Biogas Framework

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Overview

The implementation of biogas projects and programs, even on a small-scale level, must take into account the underlying socio-cultural, political, economic and ecological conditions. As an appropriate technology, mainly for rural areas, the realization of economically viable and sociologically and ecologically beneficial biogas projects heavily relies on social and political acceptance. Benefits of biogas as well as major obstacles depend on the specific and complex relationships between social organization, economic premises, environmental problems and political intentions.

Social Aspects in the Planning Process

Participation of the local population is a key issue in the project planning phase. People should be involved as early as possible. The basic facts about biogas technology should be made clear beforehand, so that possible problems of biogas technology are transparent to the actors involved.

Obstacles can arise from religious and/or social taboos in the following respects:

• prohibitions in the use of gas primarily for the preparation of food
• prohibitions in the use of the slurry
• social prohibition of work involved in running a biogas unit, either due to the separation of classes, sexes, age groups or due to ethnic or religious affiliation.

In order to deal with these obstacles in a way that considers local conditions as well as requirements of the project, the assistance and attitude of ruling or generally recognized institutions is of major importance. Class structure and barriers have to be taken into account for as well. General features of the society's class structure and comparison with neighboring areas and/or similar projects can serve for a preliminary analysis. The concrete conditions in the project area have to be investigated based on this "general model" focusing on the social position of the target group. For the delegation and organization of tasks during the project, the existing social regulations on the division of labour represent a framework, that is often difficult to determine. Women are often kept out of decision-making processes even though they are usually the primarily affected group regarding household energy issues. Their participation can, for instance, be encouraged by integration into authoritative bodies or by forming special female committees.

Social and Political Aspects in the Dissemination Process

For the dissemination of biogas technology certain social and cultural convictions and norms can act as impediments:

Ethical barriers Sociocultural taboos Defense mechanisms, (specifically against the use of human excrements as fertilizer) Lack of regularity in the attendance and maintenance of biogas systems Fertilization

The implementation of biogas programmes is also linked to a number of political and administrative factors that have to be considered.

Specific Regional Developments

Specific developments in the region can, positively or negatively, impact a biogas dissemination program. They can occur, for example, as the result of:

Regional (Energy) Development

A dam is built in a region and the population is resettled. In many aspects the resettlement villages would be ideally suited for community biogas plants. The villages are to be newly constructed and can be designed accordingly. Moreover, social mobility is increased by resettlement. On the other hand the dam is being erected to produce electricity. Biogas will have to compete with (possibly cheap) electric energy.

National Energy & Fertilizer Supply Strategies

Chemical Fertilizer

For developing countries, the production of biogas and bio-fertilizer holds the promise of substituting increasing amounts of imported fossil fuels and mineral fertilizers. On an economic scale, the importance of digested sludge as a supplementary source of fertilizer is gradually gaining recognition. As populations continue to grow, there is a corresponding increase in the demand for food, fertilizers and energy. Consequently, for example in India, both the production and consumption of chemical fertilizers have been steadily expanding over the past decades.

According to a recent estimate by Indian experts, the national consumption of mineral fertilizers could be reduced by 30-35% through the use of digested biogas sludge as fertilizer.

Fertilizer Policies, Energy Policies

For biogas programs, it is crucial,

• to be familiar with official government policies on fertilizers and fuel;
• to be familiar with the realities of implementation of these policies;
• to have a clear understanding of the possibilities and processes of policy change. This includes an intimate knowledge of persons and institutions involved in possible policy changes.

If national policies have a strong self-reliance character, involving high import taxation on mineral fertilizers and fossil fuel, biogas technology will have an easy start. If world market integration is high on the agenda of national planning, biogas technology will face stiff competition from imported fuels and fertilizers.

According to available economic data, it may be assumed that (at least in remote, sparsely settled areas) biogas programs are usually less costly than comparable energy & fertilizer supply strategies based on fossil resources, like electrification and the production or importation of chemical fertilizers. The latter strategies involve not only high transmission and transportation costs, but are also largely dependent on imports.

In any comparison between biogas technology and traditional approaches to the provision of energy and fertilizer, due consideration should be given to the fact that the continuation or expansion of the latter would surely magnify the ecological damage that has already been done and accelerate the depletion of natural resources.

Further Information

Plant operators are faced with a variety of legal issues relating to both the planning and operation of biogas plants. Before construction of the plant begins, they have to consider legal framwork on numerous levels. International instruments for funding, authorisation of the plant and grid connection. Along with each of these field varies the nature of the contract and the statutory requirements that need to be met.

When they are first elaborating the plant concept, operators have to weigh up various options against each other: the design of the plant, the choice of feedstocks, the technology to be employed and the way the heat will be utilised.

Furthermore consideration for the remuneration rates and incentives for reneweable energy utilisation in the specific country have to undertaken.Finally, once the plant is in operation the plant operator must comply with all relevant requirements under public law, operate the plant in line with the provisions of existent incentive measures and provide all the necessary statutory certifications.

Authorisation

The process of authorization of a biogas plant has to be conform with a variety of laws and decrees, specific for each country.

In Germany these regulations comprise law on planning and construction, laws on emission reduction, laws pertaining to water, waterways, environmental protection, waste management etc.

It is adviseable to ask the help of experts when it come to the authorisational planning of a biogas plant.

Authorizational planning should be considered as a major component of planning a biogas plant.

