France extends methanisation contracts

2 November 2017

When France first introduced its Green Growth Act in 2015, the country aimed to produce 10% of its natural gas through recycling by 2030. In view of this target, the French government is investing in electricity purchase contracts produced by methanisation.

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Methanisation is a natural process by which organic matter decays in the absence of oxygen. So far, methanisation contracts have sold slowly. As of late 2017, there are only 260 methanisers in France, and the government’s target of 1,000 methanisers by 2020 looks increasingly remote.

In response, the government has taken steps to make methanisation more profitable. Contracts have been increased from 15 to 20 years. The amounts paid to the producers are capped from the 16th year of the contract from 7500h/year for a 250 kW installation, to 6500 h/year for an installation between 250 kW and 500 kW and to 5500 h/year for a 500kW installation.

The revised contracts are designed to complement the new prices announced in December 2016. The new arrangement accounts for the operating costs of the first units, and are more in line with economic realities. The raising effluent bonus (representing more than 60% of the inputs) is increased by 5 cents on kWh sold. The obligation to upgrade heat in cogeneration projects is also eliminated. Heat valourisation allows for a better electricity price, but often requires the creation of additional facilities (greenhouses, barns etc) and therefore generates additional investments and more work.

Author: Thibaut Clavier, HLB France, Commissaire aux comptes at Cogep

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