Framework

The most important instrument for the promotion of renewable energies in Germany is the Renewable Energy Sources Act (EEG). The main purposes of the EEG are the protection of our climate and the environment, to promote a sustainable energy supply, to minimize the economic costs of energy supply, the protection of fossil resources, and the continued development of renewable power-generating technologies. To achieve this goal, the EEG gives priority to plants generating power from renewable energy sources within the public power grids. It also regulates priority purchase and transmission. In addition to these grid-related claims, operators generating power from renewable energies are also entitled to receive financial funding. Since the EEG 2017 came into effect the amount of funding is determined by compititive tenders.The EEG grants operators of combined heat and power plants (CHP) that extract gas from the natural gas grid a subsidy for each kWh of electricity generated. Provided the operator proves that in the respective calendar year, at least as much bio-methane was fed into the German natural gas grid as was used by the CHP to generate electricity.In this case, the operator of the biomethane CHP receives financial support, which ideally enables him/her to pay the biogas supplier an adequate biomethane price. If the biomethane is used in new CHP plants with an installed capacity of more than 150 kW that have been commissioned since the EEG 2017 came into force, the right to financial support is only valid if the plant operator has successfully participated in a tendering process. By contrast, if electricity is generated from CHP plants that were already operated with renewable energies before 2017, the amount of the claim for remuneration is determined by the law. The amount of the subsidy depends on which substances have been used for the production of biogas. It is also possible to share the biomethane used in the balance sheet if different feedstocks are used.To receive financial funding a plant operator must prove that the power was generated in a CHP plant (heat application obliga-tion) and fulfills several technical requirements and documenta-tion obligations (input material diary).

Additionally, mass balance systems have to be used for the entire transportation process of the biomethane from the biogas upgrading plant to the CHP plant. The tariffs are then guaran-teed from the onset of the first year of operation and continue over the following 20 years. Thus, biomethane can efficiently be used in cogeneration plants, which are operated in places with a significant heat demand.The EEG entered into force for the first time in 2000 and has since been amended several times. The last major amendment (EEG 2017) came into force on 1 January 2017. With the EEG 2017, the fundamental change in the EEG support system has now also been made for biomethane CHP plants: While the rates of remuneration were previously set by law, the amount of funding is to be determined as far as possible in future within the framework of invitations to tender.

Operators of all biomethane CHPs put into operation since 2012 must market the electricity from their plants directly, whereby they can receive subsidies in the form of a sliding market premi-um. The obligation to market directly applies to all new plants with an installed capacity of more than 750 kW that have been commissioned since 1 January 2012. On 1 August 2014, the threshold was then lowered to an installed capacity of 500 kW or less. As of 1 January 2016, the threshold fell to 100 kW.For plants commissioned before 1 January 2017, the market premium or feed-in tariffs continue to be subject to the statu-tory level. Operators of existing plants can also benefit from a flexibility premium. Since August 1 2014, however, the utilization of the flexibility premium has been capped at a total installed capacity of 1,350 MW across Germany.

The further capacity increase of biomass and biogas plants has already been severely slowed down by the EEG 2014: starting in 2016, the legislator had provided for an annual increase in the degression from 0.5 to 1.27 percent, if an annual capacity increase of 100 MW (gross) is exceeded. The EEG 2014 has also already significantly reduced the amount of subsidies. In partic-ular, the increased reimbursement rates and the gas treatment bonus previously planned for the use of certain feedstocks were deleted without replacement.Since the EEG 2017 came into force, all newly commissioned biomass plants must take part in an annual call for tenders, in which they must bid themselves for their individual subsidy rate in the form of the value to be invested in order to calculate the market premium.Neither a differentiation according to input materials is made nor a differentiation according to plant size or technology. This means that all technologies for generating electricity from biomass will be in competition with each other in the future. Only small new installations with an installed capacity up to and including 150 kW, existing installations and certain „transitional installations“ (commissioning before 1 January 2019 and ap-proval before 1 January 2017) will continue to receive a legally prescribed subsidy rate under the terms of the EEG 2017. How-ever, this does not change the direct marketing requirement for an installed capacity of 100 kW or more.

The call for tenders will be issued on 1 September each year for the legally determined expansion volume of installed capacity (2017 to 2019: 150 MW each, 2020 to 2022: 200 MW each), of which the number of plants commissioned with statutory subsi-dies will be deducted. The procedure is handled by the Federal Network Agency (Bundesnetzagentur).The tenderers can then indicate the value necessary for the economic operation of their plant over a period of 20 years per kilowatt hour of installed capacity. The most competitive bids will be awarded until the tender volume is exhausted. The sub-sidised new installations then receive the market premium with the value, which they offered themselves (so-called bid price or pay-as-bid procedure). No bids exceeding the legally prescribed maximum value of 14.88 ct/kWh may be considered for new plants. This means that it will no longer be possible to achieve a higher subsidy than this degressive declining amount. When participating in the call for tenders, a security of 60 euros per kWh of installed capacity must be deposited with the Federal Network Agency. If the plant is not realised within a specified period of time after the award of the contract, penalties will be due.In the future, various restrictions will apply to biomethane CHPs awarded in the call for tenders. For example, biomethane CHPs will only be eligible for funding for an annual average output equivalent to 50 percent of the value of the installed capacity. They have to twice overbuild their plant in terms of capacity and offer the correspondingly increased installed capacity in the tender. For quantities of electricity going beyond this, there is no market premium in direct marketing; the plant operator only receives his market revenue. However, plant operators may be entitled to a so-called flexibility bonus of 40 euros per kW and year for the entire installed capacity.

