Ref. Ares(2022)3718318 - 17/05/2022
Ref. Ares(2022)4148847 - 03/06/2022
FOLLOW UP - GD4S’ meeting with Jorge Pintos Antunes, Deputy
head of Cabinet of EU Commissioner Janusz Wojciechowski
20 April 2022
What is the role of DSOs in the value chain of gas supply?
Distribution Systems Operators (DSOs) are responsible for operating the gas distribution network,
ensuring its maintenance, and its development. We are responsible for safely distributing natural and
renewable gas to consumers (households and industry): 100% of residential consumers and over a
third of industrial and commercial gas end-users are connected to local gas networks in Europe.
DSOs have a strong knowledge and operational expertise in the transportation and distribution of
gas.
As an association, GD4S represents the main DSO of 7 European Member States, directly supplying
27.7 million customers in Europe (around 30% of the European market).
How can DSOs contribute in reaching REPowerEU’s biomethane target and
beyond?
Because of our mission, which is to distribute gas locally to consumers, DSOs are uniquely positioned
to facilitate the achievement of REPowerEU’s 35 bcm biomethane production target, and even more.
→ DSOs facilitate rapid injection and supply of increasing biomethane volumes to an
extensive pool of consumers
Gas DSOs have a crucial role to play in achieving the objectives of RePower EU and the 35 bcm
biomethane target, acting as the bridge between its production and its consumption by end-users in
both residential and industrial sectors.
The extensive European gas grid, with more than 2 million kilometres of network operated by 45
TSOs and 2,000 DSOs, offers the flexibility to effectively integrate renewable gases into the network,
with its 100 million points of supply. Such capillarity is a key advantage to capture the largely
decentralised and local-based production of biomethane in rural areas or in urban sites, depending
on the feedstock used.
The direct proximity of gas distribution grids operated by DSOs with
biomethane production sites makes them a crucial asset to accelerate the supply of increasing
volumes of biomethane to a large base of consumers.
At an early stage of renewable gases development, the gas network is fundamental to connecting
decentralised production of renewables gases like biomethane with areas of consumption. The
proximity of gas DSO’ grids with biomethane production sites will be a key factor for the development
of this renewable gas also in the European countries where potential is relevant, but production is
currently relatively low (for instance, for the lack of appropriate incentives or regulatory measures).
→ DSOs can accelerate biomethane uptake at limited costs
Locally produced biomethane can be easily injected into existing local gas distribution grids and
supplied to households and industries, with limited additional investments and technical
requirements. Leverage on this existing infrastructure would support the consumption of biomethane
by end-users in a secure and cost-effective way, significantly contributing to enhancing the market
uptake of this renewable gas.
Local gas networks are already connecting biomethane plants and
can integrate as many additional
volumes of biomethane as can be produced in the short/medium term. It is estimated that local gas
networks can handle the injection of significant new biomethane volumes over the next 2 years
without any major technical difficulties.
On the contrary, the direct injection of biomethane into the gas TSO grids would in most cases result
in much higher costs, due to the larger distance separating the network and the production sites, and
the need to compress the gas at much higher pressures at which gas TSOs’ grids are usually operated.
→ DSOs enhance energy efficiencies thanks to gas grids digitalisation
The key enabler of all innovations will be the digitisation of the gas networks (smart metres, sensors,
etc.), which can significantly contribute to maximise the environmental benefits of biomethane
injection by considerably improving energy consumption management and network efficiency.
The resultant improvements in network management also benefit end-users in several ways. For
example, more accurate and updated data from smart metres will enable better control of energy
consumption and induce proactive behaviours when using gas and heating appliances. A digitalized
grid can control in real time gas pressure, odorant content and the quality of the gas delivered to the
end users, also enabling if necessary an appropriate blending of streams of gas of different origins in
order to keep the key characteristics like calorific value under control.
→ DSOs use their local expertise to support local acceptance of biomethane production
plants
According to the European Biogas Association (EBA), 5 000 additional biomethane plants will have to
be built to reach the 35 bcm target by 20301. Yet, construction projects of biomethane plants often
raise multiple concerns for local communities (noise, disturbances, impact of quality of life, etc) and
sometimes even strong opposition. Local and regional stakeholders must therefore foster transparent
energy planning based on local considerations and in direct dialogue with communities.
