UPDATED: June 25, 2020
The biogas and biomethane market in France is among the most dynamic in Europe according to the latest data available. With its continued growth and the actions taken by the government to become carbon neutral as soon as 2050, the France market should offer interesting business opportunities in the next years. Despite obstacles, financial support and policies offered remain beneficial. Here is a glimpse into the biogas and biomethane France market.
Source : Biomethane Observatory, France Biomethane, May 2020
The development of more than 200 biomethane units is planned for this year, according to the previous graphic. However, this number could decrease because of the COVID-19 crisis.
The crisis had consequences for the industry such as a slowdown or closure of sites, delays in administrative procedures and the reduced quantity of organics available because of restaurants closure, for example. The French government has adopted policies to support the industry and minimize the consequences.
In addition, the majority of biogas plants use feedstocks from agriculture and that are directly available on the territory is it located on, such as manure, culture residues or wastewater sludge. The production of biogas and biomethane in France is based on the valorization of waste and agricultural, industrial or municipal by-products. Biomethane has specifically a high potential in these sectors. Unlike some countries like Germany, it does not practice culture used for production of energy.
Source: Biomethane Observatory, France Biomethane, May 2020
For several years, the government of France has actively supported the growth of biogas and biomethane. The market mechanisms and the various subsidies offered make it possible to reduce the high costs of production.
These market mechanisms give producers the certainty of selling a certain amount of biogas and biomethane to a selected supplier at a previously fixed price and for a fixed term. These are the pillars of government support for the industry.
These purchase tariff, determined by the government, depend on several factors, such as the form of valorization used, the size of the unit and the nature of the feedstocks.
There are two types of fixed purchase tariffs:
The duration of the purchase obligation is 15 years, and allows to reduce the costs of production and operation. On December 31, 2018, the purchase tariff for renewable natural gas plants was between 45 and 139 € / MWh, depending on their size. A bonus may be added depending on the type of feedstocks used.
However, the new multiannual energy programming (PPE), adopted in April 2020, plans for a gradual reduction of these tariffs. The goal is to reach a target price of 75 € / MWh in 2023, and 60 € / MWh in 2028.
Moreover, the government wishes to set up a tendering system for about 20 units of 200 Nm3/h, or medium-sized. A tariff can be suggested in the tender. After, if money remains, it could be offered to smaller facilities. These changes should be implemented in 2020.
For this type of biogas plant, the duration of the purchase obligation is 20 years. When the biogas plants exceed a power of 500 kW, they go through a formal bidding process. This purchase price has allowed for strong growth incogeneration in agricultural areas.
Source : Panorama du gaz renouvelable 2019, May 2020
Guarantees of origin (GO) bind the biomethane producer and the gas supplier for 2 years. The gas supplier receives a guarantee of origin for each MWh of biomethane produced. This disappears from the register as soon as the MWh is consumed.
However, the last version of the energy-climate law, adopted in 2019 and aiming to reach carbon neutrality by 2050 will bring changes to this mechanism. For example, the government will own the guarantees of origin and will sell them as bids to the gas suppliers. Before, they were paid by gas purchasers such as ENGIE. These changes should start in November 2020. It could change the financing capacity of this mechanism.
Over the years, the government of France and other organizations active in the biogas and biomethane industry have enhanced the financial incentives offered. The goal is to stimulate French industry and reduce the costs associated with the production and operation of biomethane or biogas units.
Here are some examples of financial incentives you could benefit from:
In April 2020, the French government adopted its multiannual energy programming (PPE), after spending several months revising it and some public debates. Multiannual energy planning allows France to set itself targets and priorities in order to make the necessary energy transition.
Biogas and biomethane took a lot of space during the discussions about the PPE. They have been recognized as important drivers for the energy transition. However, the space they got in the new PPE is reduced, which disappointed several stakeholders of the industry.
Indeed, they fear a slowdown in the number of projects in the future because of the decreasing purchase tariff for biomethane injection in the gas grid. Also, the French government has decided to decrease the renewable gas in the gas grid target to 7% by 2030. Before that, the target was at 10%, and the industry hoped the government would choose a target of 30%.
Project developers will have to reach an injected capacity target between 14 and 22TWh for 2028. This number is lower than the imagined scenario in the PPE 2015 for the same year. This is a way for the French government to encourage a cost reduction and an increase of profitability for the industry. The biogas and biomethane industry want to set up cost reduction levers and report the decrease of the purchase tariff. They believe the new PPE project may be detrimental to small-scale or agricultural projects.
Source: Biomethane Observatory, France Biomethane
Despite the continued growth of the biogas and biomethane industry, some obstacles remain.
A recent study by ATLANTE, the Advent of the 3rd Gas Revolution, mentions, for example:
However, there are several solutions for these problems: the use of new technologies, the implementation of regulatory changes and others. The actors involved in the industry are working to mitigate these obstacles to optimize its development.
Despite the obstacles mentioned, the adopted measures set up for the biogas and biomethane industry and the actions of organizations and companies unquestionably create interesting business opportunities in France for project developers and suppliers. This will become increasingly true as France moves towards carbon neutrality and seeks to reduce its GHG emissions. The latest data and studies about the France market prove without a doubt it has a remarkable dynamism and a growing potential.
They also want to decrease by 40% its consumption in fossil fuel. In addition, a report by ADEME is studying the feasibility of a 100% renewable gas mix by 2050.
Several companies in France are already benefiting from the market, such as:
This company valorizes biogas from waste storage facilities with its WAGABOX.
Prodeval is specialized in treatment and recovery of biogas issued from methanisation of organic waste systems.
It is a global leader in the biogas purification industry. They offer systems with a capacity ranging from 70-12 000 SCFM.
A company specializing in the construction of biogas plants in the agricultural and industrial industry, in particular.
A company with expertise in the technological development of biomass flows and the supply of renewable energy system.
A company specializing in gas separation technologies for biogas upgrading, nitrogen production and helium recovery, among others.
As BiogasWorld always strives to take the pulse of the market and meet its actors, we actively participate in the biogas and biomethane industry in France. Every year, we take part in several events in France to follow the growth of the market and learn to know better the stakeholders.
We stay in touch with several project developers and suppliers that are active in France.