Biogas needs to be excluded from the levyThe German government recently passed the decision about an electricity price brake law. Among other things, it provides for the skimming of electricity market revenues from renewable energy plants – biogas plants included. This is causing great uncertainty in the biogas industry.
The European Union has set a flat rate for the maximum limit above which windfall profits are to be skimmed off, but has left it up to the member states to set technology-specific revenue caps. The German government now wants to follow this 'staircase approach' with a new law.
Cabinet decision on the Electricity Price Brake Act of 25.11.2022.
- 90 percent of all electricity market revenues from bioenergy plants (except biomethane) above a reference value are to be skimmed off.
- Revenues from the spot market are to be skimmed off, in particular also revenues from demand-based (flexible) electricity generation, but also from forward contracts and long-term contracts.
- The reference value for biogas is to correspond to the previous EEG remuneration (value to be applied) plus a buffer of 7.5 ct/kWh.
- The levy is to apply from December 2022.
- Plants with an installed capacity of up to 1 MW (when all CHP units are combined, including satellite CHP units) are excluded. Especially flexibilized plants often have more than 1 MW installed capacity.
Firmly believing that flexible power and domestic heat can help secure energy in these difficult times, many operators invested this summer. "The money has been spent," said Horst Seide, president of the German Biogas Association. “If the skimming of proceeds goes ahead as planned, many plant operators are in danger of slipping into the red.”
If the skimming of profits were actually implemented in the planned form, this would have consequences both for the heat customers of the biogas plant, who in the worst case could no longer be supplied with heating energy, and for the electricity price.
To support the sector in these difficult times, GBA is very active.
The most visible protest was by bioenergy farmers in front of the German Bundestag. Under the slogan "Future instead of skimming", operators of biogas and wood energy plants demonstrated against the plans of the federal government. The demonstration was called by the German Biogas Association together with the German Bioenergy Association, the Farmers' Association, and the German Wood Energy Association.
During the EnergyDecentral, the leading trade fair for decentralized energy supply, the lights went out in Hall 25 - planned and on purpose. With the action, the biogas industry drew attention to the dangers of revenue skimming and warned of the consequences.
GBA informs its members about the recent developments on a regular and frequent basis and seeks solutions how to deal with the situation.
Concerning Germany's policy makers, GBA pushes vigorously to exclude biogas, same like biomethane, from the levy.
The members of the Bundestag (parliament) need to improve the draft and enable the bioenergy industry to contribute as much as possible to the security of supply in the coming winter.
The following arguments clearly speak against the planned price brake law for biogas
1. Biogas assumes the same function in the energy system as biomethane and is therefore to be exempted in the same way
2. The reference value is too low: the fixed and variable costs of biogas plants have increased massively since commissioning until 2022/23.
=> Electricity and heat generation from biogas plants, which is subject to skimming, would no longer be economical in the vast majority of cases. The electricity market would thus lack up to 2 GW of flexible capacity in the short term, which would further exacerbate the supply situation. In addition, the heat supply of up to 360,000 households would be at risk in the short term.
=> The revenue from trade and income tax paid by biogas plant operators would be redistributed toward electricity customers. This would have dramatic consequences for rural areas and municipalities that have benefited from these taxes so far.
3. The skimming off of revenues from flexible operation makes no sense from the point of view of energy economics.
4. Especially in the case of fixed-price deals, revenues are siphoned off that have often already been spent. This destroys business confidence in politics.
GBA is active at all levels to support its members and advance the sector. Biogas has become more present than ever in the public. The importance of biogas as a flexible, reliable and universally applicable renewable energy source is evident. The German Biogas Association aims to improve the framework conditions for the use of biogas and with that to contribute to the energy security of the country.