As the common ambition is to considerably accelerate the development of biomethane production,
such dialogue will be necessary to make sure that the involved stakeholders (producers, consumers,
1
REPowerEU-with-biomethane-EBA.pdf (europeanbiogas.eu)
local authorities, etc) fully understand the benefits of biomethane at multiple levels (circular
economy, waste treatment, additional revenues for farmers, security of energy for consumers, etc)
and guarantee social acceptance.
In this dialogue with communities and consumers, DSOs have an active role to play thanks to their
expertise and know-how on the particularities of the territories and local communities they operate
in.
What should the legal framework look like to incentivise biomethane
production and injection?
An enabling regulatory framework is crucial to deliver. Despite grid readiness, a clear European
regulatory framework and incentives are needed to massively scale-up biomethane production and
injection to achieve REPowerEU’s 35 bcm target by 2030.
Such a strong ambition must now be matched with concrete measures to support the production of
biomethane and green hydrogen as well as their injection into the gas grids.
From this perspective, GD4S invites the Commission to consider the following measures:
→ Establish an appropriate regulatory framework to facilitate the injection of biomethane
into the existing gas infrastructure
Key EU legislation for the gas sector should align with the newly stated ambitions of RePowerEU on
biomethane and hydrogen;
1. Translate the target of 35 bcm biomethane into a binding EU wide objective, in the
revision of the Renewable Energy Directive and in the Gas Package, that should be further
reflected into Member States National Energy and Climate Plans;
2. Support the DSOs with a proper regulatory framework to overcoming technical and
economic aspects related to connecting biomethane plants to the gas grids, metering, and
quality control (planification with DSO/TSO cooperation, tariffs and investment decisions for
grid connections and reinforcement, gas quality control procedures, etc.).
3. Encourage cooperation among gas DSOs, for instance through the implementation of a
dedicated EU DSO entity.
4. Establish Guarantees of Origins (GO) for all renewable gases to increase the demand and
encourage investment in the sector,
including the GHG emissions reduction of the
renewable gas calculated on a life-cycle basis.
5. Incentivise European consumers to better control their own energy use.
EU legislation
should emphasise DSOs’ active role to reach higher energy savings, especially in supporting
local authorities to improve their actions as well as the identification and support of energy
vulnerable consumers.
→ Foster knowledge sharing and cooperation among Member States to enhance
biomethane production across the EU
As the timeframe in which to act is limited, the role of the European Commission is crucial to foster
high-level coordination among Member States, energy regulation agencies, markets representatives
(producers and consumers) and infrastructure operators;
6. Elaborate as soon as possible
RePowerEU guidelines on best practices at local and
national levels on biomethane production and injection to support Member States and
National Authorities in scaling up their efforts. Given the variety of starting points and
specificities across Member States, such guidelines would be instrumental
to encourage the
adoption of the needed measures to accelerate the uptake of biomethane, such as support
for connections, feed-in-tariffs, contract for differences, reverse flow investment and
operation management, etc.;
7. Introduce as soon as possible
consistent guidelines on existing EU funding for
biomethane production to streamline and facilitate its use by national, regional and local
authorities (Cohesion funds, ERDF, Recovery and Resilience Facility, CAP, etc.);
Case studies: a variety of starting points on biomethane production and
injection in Member States
The comparison of the situation across different Member States illustrates that a pro-active and
ambitious policy framework at the national level is crucial to accelerate biomethane production and
injection into gas grids. While some countries are well advanced with clear legislative incentives in
place, such as France, others like Romania are at the very early stages of development and require
national governments to operate a quick shift towards a clear strategy and vision to support
biomethane uptake in their country. Others, such as Italy, have started to support biomethane
production and injection, but need to considerably accelerate the implementation of concrete
incentives to move forward.
FRANCE
Current situation and potential:
●
France is among the five first biomethane producers in Europe, with 4.3 TWh produced in
2021. It also enjoys the fastest pace of growth in the EU: production capacity has doubled last
year and the maximum annual injection capacity reached 6.4 TWh in 2021, compared with
3.9 TWh at the end of 2020.
● This represents 9.2% of the 2030 target, which is to reach 10% renewable gas in total gas
consumption.
