In August 2017 154 biogas plants are in operation in Denmark, producing biogas equivalent to 1.2 TWh /year. Animal manure is the most important biogas feedstock, with a high future potential. Roughly 7% of the produced animal manure is today supplied to biogas plants, but the aim is to increase it to 50% by 2020. Along with manure, organic wastes from mainly food processing industries are co-digested, boosting the methane yield per digested biomass unit.
Today biogas is mainly used for heat and power production, but the interest for upgrading and use as vehicle fuel is increasing. The first four Danish biogas upgrading plants were in operation in 2014, and several other biogas upgrading projects are at various planning stages. Historically, the industry has functioned as a service for agriculture and delivered energy for district heating plants under the Heat Supply Act. This framework has had an impact on the industry’s structure and development. The Heat Supply Act does not give the opportunity to increase earnings, because profits must be sent to the heat customers in the form of cheaper heating. Also the agricultural interests had had great significance because the plants were originally built to meet the increasing demands for storage and utilization of manure in connection with the NPO Action Plan of 1986 and subsequent the water environmental plan.
Despite the challenges that come from being a company that offers solutions for different actors, many plants have evolved into well-run plants that are ready to develop within the new framework, which occurs as a result of a social change based on an increase focus on green energy. Nevertheless, it gives new challengers to the existing plants especially in relation to the agriculture industry, because the biogas industry in Denmark is mostly based on manure. The biogas plants (both the old and the new ones) must therefore have a good and fruitful relationship with the farmers. It is important because the suppliers of manure do not receive any payment for manure like in a classical relationship between company and supplier. The plans “borrows” the raw material, and it typically return with an improved fertilizer potential. The added value is not capitalized, although it has a value for farmers, while helping to relieve society of both environmental and climate challenges.
Secondly, transport costs for the supply of raw materials and return of the processed is a large part of the total cost of a biogas plant. Transport costs for pickup and delivery of biomass in the form of manure is between ¼ and 1/3 of the total cost of the Danish biogas plants. Thirdly, the plants have the ability to get rid of the digested manure again including the extra nutrients that are supplied from other biomasses on the plant. This means that the agriculture industry both acts as a supplier and customer. It should also be mentioned that the returned biomass must contain at least 75% of manure on the dry substance, according to the Executive Order rules. If there is more waste, it must be applied by the sludge directive, which may present challenges for the farmer.
The farmers are also dependent on the biogas plant. Their production of animals can be tied to getting rid of manure from their holdings to a number of suppliers. It is for example applicable both on Bornholm, where Biokraft acts as a distribution center, and in Ribe, where the plant also distributes biomass between farmers. The farmers cost can be too high for them to immediately step out of a collaboration with the plants, because then they will have to pay to get rid of manure. However, not all farmers are depended on a plant – At Blåbjerg Biogas, the farmers are not dependent on the biogas plant in relation to environmental approval.
Regarding other biomass, the biogas sector is also being challenged. Other biomass are often easier to carry around, as they typically have a higher energy content per. tons, and therefore also a higher willingness to pay. It is typical biomass from slaughterhouses or other food production. The plants have in recent years experienced an increased competition in this area. Some plants have experienced an increase in payment between 1500 and 3000% in the period from 2001 to 2013. Where previously it was between 10 and 20% of the total cost of purchases they now anywhere up to 70% of the total cost of goods purchased. Hence other biomass is an area where the biogas plants are experiencing increasing challenges and therefore it is also an area which is being looked at from both the industry and the state.
Compared to the overall social development, there is a paradigm shift across the industry, thanks to the increasing focus on energy and climate. The industry has always been aware that it contributed positively to the climate and energy challenge, but it is only in recent years that the rest of the outside world have become aware of it. Biogas has a broad appeal as production also solves challenges in terms of food production, sustainable agriculture, resource management, climate and employment. One could even say that the biogas plants continues to be companies that offer a variety of solutions to various challenges in the society.The paradigm shift is also supported by new opportunities to sell gas. A large part of the plants still providing gas and heat for public heat supply and thus fall under the Heat Supply Act “break-even” principle. Whit more plants upgrading, it means changing customer relationships and a refinement of biogas, which is not seen in the past. The industry is shifting from being the district heating law to be a competitive company. This challenges the entire organization.
In addition, several new players are moving into the market because it has become more attractive due to gas prices and the possibility of combining biogas production with existing business – e.g. NGF Nature Energy, an energy company. There are new constellations with energy companies or other actors who act both as financier and producer. The traditional cooperative mindset of agriculture is generally not as pronounced as it was with the construction of the biogas industry in the 90s. Several new plants and the growing expansion of the industry, which also comes through the expansion of existing plants, providing a natural pressure on staff resources means that in future there will be an increasing demand for employees and thus an increasing employment.
During the first period of BiogasAction the Danish Biogas association, DFFB, has been working on different tasks in order to promote and fulfill the BiogasAction targets and the different challengers in Denmark.
The following initiatives have been established:
Strengthening the biogas sector framework:
Optimizing business models and financing of biogas projects:
Optimizing biogas production:
Assistance to specific high quality biogas project development:
For further information you can contact Danish Technology Centre for Biogas (DFFB). DFFB is a Biogas association and is devoted to increase the level of competences amongst Danish biogas plants by providing training and retraining of employees, managers and board members in the sector. The association also works gathering and sharing within the business for a better cooperation between the biogas sector, public authorities and institutions.