From Value stacking to Tool stacking in Renewable Gas ...DTU Management Engineering, Technical University of Denmark Questions Agenda •How should future RE -gas support models be

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From Value stacking to Tool stacking in Renewable Gas Regulation

Nielsen, Lise Skovsgaard; Jensen, Ida Græsted

Publication date:2018

Document VersionPeer reviewed version

Link back to DTU Orbit

Citation (APA):Nielsen, L. S. (Author), & Jensen, I. G. (Author). (2018). From Value stacking to Tool stacking in Renewable GasRegulation. Sound/Visual production (digital)

https://orbit.dtu.dk/en/publications/e97b1904-4472-498d-9bfe-39084fe7def1

From Value stacking to Tool stacking in Renewable Gas RegulationSdewes, Palermo October 2018

Lise Skovsgaard, [email protected] Græsted Jensen, [email protected]

4 October, 2018

1

mailto:[email protected]


DTU Management Engineering, Technical University of Denmark

Questions Agenda• How should future RE-gas support

models be designed?

–Should they differ from wind- and

solar support models?

• What could we expect from such

models?

• Back-ground

• Support-model suggestion

• Plant optimisation Model

• Scenarios and results

• Conclusions

4 October, 20182


New Energy Agreement with low cost focus

4 October, 2018

Overall principles

- Ambitious green transition – but at low costs

- Focus on harmonization of support

Source: Danish Energy. Results from tenders for RE-technologies in Germany (used as background info by the Danish government in suggestion for new energy agreement)

Decreasing prices for wind and Solar

3

New funds for RE-gas


Current support and Agreement

4 October, 20184

0

10

20

30

40

50

60

Electricity,CHP

Industry ortransport

direct

Transportdirect withbioTicket

Biogasupgraded

Electricity,CHP

Industry ortransport

direct

Transportdirect withbioTicket

Biogasupgraded

Current 2017 Potential new

BioTicket value

Green certificate

Energy support

Euro/GJ

Feed

-inTa

riff,

pr K

Wh

elec

tric

ity

Feed

-inPr

emiu

m

Feed

-inPr

emiu

m

Feed

-inPr

emiu

m

Feed-inPremium

• CHP: in competition with wind and solar

• Others: reduced support• Type of tender• Cap on support


Inspiration from our neighbours• Norway: Primary income: input

side (waste treatment)• Support focus:

– input side (degasification of manure) => inspiration

– Output side (no tax on transport)

• Notice: Risk of flaring

4 October, 2018

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NODK

Utilisation of biogas

Upgraded, Heat and electricity Upgraded, Transport Upgraded, Other

Heat and electricity Other

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NO

DK

Feedstocks for biogas production

Sewage sludge Organic waste Agriculture Industrial

5


Inspiration from Germany and Sweden

• Germany: – No net tariffs for RE-gas– No German PSO for German Power

to Gas (PtG) due to the potential flexibility it offers the system

4 October, 2018

• Sweden: Biomethane on the grid + biogas certificate => reduced carbon tax• Germany: RE-gas on the grid + RE-certificate => support to electricity based on RE-gas

6

Green certificates represents a “support” or

”tax reduction”

=> price add-on


What should the Danish model do?• Be cost-efficient

– Not too high cost =>– Minimize regulators risk and investors risk

• Be generic (not pick the winners)• Transparent and last long (reducing investors

risk)• Cross borders?

4 October, 2018

RE-gas can provide

- Energy

- flexible and storable

- for transport

- for high temperature

- Environmental

- smell

- nutrients

- GHG

7

• Address values from a given technology

=>=> Value stacking


Model: Tool StackingSeveral values:- Energy (flexible, storable, high temperature and for transport)- Environmental (GHG, nutrients, smell)

Example: Combination of semi-technology neutral auctions with other support tools

4 October, 2018

Biomethane

Manure treatment

Biogas production + upgrading

FIT for manure

Technology neutral auction for green gases

Green Gas in the grid

Green certificate exchanged for:

-Tax reduction (green gas tax) or

-EU-ETS (carbon emissions) or

-Bio-Ticket (transport blending demand)

+

+

=> several tools

8


What is the Certificate value?

0

2

4

6

8

10

12

14

16

18Euro/GJ

BioTicket EU-ETS

Biogas Tax instead of Methane tax Swedish carbon tax

Biogas instead of process tax4 October, 20189

BioTicket value – price add-on from RE-fuel requirement in transport

Tax reduction, when acknowledged as biogas via certificate

Swedish carbon tax

EU-ETS


Model: Biogas value chain

4 October, 201810

DTU Management Engineering, Technical University of Denmark 4 October, 201811

1. Energy prices: 20172. Support: 20203. EU-ETS-price: 2020-

prediction

Prices


The significance of the green tariff

4 October, 201812

Will the green tariff dictate inputs?

