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The ‘German way’ is not a business case yet in Estonia:

“We try to concentrate on projects that are financially profitable – and at the moment biogas projects are not for using biogas in CHP-s”.

The ‘Swedish way’ has not yet been explored in Estonia:

“Biomethane for vehicle fuel can be the unused option for Estonia”.
The words of an Estonian energy sector entrepreneur illustrate the Estonian situation - the biggest development obstacle in promoting the biogas sector is the fact that in the current economic and market situation the production of biogas is not profitable. The developers of biogas plants say there is only one bottleneck to the development of the biogas sector: the market price of 3-5 €c/kWh will be received by producers and the support for renewable electricity (obligation to purchase with a feed-in-tariff 5,4 €c/kWh) will be received additionally, but this (8-10 €c/kWh) is simply not high enough. It is one of the lowest in Europe, approximately 3 times smaller than in Italy, Germany and also Latvia. Also the market for purified biogas (biomethane) is currently missing in Estonia.

The absence of a political strategy and official action plan is a serious problem because the development paths of biogas sector are not set clearly – which also causes uncertainty among developers. As long as there is no agreement and vision for the development of bio-energy and biogas, and the tax rates and subsidies are inconsistent, the interest of biogas developers and possible investors to establish and develop biogas plants is impaired significantly. At the moment biogas is the least regulated renewable fuel in Estonia.

Political Framework

Considering the current economic situation in Estonia and the (un)profitability of bioenergy, it is clear that transfer to bio-energy will not take place without a political decision and subsequent financial tools and measurements. Therefore it is an actual need in Estonia to find out which renewable energy support mechanisms (including support schemes for biogas production, delivery, use, and utilization) are economically, socially, regionally and environmentally most reasonable.

According to the Renewable Energy Directive Estonian share of renewable energy has to increase to 25% of the gross final consumption of energy by 2020. The estimated energy consumptions for current and coming years for heating and cooling, electricity and transport are shown in Table 4. The biggest growth has to be ensured in the use of renewable energy sources in transport: in 2009 0.6% of transport fuels were produced from bioresources, thus in 10 years the share of biofuels used in transport has to increase 4.5 times. The estimated share of heating and cooling will be the same and the share of renewable electricity has to increase three times.
Current action plans and legal acts having the biggest impact on the renewable energy sector (incl. biogas) are:

National Development Plan of the Energy Sector until 2020 is the main so-called umbrella strategy of the energy sector. The aim of the national energy sector is to relate the specific development plans of the sector and provide general guidelines until the year 2020. Measure 2.4 of the plan provides the development of the National Renewable Energy Action Plan (NREAP).

National Renewable Energy Action Plan until 2020 (NREAP)
The first steps in moving towards the national vision for the biogas sector have been made by the development of the National Renewable Energy Action Plan (NREAP) by the Republic of Estonia. The document is focusing on renewable energy development, including development of biogas sector. Stakeholders of the Estonian biogas sector also expect the public officers (Ministry of Economic Affairs and Communications in cooperation with the Ministry of the Environment and the Ministry of Agriculture) to compile a spatial plan for biogas production perspectives in Estonia.

National Renewable Energy Action Plan includes actions for promoting the development of the biogas sector in Estonia:
  • implementing biogas study;
  • in case an entrepreneur is applying for subsidies for building a manure storage facility, a precondition for the construction of methane collection facility has to be set;
  • subsidies (financial support for investments) for using biofuel in public transport and developing necessary infrastructure, e.g. construction of filling stations;
  • making use of biofuel as a condition in public procurements for passenger transport; developing and implementing incentives for increasing the use of vehicles running on other alternative renewable energy sources; developing incentives (e.g. taxation,) that would influence the structure of vehicle use.
Actual implementation of these methods may prove to be a problem.

The objective of the The Development Plan 2007-2013 for Enhancing the Use of Biomass and Bioenergy is to reduce the dependence of Estonia on imported energy resources and to enhance the use of biomass as a raw material for energy which coincides with the objective of the Development Plan of the Energy Sector to guarantee continuous energy supply by diversification of energy sources and more even distribution in the energy balance.

Perspectives for Estonian biogas sector

The biogas sector in Estonia is in an early stage of development, both in the sense of acquiring know-how and implementing practical solutions. To fulfill the targets set by NREAP, considerable increase has to take place in both quantity and quality of using biofuels in Estonia.