Incentives for Biogas Utilization

Feed-in Tariff

The Feed-in tariff (FIT) is the most effective policy for promoting renewable energy, and thereby creating the fundamental conditions for a green and stable economy. It is a policy with many names, including REPs (Renewable Energy Payments) and ARTs (Advanced Renewable Tariffs).
FITs set a fixed price for purchases of renewable power, usually paying producers a premium rate over the retail rate for each unit of ectricity, or kilowatt-hour (kWh), fed into the grid. FITs usually require power companies to purchase all electricity from eligible producers in their service area at this premium rate, over a long period of time. FITs also often force all electric utilities and transmission operators to connect all possible renewable power providers to the grid, and mandate that the utilities themselves pay the interconnection costs, or at least the grid expansion costs. These costs are then distributed among all electricity consumers, minimizing costs while delivering an ever-growing amount of renewable energy. It may not look like it, but a FIT is a truly revolutionary tool – one that changes the role that governments, power operators, grid operators, transmission and distribution operators, and ordinary consumers currently play when it comes to electricity (see picture). As this book will exhaustively document, regulators generally differentiate FITs by technology, plant size, location and time to reflect differing production costs, and there are many other potential design options – not
d ones.

TARIFF CALCULATION METHODOLOGY
One of the most urgent questions for policy makers dealing with FITs is how to get the tariff level right. A tariff that is too low will not spur any investment in the field of renewable energies while a tariff that is too high might cause unnecessary profits and higher costs for the final consumer.

The authors from the FIT Handbook recommend developing a joint analytical framework for all technologies eligible under the FIT scheme in order to guarantee transparency and comparability.
In the past, regulators (and the consultants and economists they frequently employ) have applied different methodologies for tariff calculations. However, empirical evidence shows that those countries that have based their FITs on the real generation costs plus a small premium, and thus offered sufficient returns on investment, have been most successful. This approach will hence be considered as ‘best practice’.

Different names have been used to describe this tariff calculation approach based on actual costs and profitability for producers. The German FIT scheme is based on the notion of ‘cost-covering remuneration’, the Spanish support mechanism speaks of a ‘reasonable rate of return,’ and the French ‘profitability index method’ guarantees ‘fair and sufficient’ profitability. Despite the variety in names and notions, in all cases the legislator sets the tariff level in order to allow for a certain internal rate of return, usually between a 5 and 10 per cent return on investment per year. In some cases the rate will have to be higher as the profitability of renewable energy projects should be comparable with the expected profit from conventional electricity generation. Only if the profitability of renewable energy generation is similar to or higher than that of nuclear or fossil plants will there be an economic incentive to invest in cleaner forms of energy.
A legislator has several options to determine the tariff.

Cost factors related to renewable electricity generation have to be evaluated.

The authors of the FIT handbook recommend basing the calculations on the following criteria:

• Investment costs for each plant (including material and capital costs);
• Grid-related and administrative costs (including grid connection cost, costs for the licensing procedure, etc);
• Operation and maintenance costs;
• Fuel costs (in the case of biomass and biogas); and
• Decommissioning costs (where applicable).

Based on these data, the legislator can calculate the nominal electricity production costs for each technology. Three examples are given below. Knowing the average operating hours of a standard plant and the duration of tariff payment, the legislator can fix the nominal remuneration level. For the estimate of the average generation costs, regulators can use standard investment calculation methods (such as the annuity method). The Spanish legislator even obliges renewable electricity producers to disclose all costs related to electricity generation in order to have optimal information when setting the tariff.
In the following three examples, the German and the French approaches for tariff calculation for industrialized nations are presented. In order to give an example of an emerging economy the South African approach is described.

Moreover, we will present an online tariff calculation tool from the European PV Policy Research Platform. By definition, tariff calculation methodologies are rather technical but certainly interesting for all committed policy makers.

Check the FIT Handbook for further details.

Renewable Energy Sources Act (EEG) in Germany

The Renewable Energy Sources Act (EEG) has a substantial role to play in promoting the operation of biogas plants in Germany.
One of the purposes of the Act, which was most recently amended on 1 January 2009, is to increase the proportion of electricity supplied from renewable energy sources to at least 30% by 2020 in the interests of climate change mitigation and protection of the environment.
Under German EEG the operator of a biogas plant is entitled to connect the plant to the public electricity grid and to feed the power generated at the plant into the grid. Plant operators enjoy privileges over conventional power generators not only in relation to their connection to the grid: they also receive a statutory feed-in tariff for the electricity that they supply to the grid, for a period of 20 years. The level of the tariff is determined partly by the size of the plant, the date when it was commissioned and the input materials. The various bonuses provided for under EEG 2009 have a particularly important part to play in calculation of the feed-in tariff.

The bonus system under EEG

The purpose of the bonuses provided for under EEG is to establish a sophisticated incentive system to ensure the conversion of biomass into electricity in an innovative and efficient way that is climate-friendly and environmentally sound. Particular support is therefore provided for the generation of electricity from renewable resources, such as energy crops. The NawaRo bonus, as it is referred to in German (NawaRo = 'nachwachsende Rohstoffe', or renewable resources), was introduced in 2004. It is sometimes referred to in English as the energy crop bonus. The intention on the part of the legislator was to target support at both the growing of energy crops and the utilisation of manure,
in the interests of climate change mitigation. Several other provisions of EEG also take account of climate change, for example the bonus for operation in acombined heat and power installation (CHP bonus).

According to the latter, a significantly higher tariff is paid to plant operators who put the waste heat arising from power generation to meaningful use and consequently avoid burning fossil fuels, which is associated with CO2 emissions. Innovative technologies
that promise more efficient generation of electricity in the medium or long term but are not yet competitive at the present time are given targeted support through the technology bonus.

• A presentation about the political framework for biogas in Germany.
• How the FIT in Germany is calculated on an example by DBFZ.

The EEG 2012

The above mentioned boni system has been abandoned beginning with plants that are built after 2013. It is then mandatory to use at least 60 & of the prdocued heat in a CHP engine.

Further Information

• All Biogas Articles on energypedia
• Acts & Regulations in Germany on Biogaspartner.de
  
• Renewable Energy Sources Act