0

5

10

15

20

25

30

0

5

10

15

20

25

30

35

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Bau2020 Green + certificate_I Green +certificate_II

Green +certificate_III

Green + upgradeand methanation

Green support Energy support Certificate Carbon reuse support

Euro/G


Results

Bau2020Green + certificate_I

Green + certificate_II

Green + certificate_III

Green + upgrade and methanation

Manure treated, t tonnes 416,3 421,6 544,2 421,6 416,3biomethane, GJ 524.046 552.361 323.246 516.872 524.046Technology Upgrading Transport Upgrading Upgrading MethanationProfit, Mio. Euro 7,9 7,7 4,3 8,3 12,5Net-support, Euro/GJ 16,4 6,4 18,7 9,1 14,8Net-support, Euro/t. tonnes 20,7 8,3 11,1 11,1 23,84 October, 201813

0

5

10

15

20

25

0

5

10

15

20

25

30


Upgrade or transport?

4 October, 201814

0

5

10

15

20

25

30

0

5

10

15

20

25

30In

dust

ry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Bau2020 Upgrade ortransport I

Upgrade ortransport II

No support Methanize

Energy support Green support Certificate Hydrogen support

Euro/G

No electricity tax and tariff Do we have

to pay support at all?


Results

Bau2020Upgrade or transport I

Upgrade or transport II No support Methanize

Biomethane, GJ 524.046 524.046 560.028 560.028 524.046Technology Upgrading Upgrading Transport Transport UpgradingProfit, Mio. Euro 7,9 5,6 4,2 4,2 5,6Total cost, Mio. Euro 8,6 8,6 8,7 8,7 8,6Total income, Mio. Euro 16,4 14,1 12,9 12,9 14,1Net-support, Euro/GJ 16,4 12,1 0,0 0,0 12,1

4 October, 201815

0

5

10

15

0

5

10

15

t

t

t

t

t

No electricity tax and tariff


Regulatory models: Tool stackingModel 1 Model 2 Model 3 Model 4

4 October, 2018

Feed-in Tariff for manure treatment

Tender on upgraded biogas (feed-in premium)

Green gas Certificate: -As price element or-As quantitative element

+

+

Feed-in Tariff for manure treatment

Tender on upgraded biogas through methanation (feed-

in premium)

RE-gas Certificate: -As price element or-As quantitative element

+

+

Tender on biogas production with a feed-in

tariff targeting manure and waste treatment

Tender on the application of hydrogen with a feed-in

tariff

Hydrogen Certificate: -As a price element

+

16


Questions and Conclusions1. How should future RE-gas support

models be designed?

2. Will the green tariff dictate inputs?

3. Do we have to pay support for

upgraded biogas?

4. What will it take to get the model to

methanize?

1. We suggest tool-stacking

• Targeting each value in the stack

2. Green tariff may affect – not dictate

3. Not always, if there is another value

from other regulation

4. Targeted support for reuse of carbon

maybe combined with other factors

4 October, 201817

Thank you for your attention

Lise Skovsgaard, [email protected]

4 October, 2018

18



Upgrade or methanization

What will it take to get the model to methanize?

4 October, 201819

0

5

10

15

20

25

30

0

5

10

15

20

25

30

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Indu

stry

Tran

spor

t dire

ct

Biog

as u

pgra

ded

Methanize I Methanize 2013 Methanize II Carbon Reuse I Carbon Reuse I

Energy support Green support Certificate Hydrogen or carbon reuse support

Euro/G



Results

4 October, 201820

0

5

10

15

20

25

0

5

10

15

20

25

t

t

t

t

t


Methanize IMethanize 2013 Methanize II

Carbon Reuse I Carbon Reuse I

Biomethane, GJ 679.003 524.046 801.260 524.046 666.446

TechnologyUpgrading Methanation Upgrading

Upgrading Methanation Upgrading

Upgrading Methanation

Profit, Mio. Euro 13,6 9,7 10,6 13,9 12,5Total cost, Mio. Euro 13,4 8,6 15,2 8,6 12,0Total income, Mio. Euro 27,1 18,3 25,8 22,5 24,5Net-support, Euro/GJ 9,4 12,1 9,9 12,7 14,8

DTU Management Engineering, Technical University of Denmark 4 October, 201821

Model: Biogas value chainOutput side in detail


Boom vs cost efficiency

Example: Italian development

4 October, 2018

≈ funds for other RE

Source: M.D. 18.12.08, M.D. 06.07.2012, M.D. 23.06.2016 and Gestore dei Servizi Energetici S.p.A. (GSE), Annual statistical reports on renewable energy, www.gse.it

22

Danish CHP support

2017: 182Euro/MWh


Price tool vs quantity tools

4 October, 2018

Source: Aures project, Report D6.2 Source: Aures project, Report D6.2

What determines….

- Marginal Benefit?

- Marginal Cost?

What is the shape of MC

- Regarding upgrading of biogas?

- Manure treatment?

- Power to Biomethane (PtBM)?

23

Documents

From Value stacking to Tool stacking in Renewable Gas ...DTU Management Engineering, Technical University of Denmark Questions Agenda •How should future RE -gas support models be