Biogas for heat and electricity production - ‘German way’

Estonian theoretical potential of 60% methane content biogas is estimated to be as big as 545 million Nm³/y and the economically usable biogas quantity would be 286 million Nm³/a. The actual amount of Estonian biogas production from operating 6 plants is only around 11 million Nm³ of gas originating from landfills, sewage sludge and slurry (liquid manure). Most of the produced biogas is used in CHP-s to produce renewable electricity and heat, renewable electricity was produced in 3 plants in amount of 55 TJ/1,31 ktoe in 2007. The remaining biogas was burned in flares instead of using it for energy production.

The reason why Estonian production has not followed the ‘German way’ of fast growth is the low renewable electricity feed-in tariff. It is clear that neither current (5,4 €c/kWh, excluding market price) nor planned (6 €c/kWh, including market price) feed-in tariff for renewable electricity are not feasible for biogas production, not even with 50% investment subsidy. Biogas production is multifunctional process and has public benefits via positive impacts to rural life, economics, renewable energy production and national energy supply safety, environmental protection (reduction of green house gases and nutrient run-off to Baltic Sea), waste management, agriculture (alternative activity for farmers to grow energy crops) regional development and social aspects e.g. additional jobs and cooperation of farmers via bioenergy cooperatives and regions. This justifies governments to support biogas production. This would mean that the renewable electricity feed-in tariff has to be modified according to the source of energy, location of the production and the size of the plant. Micro CHPs using biogas would become feasible in Estonia if renewable electricity feed-in tariff for biogas were 14 €c/kWh (excluding market price; no investment subsidies provided). In case 50% investment subsidy was available, feed-in-tariff (including market price) of 14 €cents/kWh would be feasible. If the current feed in tariff is not substantially increased, the biogas production in German “way” will not be feasible in Estonia.

Biogas for transport – ‘Swedish way’

Biogas purification to biomethane and use in transport is not the case in Estonia today, but can be development opportunity for future. The market for purified biogas (biomethane) is missing currently in Estonia: the number of CNG vehicles is around 60 in Estonia (March 2011) and there are two CNG filling stations in operation.

The share of biofuels has not increased and is less than 1% of the final usage of transport fuels. Although energy consumption of the transport sector accounts for 24% of the final energy consumption and the energy consumption has constantly increased, the energy consumption alternatives and energy saving potential of transport, particularly cars, have not been discussed in Estonia. Also, very few energy saving campaigns have been initiated for informing the public of energy savings when making transport choices.

One possible trigger to take steps in increasing the use of biofuels in transport is the directive 2009/28/EC saying that 10% of the energy used in transport must be generated from renewable sources by the year 2020. However, the research of the past years has shown that in terms of CO2 emissions a lot of biofuels produced today are not better than fossil fuels. A number of scientists have recommended the European Commission to give up the objective or couple biofuel production with strict sustainability criteria. Biogas from biowaste has good opportunity to answer to the sustainability criteria.

The construction of natural gas filling stations will hopefully show an increasing trend and the number of filling stations will rise from the current two and the number of clients will increase as well. The “GasHighWay” project that is promoting the uptake of gaseous vehicle fuels has produced a vision that in 10 years total of 12 compressed natural gas i.e. CNG and biomethane filling stations could be set up in Estonia. The following figure describes the optional locations of future CNG filling stations in Estonia.
Possible locations of CNG/biomethane filling stations in Estonia according to the GasHighWay project vision. At the moment there are two gas filling stations operating in Estonia.
It is clear that neither German way nor Swedish way are the cases in Estonia at the moment, but both are theoretically possible and the development track depends on political and strategic choices. For that, SPIN contributes to knowledge transfer in the field of policy-making and effective support scheme design.

Regarding technological needs, the biggest demand in Estonia is for increasing the operational reliability and productivity of biogas plants – a need that also can be addressed with technology and information transfer. There is however local expert knowledge available that can support developers and entrepreneurs, too. The R&D institutions and their fields of specialization are:
Tallinn University of Technology, Department of Chemistry - anaerobic digestion technologies and optimization, (Peep Pitk, Raivo Vilu)
Estonian University of Life Sciences – biogas production potential of different natural resources (Argo Normak, Liina Nurk)
University of Tartu, Institute of Chemistry (Toomas Tenno)

Practical examples

The development of Estonian biogas plants is only in such an early stage that it is very difficult to name any best practices or failures. One observation that can be mentioned is that technology that has been imported but not adapted may not bring about the expected results, either because the Estonian situation is different or because there is not enough experience.

Some first developments include:
  • Prograss - Securing the conservation of NATURA grassland habitats with a distributed bioenergy production
  • Research and development on anaerobic digestion at Tallinn University of Technology

Stakeholders and institutions

Some biogas producers and developers in Estonia: