Letter From Europe: The law that changed the German countryside

Wednesday, December 19, 2007

Biogas production from corn, grass and cereal wholecrop harvests swallowed up over 800,000 acres of this country's farmland this year - and income from biogas electricity was beating earnings from milk production

by NORMAN DUNN

Only a year or two ago seeing a farmyard biogas production plant when driving through the German countryside was so unusual that it called for a stop and a chat with the farmer if he happened to be around. Most were on cattle and pig farms at that time. Fermenting the manure and collecting the produced methane for running a gas motorand generator was providing electric current for the farmhouse and farm buildings. Then came an innovative renewable energy law from Berlin that promised farmers a fair price if the biogas electricity was fed straight into the mains network - actually a tick more per kilowatt than the price householders had to pay for their current. This triggered a revolution on the land. By last year there were some 3,500 biogas plants producing a total 5 billion kiloWatt (kWh) hours. And a 30 per cent output expansion is expected for 2007!

A look at Germany's renewable energy law gives a really good example of how the right legislation can change the course of agriculture - although of course the main thinking behind this law was to reduce production of climate-harming gases and also the country's dependence on imported fossil fuels.

But farmers were very quick to see the advantages. In fact the introduction of so-called dry fermentation with silage input as a co-ferment sometimes completely replacing animal manure led to a series of smaller livestock producers giving up this side of their business completely. "The new prices for my farm-produced electricity mean that instead of feeding corn silage to my cows I will be better off selling the cows and fuelling my biogas plant with the silage," Swabian farmer Winfried Vees told me back in 2004.

At the time this farmer reckoned the real breakthrough had come with an amendment in the law awarding the equivalent of up to 10 Canadian cents per kWh in bonus for biogas electricity produced from farm-produced biomass including specially grown crops. Before that, there was no incentive for using substrate from the farm and in fact many farmers were importing bakery and food factory waste from the cities as co-ferments.

Further incentives - with a guarantee that they will be paid for a minimum 20 years - are aimed at encouraging efficiency and opening even more income possibilities for farmers. These include a bonus of 3.3 cents per kWh where the heat given off by the gas engine is harnessed for keeping buildings warm. Yet another extra 3.3 cents is promised if a gas washing system is installed to provide biogas with the purity standard of natural gas. This latter move is in preparation of schemes to allow farmers to sell surplus gas via the national network of natural gas pipelines in Germany.

All these goodies, if earned, are then added to the current basic payment made for biogas electricity that is the equivalent of 15.13 c/kWh for a farmer fuelling a generator of between 150 kW and 500 kW capacity. This ground price is also guaranteed for 20 years, although with an annual reduction of 1.5 per cent.

Now, animal manure is still the favoured fermentation fuel for on-farm biogas units. But the German Biogas Association reckons that up to 865,000 acres are devoted this year to growing energy crops for biogas production - that's around two per cent of Germany's farmland. Corn is the most popular crop because, even in temperate northern Europe, it easily produces the most dry matter per acre. This is followed in the fermenter fuel league by grass then comes wholecrop wheat, barley or rye.

Not only is biogas changing land use, it's also bringing new crops onto the European countryside because a new branch of research with trials running this year is looking at Sudan grass and sorghum as potentially even more efficient energy producers out in the fields. Talking about efficiency, the Ministry of Agriculture in Bavaria, by far the most advanced state in the on-farm biogas sector with 4.3 per cent of farmland down to biogas crops last year, calculates that corn as biogas substrate produces the energy equivalent of 2,020 litres diesel per acre which is three times more than the equivalent output of RME "biodiesel" from canola.

With corn as substrate Bavarian farmers reckon on a harvest producing an average 7,700 kWh per acre giving an average gross income, at 25c/kWh, of C$1,925 per acre. Further calculations show that biogas from energy crops is very far from being a license to print money, however. Variable costs alone come to around C$800/acre for planting, harvesting and ensiling. Recent research shows, though, that in terms of dollars per hour of work by the farmer, biogas production from corn still marginally beats dairy farming!

But there's a lot more cash waiting on the wings for those who invest in heat exchanger technology and use the warmth given off by gas engine and generator. This is being actively encouraged now. And no wonder. It is calculated that for every kilowatt hour of electricity fed into the national grid by biogas farmers there's another 1.6 kWh of heat energy being produced - and most of this is so far wasted. This is why the 3.3 cents per kWh heat-transfer bonus is being championed just now with plans for community central heating plants fed by farm-produced warmth. BF

Norman Dunn writes about European agriculture from Germany.