In addition, only biomethane may be used for the production of which the proportion of maize (whole plant) and cereal grain, including corn cob mix and maize grain as well as corn cob grits, is limited to a total of 50 percent by weight in one calendar year (from 2019: 47; from 2021: 44) (so-called maize cap).

In the case of biomass plants, in contrast to other energy sourc-es such as wind and solar energy, existing plants can also take part in the annual call for tenders under special conditions and thus secure a one-off extension of their funding period by ten years. However, this option is only available for older instal-lations whose previous entitlement to funding is limited to a maximum of eight years. This option is likely to be of interest to biomethane CHP operators only in rare exceptional cases.In addition, a special rule for natural gas CHP plants converted to biomethane was introduced with the EEG 2014, which was supplemented with the EEG 2017. The background to this is that, as a result of the change in the definition of commission-ing following the conversion of a fossil CHP to biomethane under the Renewable Energy Sources Act (EEG 2014), the date of conversion is deemed to be the date of (re-)commissioning within the meaning of the Renewable Energy Sources Act. As the applicable legislation is based on the date of commissioning of the plant, only a – significantly – lower subsidy can be achieved in such a case. In order to protect existing and currently being implemented gas treatment projects, a special regulation was introduced, according to which, under certain conditions, the old concept of commissioning continues to apply, according to which the first electricity generation from natural gas was required for former fossil-fuelled CHP plants.

However, the first major prerequisite for this is that the elect ri-city-generating biomethane comes from an existing gas treat-ment plant. In this case, the plant operator must also provide a so-called „decommissioning certificate“. He must therefore prove that before the first generation of electricity from bio-methane in his plant, another existing biomethane CHP was finally decommissioned. The EEG 2017 makes it clear that several decommissioning certificates for individual plants can also be used together for a larger plant and that a decommis-sioning certificate for a larger plant can be distributed among several smaller plants.

If biomethane is used in combined heat and power plants, the use of the so-called CHP surcharge in accordance with the KWKG can be an alternative to support under the EEG. However, the support granted under the KWKG is significantly less than that provided under the EEG, so that this approach only appears to be useful in exceptional cases.

However, the CHP tendering regulation, which came into force in August 2017 on the basis of the KWKG, provides a specific incentive for the use of biomethane. For example, the ordinance provides for a separate annual tender volume of 50 MW and a maximum value of 12.0 ct/kWh for innovative CHP systems for the years 2018 to 2021.

Special requirements apply to innovative CHP systems. The share of „innovative renewable heat“ must amount to at least 30 percent of the reference heat (from 2021:35 percent). If gas is used in the innovative CHP system – as is the case with gas-powered heat pumps, for example – it must be gaseous biomass, i. e. biogas or biomethane. The use of biomethane is also rewarded by the fact that the use of biomethane in the CHP plant of the innovative CHP system in the first five years is credited to the mandatory 30 percent and 35 percent share of renewable heat, respectively, for a maximum of 5 percentage points.

Effective since 2001, the Biomass Ordinance sets guidelines on which materials qualify as biomass, which technologies for power generation from biomass are within the scope of application of the EEG, and the environmental requirements of generating power from biomass. Biomasses, according to the biomass regulation, are energy sources from phyto and zoo mass. This also includes secondary and byproducts, residues and waste whose energy content is made up of phyto and zoo mass.

The definition of biomass in Paragraph 2 (2) und (3) also includes biogas generated by anaerobic fermentation.

Excluded, however, is biogas which has been produced from the following material (according to Paragraph 2 (3) Number 2):

• mixed settlement waste from private households including released biomass fractions,
• mud and sediments,
• by-products from animal husbandry and
• sewage sludge as far as its account on the input material is over 10 mass percent.

The Biomass Ordinance also includes an adverse list of further input material that are not entitled to financial funding (wood waste, paper and textiles).

The Renewable Energies Heat Act (EEWärmeG) came into effect on January 1 2009. According to the EEWärmeG, 14 percent of the German heat and cold demand (final energy) must be produced from renewable energy sources.

• Crucial elements of the law are:
• Obligatory utilisation for new buildings
• Obligatory utilisation for existing official buildings
• Role model function of official buildings
• Financial promotion in the form of funding programmes
• Specific promotion of heating networks

Owners of new buildings are obliged to employ renewable energies for a certain share of their heat supply or to prove alternative measurements (CHP application or energy savings). This application obligation for newly constructed buildings applies to all owners (private, state, economy) whereas in the public sector existing buildings are partly included. All forms of renewable energies can be used and also in combination.

When using biogas, the obligation is generally met if 30 percent of the heat energy demand of the respective house is covered. Therefore, the biogas is to be used in a cogeneration plant.

