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BiogasAction – New developments in Croatia

Illustration : Croatia. Pixabay

Although Croatian biogas market records a 27% annual growth from 2016 to 2017, this growth is based on power purchasing contracts signed by December 2015. Since January 2016, a single contract was not signed in the overall renewable energy sector, let alone in biogas. The main reason is poor transition from feed-in system to market premium system that is still pending and non-existence of implementing acts both for electricity and bio fuel market.

The situation of the biogas market in Croatia

In May 2017, there are 38.935 MWe in 26 biogas plants operating. 23.094 MWe in 27 biogas plants have power purchasing contract signed with the Croatian Energy Market Operator (HROTE) and are eligible for FiT within the old system. Only 2 biogas plants remain to rely on waste (5.5 MWe) whereas most of them, if not all, rely heavily on maize silage as the main feedstock. There are 7.981 MWe remaining until reaching the 70 MWe quota by 2020.

As for feedstock, a combination of maize silage with manure is still a dominant, if not only, option considered in pending plants. And while the existing plants are disproportionally large to the average farm size in Croatia: 13 plants or 62% are 1 MWe and 6 plants or 28% have 2 MWe, the pending plants are still clustered around 1 MWe (21 or 68%) and 2 MWe (4 or 13 %) but there are also 6 biogas plants with size <300 kWe. There is an on-farm biogas plant adjusted to the farm’s size with 300 kW that would be used as best practice example in Biogas Action project. No restrictions or preferences within the FiT are placed in terms of energy crops used for AD. The amount of FiT varies according to the Ordinance on FiT valid on the date of acquisition of power purchase contract. The FiT is annually corrected for power purchasing parity. Power purchase agreement is signed for either 12 or 14 years, depending which FiT Ordinance was in placed when it was signed.

All energy from biogas is focused on electricity production whereas biomethane, either as natural gas substitute or as biofuel for transport, is fully neglected despite some existence of fundamental legislation that includes biomethane production and utilisation.

Since January 2016, only Rural Development Fund subsidizes biogas investments. Family farms are eligible with own energy consumption and limit on energy crops use.

With January 2016, Croatian biogas market has to find new direction(s) to continue its growth as such market of over dimensioned biogas plants relying on energy crops has been saturated with the contracted projects. Indeed, BiogasAction project comes at the right time to indicate plausible directions of biogas market evolvement and regain interest in this valuable type of renewable energy.

The evolution of biogas in the country

During the first 1 year and a half of BiogasAction, the Energy Institute Hrvoje Požar, EIHP, was optimistic in the new Government to tackle burning energy sector issues, starting from renewing 2009 Energy Strategy, NREAP renewal, biofuels on market, financing on contracted renewable energy projects… and fast and smooth transition to from feed-in system to market premium. Yet, despite the efforts within BiogasAction to contribute to creating better frameworks for the widespread production of biogas and biomethane by participating actively in public discussions and writing comments on given working versions of legislative acts, it was necessary to admit that project indicators are not likely to be achieved as originally proposed. Thus, EIHP has undergone through changes of Grant Agreement which slowed down implementation in the first period. However, the updated Grant Agreement has a potential to carve out future biogas market in Croatia and fulfill the overall Biogas Action aim: to serve as vehicle for the development of the European biogas sector and to increase the biogas and biomethane production in the European Union, by focusing on removing the non-technical barriers to contribute to creating better frameworks for the widespread production of biogas and biomethane, in line with the EU 2020 targets.

EIHP has arranged knowledge transfer sessions on experiences with biogas within market premium system in Germany from IBBK to Croatian Energy Agency and Croatian Energy Market Operator. A Croatian Biogas Association was founded in summer 2016 and its work has been actively supported by Biogas Action. The platform of all biogas market stakeholders was formed to react on Ordinance on RES_v1 in February 2016 and Ordinance on RES_v2 in August 2016. Also, a virtual part of the platform was established. In February 2017, there was a joint initiative to react on Government announcement of reducing FiT on the existing biogas plants by calculating the effect of announced fees on renewable electricity producers. The aim was to demonstrate to the government that operating biogas plants cannot sustain such burden. The energy institute contacted by email and phone every of 26 biogas producers to assure them to give us OPEX and CAPEX. In addition, the first stakeholder forum took place in March 2017 with a topic of Future biogas markets in Croatia and the second one by the end of 2017.

In relation to the meetings with municipalities, policy makers, biogas producers and other biogas market stakeholders, Biogas Action project was promoted. Challenges are recorded, as well as aspirations and future expectations of biogas market. All that was taken into the account in order to find common solutions. Croatian Biogas Association has just started its activation and faced with organisational problems and lack of financing. EIHP has networked and included Biogas Association in a European Project (Interreg Danube) proposal to increase its capacity and the Association and Biogas Action have established a relationship. Finally, the Biogas Action project was introduced at a specialized TV show Eko Zona on Croatian television (HTV).

EIHP has mainly changed this task from the original plan to develop a hypothetical 4 business models of biogas market: a pocket size on-farm (<30kW, CHP, fertilizer); a centralised (<30kW, CHP, fertilizer); a industrial (>30kW, CBM, bioplastics); a waste management company (>30kW, CBM, agrochemicals). With plausible market size, energy production, subsidy needed, CO2eq saved. Also, generic business models are created and presented to the public on 4 occasions. Policy Delphi method is used for forecasting the outlines of each business models given the national circumstances and time dynamics of the development of each market. This will serve as decision base to the decision makers in order to trigger desirable tradeoffs, not only looking at energy from biogas but AD as a business concept. Finally, a series of 6-8 trainings is planned for mid 2018 aiming at farmers, utility company management, GHG emission mandatory payers, fossil sector companies, officers from extension service and other “think tank” members.