● At the end of March 2022, the 400th biomethane unit has been connected to GRDF gas grid,
thus reflecting the development of the sector since 2020 (which accounted for 214
biomethane units).
●
By 2050, the production of green gas in France is expected to reach 420 TWh and would be
sufficient to cover all gas consumption. New renewable gas production and recovery
processes are currently being developed in the medium and long term such as pyro
gasification of solid renewable and non-renewable residue, power-to-gas and hydrothermal
gasification.
Legislative and regulatory framework:
●
The current trend can be attributed to the favourable regulatory framework supporting the
injection of biomethane into the natural gas grid (Feed-tariff for Biomethane injected into
the Gas grid, Guarantee of Origin System, Compensation Mechanism Associated with Feed-In
Tariffs).
●
The implementation of the "right to inject", which aims to achieve the optimum technical
and economic investments required for the injection of biomethane, was strengthened in
2021, securing gas networks as an outlet for project developers.
The public authorities are working on implementing additional provisions designed to
accelerate the
development of injected biomethane, by forcing natural gas suppliers to directly finance the
production of biomethane in proportion to their supply portfolio (biogas production certificate (BPC).
ROMANIA
Current situation:
● The biogas industry in Romania is in the early stage of development. Currently there are 33
biomass/biogas power plants producing electricity only.
No biomethane installations for the
moment (pilot biomethane projects under analysis).
●
The regulatory and policy framework is very fragmented. The different authorities are not
necessarily aware of the interlinkages to other areas (renewable energy, waste management,
waste/water treatment, environment, and agriculture).
● There is a
clear lack of legislative framework to support the injection of biomethane into
the national natural gas grid.
Romania’s potential:
● Romania produced about 7 mn tonnes of organic waste in 2016 (the last available data on
Eurostat).
● Municipal waste (household and similar wastes) represented the largest amount of organic
waste.
● We estimate that the biogas potential of Romania, based on organic waste reported by
Eurostat (2016) and biogas yield,
ranges from 50 TWh to 70 TWh.
● Key assumption is that all organic matter is transformed into biogas.
Necessary steps to boost the biomethane development:
● Develop existing and missing legislation on biomethane, including the rights of the
biomethane producer to access the natural gas network in a non-discriminatory way.
● Introduce a sustainable support scheme, including injection costs sharing between the
natural gas grid operator and the biomethane producer.
● Set up a regulatory framework to allow biomethane projects implementation.
● Draft technical norms.
● Build a sustainable and credible incentive scheme of feed-in type tariffs.
ITALY
Current situation:
●
Biogas industry developed mainly for power generation, due to favourable incentives in the
past years
● Currently around 50 injection points in operation; 90% of which from organic waste and
agro-industrial residues
● Operative incentive schemes only for biomethane used as a fuel for transport; waiting for DG
COMP approval of operative measure for extending support to generic injection into the gas
grids
● Under construction a regulatory scheme for supporting DSOs à TSOs reverse flows (ongoing
NRA procedure)
Potential:
●
8 bcm of biomethane potential estimated based on ENEA calculations
●
5,5 bcm (60 TWh) achievable at 2030 also with conversion/upgrading of current biogas
production plants (approx. 10% of expected gas consumption)
Necessary steps to boost the biomethane development:
● Key factors are an appropriate incentives scheme in place, fair burden sharing between gas
producers and grid operators, regulation supporting reverse flows.
Focus: business models on biomethane
Example of an agricultural project for biomethane production using manure (source: GRDF
website)
Key figures:
● 31,000 tonnes of inputs per year
maximum
● 100.15 EUR/MWh (purchase price in force
on 1st March 2021)
● 18.2 GWh/year, either 3,000 housing or
71 buses
Inputs:
● 12,000 tons of livestock manure
● 15,000 tons of intermediate culture with
an energy vocation
● 4,000 tons of main crops
Outputs:
● 201 Nm3/h of biomethane injected
● 29,000 tons of digestate
Funding:
● 1,8% rate over 13 years
● 85% in debts
● 5% subsidies
● 10% equity
