It was 2020, a few days before the outbreak of the health pandemic and two years before the outbreak of war in Ukraine. At the Bordeaux Regional Council, New Aquitaine gas stakeholders set a very ambitious target, which was then adopted by Neo Terra’s regional roadmap: to achieve 30% green gas by 2030 and 100% by 2050 to become a net green gas exporter to become gas. While the hypothesis of a halt to Russian gas imports is now clearly on the table, this ambition is taking on a strategic character. In France, Russian gas accounts for about 17% of consumption, while gas from renewable sources does not exceed 1.5%. To what extent could the rapidly increasing production of green gas in New Aquitaine take over if necessary? Can the goals set for 2020 be achieved even though the new state tariff is hampering the development of the industry? ?
In comparison, green gas accounts for 0.92% of national consumption. At around 3%, New Aquitaine is doing three times better than the national average and showing good progress, as that rate was only 1% two years ago. And some of the 12 regional departments are even particularly far ahead, as shown in the map below, updated in April 2022.
Click on the map to enlarge it. The share of green gas in each of the twelve departments of Nouvelle-Aquitaine in April 2022 and the forecast at the end of 2025 (Source: GRDF Nouvelle-Aquitaine).
Capacities in Deux-Sèvres and Landes could allow moving away from Russian gas within three years or even earlier, while Pyrénées-Atlantiques, Lot-et-Garonne and Vienne are also well positioned.
“Because New Aquitaine is the leading agricultural region in Europe, we have enough resources available, that’s for sure. So, theoretically, if we gradually reduce Russian imports by looking for more gas in Norway and Algeria, and if we reach 10% green gas regionally, which will be the case in the course of 2025, we won’t be far off to be able to protect us from a supply disruption”reflects Arnaud Bousquet.
“A sharp slowdown in the industry”
Very good news. Just that there is theory and practice. In this case, geopolitical contingencies disrupt the methanizers’ economic model. “The main difficulty is the sector support mechanism that allows this renewable energy to be viable. Initially set in 2011, the tariff allowed the projects to grow well, but was deemed too generous for producers. But today, the tariff revised in November 2020, i.e. before the energy price increase, is no longer competitive as the costs of construction, supply and operation have meanwhile skyrocketed “explains the regional director of GRDF.
This new purchase price, fixed for 15 years, provides for a reduction in the remuneration of biomethane producers by around 10% and introduces a degression of 2% per year until 2025 to take into account economies of scale in connection with the expansion of sites. The price for injectors was thus reduced by 30%.
But the new balance linked to this tariff, applicable to projects launched from January 1, 2021, has consequences that are already being felt in practice:
“The economic equation of many projects just doesn’t add up anymore!”, Arnaud Bousquet sets in motion. “In New Aquitaine we have a hundred pending projects and more and more doubts about their feasibility! We know 2022 will be a good year to go live, but what I’m seeing is a sharp slowdown in the sector, even though it takes between three and five years to get a project out! Today we no longer have the same speed in the development of projects as we used to have,” warns Arnaud Bousquet bluntly.
A slowdown that comes at the worst possible time, as we’ve never had to produce so much green gas. “In the geopolitical context, this logic of energy sovereignty should lead to more support for the green gas sector and that is what the regions are asking for,” insists the GRDF manager. But for now the government is standing still, maintaining its tariff, which it believes is sufficient to meet its own national target of 10% of gas consumption coming from renewable gas in 2030.
And the sharp rise in the price of natural gas, which mechanically restores the competitiveness of green gas, which was structurally more expensive before the energy crisis, is ultimately not such good news, Arnaud Bousquet comments angrily: “Rising prices can make green gas more competitive with natural gas…but at a price that actually turns consumers off when compared to other energies! Nobody can sustainably pay for their gas at 100 or 130 €/MWh. The main benefit is actually for the state, which has to subsidize green gas less.”
The question of social acceptability
Despite all of this, GRDF remains confident that the region can meet the target of 10% biomethane in gas consumption by 2025, five years ahead of the national schedule. This probably won’t be enough to replace Russian imports in the short term, but it’s another step towards a low-carbon and more sovereign economy.
However, it must also be possible to convince the inhabitants of the advantages of its methanizers, which are often criticized by local residents. Especially since the numbers can be dizzying, as 830 methanation units are planned in New Aquitaine by 2050, more than five per intercommunal. “We are working on well-integrated and modest units, built mainly in agricultural areas, as farmers own most of the biomass. There will also be some industrial methanizers. I’m not denying that there may be nuisance in certain locations, but it’s not a process that creates odors. On the other hand, we have to work on covering biomass and controlling truck flows.”confirms Arnaud Bousquet.