In the case of biomethane usage, the same requirements of the 2012 EEG, including the efficiency and climate protection requirements for the biogas upgrading bonus (methane emissions < 0.2 percent, power consumption not exceeding 0.5 kWh per Nm³ raw gas, process heat coming from renewable energies or thermal discharge of the upgrading or feed-in plant) are to be observed as well as the standards for the application of mass balancing systems.The Federal Government is currently planning to harmonise the legal framework for efficiency requirements and the use of renewable energies in a building energy law.

Preferred Network Entry

According to § 34 GasNZV, grid operators are to grant-preference to biomethane transport clients when it comes to concluding feed-in and offtake contracts, as long as these gases are compatible with the grid. At the same time, the grid operator is obliged to take all necessary and economically sensible measures to optimise and ensure an availability of at least 96 percent.

Extended Balancing

For biogas transport clients, § 35 GasNZV provides special regulations on the extended biogas balancing. For natural gas transport clients, the grid operator is obliged to offer the opportunity to balance within tolerance boundaries free of charge. In the case of biomethane, he is obliged to offer a flexibility of up to 25 percent.

This flexibility applies to the specific biogas accounting time span of 12 months. Within this accounting time span, the flexibility is applied to the accumulated difference of the quantity fed in and the quantity taken out. For the use of the flexibility a fixed sum of 0.1 ct/kWh is to be paid to the grid operator.

The worksheets published by the German Technical and Scientific Association for Gas and Water (German: DVGW) provide the overall requirements for gases in the public supply grids. The basic guideline for the quality of gas from renewable sources is DVGW worksheet G 262. If the gas is to be fed into the public gas grid, it needs to meet the regulations of DVGW worksheet G 260. In particular, it has to comply with the second gas family within the local gas groups.

DVGW worksheet G 265-1 provides detailed information on the minimum requirements for technical safety and summarises all plants and components necessary for biogas utilization. These include plant upgrades, conditioning, pressure setting, measurement and gas grid feed-in as substitute gas.

DVGW Data Sheet G 415 presents minimum requirements for the planning, construction, and operation of gaspipelines in which raw biogas or partly upgraded biogas is transported. DVGW worksheet G 1030 defines the requirements for technical safety management systems (TSM) of biogas plants.

Since 2006, it is mandatory in Germany that a certain proportion of biofuels, known as the biofuel quota, must be added to the sale of fuels. The quota requirement, which only applies to diesel and petrol, can also be met by the use of biomethane in natural gas vehicles. The oil company, which is subject to a quota obligation, can make use of third parties (so-called quota trading). In addition to the introduction of the biofuel quota, tax concessions have been granted in the past for certain biofuels such as biomethane. However, the tax relief for biofuels has been reduced step by step and expired at the end of 2015 (§ 50 Paragraph 2 EnergieStG).

The regulations on the biofuel quota were implemented in the Federal Immission Control Act (see §§37a ff. BImSchG). Since 2015, the energy quota has been replaced by a proportionate greenhouse gas reduction obligation. The benchmark of the quota has been changed from the energetic share to the net greenhouse gas reduction. This means that, since 2015, the companies from the petroleum industry must prove that the fuel they market has produced an overall reduction in greenhouse gas emissions of 3.5 percent compared to a calculated reference value, with the specified reduction rate having risen to 4 percent since 2017 and rising to 6 percent by 2020.

The 2008 amended EU Renewable Energy Directive initially contained sustainability criteria for the creation and further use of biofuels. These standards were implemented for the fuel sector through the Biofuel Sustainability Ordinance and for the power and heat sector through the Biomass Power Sustainability Ordinance (Biomassestrom-Nachhaltigkeitsverordnung). The Biokraftstoff-Nachhaltigkeitsverordnung (Biokraft-NachV) ensures that in the course of biofuel production such as biomethane, binding ecological and social sustainability criteria are met. Only biofuels produced sustainably in accordance with the Biokraft NachV (Biokraft NachV) will be eligible for relief under the Energy Tax Act (Energiesteuersteuergesetz) or will be eligible for the biofuel quota or the new greenhouse gas reduction obligation. For example, this can only be taken into account if the requirements for the protection of certain ecologically particularly valuable habitats and agricultural management during the cultivation of biomass can be certified. In addition, a certain greenhouse gas reduction potential must be verified against fossil fuels, taking into account the entire process chain. The minimum requirement was raised from 35 percent to 50 percent as of January 1 2017. A further increase to 60 percent is planned for January 1 2018. In Germany, the Federal Institute for Agriculture and Nutrition (Bundesanstalt für Landwirtschaft und Ernährung, BLE) is the body responsible for sustainability certification.

The purpose of the German Biogas Register is to provide a simple, reliable and standardised tool for certifying the origin and the quality of biomethane. dena has developed the system in cooperation with 14 leading market actors, among them many biogaspartner project partners.

The IT-based system began operating in February 2011 and is managed by dena. In 2014 the balancing of power to gas was added to the register. In the course of the development, the documentation and certification of biogas feed-in tariffs and other incentives have been standardised for the first time.

Further information can be found at www.biogasregister.de