Biogas has been encouraged as a great way to cut greenhouse gas emissions in both the power and heating systems, but it is coming up against environmental constraints of its own. Indeed, land requirements and feedstock transport costs are constraining current growth.
What is Biogas?
Biogas refers to the process and resulting gases produced from the natural breaking down of organic matter in an anaerobic environment. There is no requirement for the presence of oxygen as micro-organisms act as the catalyst for decomposing the raw materials.
The gases produced are mainly methane, carbon dioxide with some nitrogen, hydrogen, and carbon monoxide.
A biogas plant in an agriculture setting.
The Importance of Biogas as Renewable Energy
Biogas and other forms of bioenergy make up the second most important contribution to renewable energy in the UK (after wind and ahead of solar and hydro), and last year it produced more electricity than coal.
Biogas can be used in industry or combusted to produce heat, electricity or both (combined heat and power, or CHP); or it can be refined to produce biomethane for injection into the national gas grid – so it has a direct impact on both gas and power sectors.
How Much Energy Does Biogas Contribute to the UK Grid?
In the UK there was 617MW of installed biogas capacity in mid-2016, up 30% on the year, according to the Anaerobic Digestion and Bioresources Association (ADBA).
Since then, the growth in capacity has stalled due to lower subsidies – cut partly as a result of concerns over competition between biogas and food crops on limited agricultural land (Germany has also seen cuts in subsidies, where they were particularly generous and the early biogas expansion rapid).
Overall, generation from bioenergy contributed about 10% or 31TWh of the UK’s total power in 2017 (out of a total renewable share of 29%), with biogas making up about a third of that. Imported biomass burnt at the giant Drax converted coal plant, made up most of the rest.
How is The Majority Produced?
Looking at the gas grid, the UK had almost 90 agricultural biogas plants injecting biomethane in early 2017, according to ADBA – displacing around 0.6% of the UK’s natural gas demand. Once the biogas refines into biomethane, it is chemically identical to natural gas and so can be injected into the grid and used in the same applications as conventional gas, including residential heating and industry, as well as power.
Agricultural biogas plants in Germany dominate biogas production, but in the UK it is mostly landfill gas, although the number of plants rose sharply in 2015-2016. In Germany, most of the agricultural biogas plants use specially grown crops, whereas in the UK it is mostly waste agricultural products. Overall, biogas (including syngas) and biomethane supplied an estimated 4% of the UK’s total gas supply in 2017, or roughly 3.5 billion m3 (bcm).
Chart 1 – Breakdown of biogas output in Europe (2010-2016) (Source, European Biogas Association).
The Potential Growth Throughout Europe
Biogas production has risen from 2.2 million tonnes oil equivalent (Mtoe) in 2000 to 15.6 Mtoe (18 bcm) in 2016, representing about 4% of total European gas consumption. As in the UK, most of this gets used in power generation, but some is refined to biomethane (see chart 2).
Chart 2. European biomethane production. (Source, EBA Statistical report 2017)
According to the German Energy Agency (DENA), there are currently 410 biogas refining plants in operation across 14 European countries, of which 360 are injecting biomethane into the grid. These plants produced 1.76 bcm in 2016, or less than 0.5% of total annual European gas demand of around 400 bcm, leaving biomethane with some way to go to make an impact.
However, given the extensive untapped farmlands across the Continent (outside Germany), there is considerable potential for growth, and the European Biogas Association (EBA) recently estimated that European biomethane production could reach 18-20 Bcm/year by 2030, displacing 3% of conventional natural gas consumption.
When all forms of biogas are considered, the EBA estimates that production could reach 48 bcm/year by 2030 – or about 10% of European natural gas consumption – based on current demand figures. The American Gas Foundation also estimates the potential for renewable gas at up to 10% (about 40 bcm) of total gas demand “in the long term”.
French utility, Engie, is particularly bullish on biogas, and believes it would be economically feasible for it to deliver 11,000 TWh of power from biogas globally by 2050. This would require about 1.2bcm of biogas, which it said would be sourced “principally from biomass methanation and anaerobic digestion”. The company noted that this level of biogas output would require a carbon price below EUR 80/tonne – which is estimated to be the level needed to deliver a 100% renewables scenario.
The Important Role in a Zero Carbon Energy Mix
Unless battery technology improves dramatically, in a 100% renewables scenario there will still need to be a backup to intermittent wind and solar generation using combined cycle gas turbines (CCGTs). This gap could either be fuelled by biogas, or by natural gas combined with Carbon Capture and Storage (CCS), or possibly hydrogen. Engie says that although there will be a quick decline in CCGT utilisation post-2030, the old plant that remains can be run at relatively low cost using biogas when renewable output dips.
Biogas could also play a role in the decarbonisation of heat. Currently, four out of five of the UK’s 26 million homes use gas for heat, and this creates more than a quarter of UK carbon emissions. For the decarbonisation of heat to be successful, “around 20,000 homes will need to switch to a low carbon heat source every week between 2025 and 2050,” according to a recent report from the National Grid.
This target will require a mix of solutions, such as using natural gas alongside greener alternatives like hydrogen and biogases, electric heat pumps, combined heat and power (CHP) facilities and district heat networks. By 2030, hydrogen, biomethane and bio-substitute natural gas from various sources could account for 10% of domestic gas usage, according to DNV.
Biogas has tended to be in competition with CCS, which is the only other way to attain low carbon status while still using gas of some sort. CCS has had a difficult time recently, which has probably helped biogas, but new UK policy is expected soon, with a particular eye on decarbonising the heating system. This strategy could favour both CCS and biogas, along with other low carbon combustible gases such as hydrogen.
Government Subsidy Cuts and Production Costs
Since 2016, the UK has reduced subsidies for biomethane and biogas injection into the grid under the non-domestic Renewable Heat Incentive (RHI). The most recent cut saw a 10% reduction to the biomethane for injection tariff, and a 5% reduction to the small, medium and large biogas tariffs, effective from April 2017.
And in December the government announced new biogas and biomethane plants would only receive support if at least 50% of the gas comes from feedstocks that are wastes or residues – reflecting growing concern that crops to be used as feedstocks were extending the space devoted to monocultures and competing with food crops for land. The Renewable Energy Directive currently mandates that biofuels must yield 35% carbon savings compared to fossil fuel equivalents. This figure will rise to 70% by 2020, which will also exclude many energy crops.
Germany rolled back biogas incentives earlier in 2014, removing them completely for biogas production from energy crops and biogas upgrading, as well as imposing a 100 MW annual cap on new biogas power plant additions. The use of energy crops (as opposed to waste products) looks set to be limited elsewhere in Europe too.
In addition, the scope for further growth in biomethane is limited by the lack of economies of scale achievable in production, as they are limited to feedstocks available locally due to high transport costs. According to the German Agency for Renewable Resources (FNR), biomethane production costs are likely to stay around EUR 60-90/MWh (£50-105/MWh) – still some way from current UK wholesale gas prices of around £40/MWh.
However, natural gas prices have been rising recently and biomethane producers may yet benefit from technology that improves their operation profile, including in enzyme technology and, further forward, alga feedstocks. In total, Navigant estimates that this could cut the costs of biomethane production by 20-30% over the next few years. However, once waste crops become fully utilised, the constraints of land use and limited scale economies are likely to cap biogas output – in Germany it may already be nearing its peak.
- Chart 1&2 – European Biogas Association