industry-led AD plants, along with 15 larger dedicated commercial waste AD plants, will need to be developed by 2030.
This will require a capital investment in the region of €1.5bn, a government capital grant, implementation of Article 23 obligations under the EU RED II policy, and socialising the cost of producing biomethane.
The European Investment Bank (EIB) has approved €700 million of financing for agriculture and the bio-economy. The initiative aims to unlock around €1.6 billion of investment in these sectors by supporting private companies operating throughout the value chains of production and processing of food, bio-based materials and bioenergy.
The government has included biomethane in its plans to reduce carbon emissions by 2050, however RGFI industry members would like to see a more ambitious target of 12% for biomethane in the grid by 2030. (The government target is just 3%).
RGFI is working through its members and with government to develop the framework for policy supports for biomethane.
A range of economic funding options have been presented to government in the KPMG Integrated Business Case for Biomethane in Ireland, using the principles of socialisation of production costs as the most acceptable and preferred solution to support the price differential. These include a gas public service obligation levy, a biomethane obligation scheme and capital grants.
The second round of the government’s Climate Action Fund, primarily funded by a levy on oil companies, will leverage a multiple of the €500m committed to it by the government.
The first round included funding for a GNI project to trial the central grid injection of biomethane.
RGFI is calling for :
- An all-of-industry, all-of-government approach to implementation strategy and policy support for biomethane – specifically taking into account the needs of agri-food, drinks, biopharma, and the agricultural industries, to comply with new regulations under the European Green Deal strategy and Farm to Fork initiatives.
- A biomethane target of 12% by 2030 – as the minimum required to realise the vision for this sector.
- Government to introduce Renewable Energy Directive II, Article 23, in 2021, ahead of its 2026 target, in support of the KPMG / RGFI integrated Business Case for Biomethane in Ireland.