The incentives provided by Italy’s FER 2 and PNRR to foster biogas and biomethane production

To meet the ambitious decarbonization targets by 2030 in Europe, it’s crucial to ramp up renewable energy production. Besides solar and wind power, biomethane, derived from biogas purification, emerges as an excellent renewable resource, capable of reducing emissions by 80% to 200% compared to fossil fuels.

Let’s start from the basis: how is biomethane produced? The process of producing biomethane utilizes sewage sludge, agricultural byproducts, organic waste, and agri-food residues to generate energy. Biomethane offers numerous advantages:

  • it is incredibly versatile and suitable for both transportation and heating purposes.
  • it can be directly injected into existing gas distribution networks, thus reducing construction costs
  • its flexibility allows for compressed or liquefied transportation for decentralized uses.
  • its reduced costs: in recent years, the production cost of biomethane, which ranges between €50 and €110/MWh depending on the raw materials, has been highly competitive compared to natural gas. The latter has faced significant fluctuations due to the geopolitical situation in Europe.

Biomethane cost

Considering the crucial role of biogas and biomethane in reducing emissions, let’s examine in detail the biogas and biomethane market in Europe and Italy, along with the incentives the Italian government is implementing to foster the growth of this invaluable resource.

The biogas and biomethane market in Europe

In recent years, the biogas and biomethane market in Europe has experienced significant growth, driven by the increasing demand for renewable energy sources. According to the European Biogas Association (EBA), between 2022 and 2023, the number of new plants increased by 30% compared to 2021, reaching 1,322 plants in 2023. Of these, over 75% are connected to gas transportation or distribution networks.

Overall, renewable gas production, including biogas and biomethane, reached 21 billion cubic meters in 2024, covering 6% of the EU’s total natural gas consumption. Biomethane production increased by 20% compared to 2022, marking significant progress in the renewable energy sector. Among the leading producers of biomethane in Europe are Germany (12,753 GWh), the United Kingdom (6,183 GWh), and Denmark (5,683 GWh).

Europe has ambitious goals for the future of biogas and biomethane:

  • The European Commission anticipates that by 2030, it could produce 350 TWh of biomethane annually, equivalent to 33 billion cubic meters.
  • The “European Gas Decarbonization Plan” aims to produce at least 1,000 TWh of biomethane by 2050.

According to the European Biogas Association, the use of biogas and biomethane could lead to a significant reduction in emissions compared to fossil fuels, thereby contributing to the climate neutrality objectives by 2050.

The potential of biomethane production in Italy

In Italy, biomethane represents a resource of significant potential thanks to the variety of biomass sources available, including sewage sludge, agricultural and agri-food residues, and organic waste. These materials can be converted into biogas and subsequently refined to obtain biomethane. Currently, the country hosts over 2,000 biogas plants and approximately 85 biomethane production facilities, primarily concentrated in northern Italy.

According to data collected by REF Ricerche, by cross-referencing information from Snam, the European Biogas Association (EBA), and the National Anti-Corruption Authority (ANAC), an annual production of 572 million standard cubic meters (SMC) is estimated in the least favorable scenario. It should be noted that half of the facilities use organic waste for biomethane production, which must be properly treated and cleaned from non-compostable materials before use.

Number of biomethane plants and production in Italy

Italy has committed to reducing greenhouse gas emissions by 80% by 2030, in line with European objectives, and biomethane is a key element in achieving this goal. To support the development of the sector, the National Recovery and Resilience Plan (PNRR) has allocated €1.92 billion, and the European Commission recently approved the FER 2 decree (Energy and Renewable Sources), an integral part of the European Green Deal, to minimize dependence on fossil fuels and accelerate the energy transition.

Let’s delve into them in detail below.

Incentives for biogas and biomethane production in Italy

The FER 2 incentive for high operating costs sources and technologies

The European Commission has approved the FER 2 decree (Energy and Renewable Sources), aimed at promoting the construction of production plants from renewable sources that are not yet fully mature or have high operating costs. The goal is to incentivize the creation of a capacity of 4.6 GW of plants by December 31, 2028.

This decree applies to a range of facilities, including

  • offshore wind farms,
  • zero-emission geothermal power plants,
  • traditional geothermal facilities,
  • biomass, and biogas-powered plants,
  • floating photovoltaic installations on both inland and offshore waters, tidal and wave energy projects,
  • other forms of marine energy
  • solar thermal power plants.

The total funding available amounts to €35.3 billion and will be allocated through competitive online procedures, periodically announced by the Gestore dei Servizi Energetici (GSE).

The incentives of the PNRR for the production of biomethane from organic waste and agricultural residues

The fourth competitive procedure for accessing PNRR incentives for biomethane production from organic waste and agricultural residues has already been opened. For the first time, this measure includes proposals for the revamping of biogas plants from organic fraction of municipal solid waste. The competitive procedure is open with a contingent of available production capacity amounting to 162,499.26 Smc/h.

On the GSE portal, companies can submit their project proposals to access the incentivizing tariff and capital contribution from June 3rd to August 2nd, 2024.

The crucial role of screening organic waste for the biomethane production

When composting or aerobic/anaerobic digestion processes, ensuring that organic material is uniform and free from plastics or other non-compostable materials, commonly found in municipal solid waste, is paramount. Achieving a clean and high-quality material requires an Ecostar disc screener.

Con oltre 70 vagli realizzati per il trattamento di compost, organico e FORSU e con oltre 130 vagli attivi per il trattamento dei rifiuti solidi urbani in tutto il mondo, Ecostar excels in developing optimal solutions to guarantee a final material primed for use in composting or aerobic/anaerobic digestion processes.

In the case of separating organic material from municipal solid waste, the HDDS (Hyper Dynamic Disc Screening) technology developed and patented by Ecostar proves to be particularly effective. Thanks to a special flap, the screener can catch plastic bags or long and filamentous materials and move them towards the oversize, ensuring a final product free of contaminants.

Ecostar disc screeners, both stationary and mobile, can process from 10 to 60 tons per hour of both dry and wet organic waste in fractions of 20, 30, 50, 80, and 100 mm.

Let’s now delve into a detailed case study. We are delighted to be involved in the Herambiente project focused on producing biogas and biomethane in Northern Italy. The biomethane, injected into the grid in 2018, is derived from household organic waste and green waste. The project utilizes three stationary Hexact screens: two are dedicated to preselecting waste at the inlet, separating the organic fraction from the non-compostable fraction, while the third screen is employed at the end of the anaerobic digestion process to refine the compost before it is introduced to the market as a natural soil amendment.

Some figures about the plant

  • Location: Northern Italy
  • Customer: Heramabiente – Hera Group
  • Material processed: household organic waste and green waste
  • Number of stationary screens: 03 Hexact
  • Working length: 6000 mm per screen
  • Weight: 7 tons per screen
  • Production capacity: up to 30 t/h
  • Installed power: 2x 7.5 kW
  • Solid waste screening fraction: 0-70 mm and >70 mm
  • Compost screening fraction: 0-40 mm and >40 mm

Ecostar screens are capable of operating with wet material as well, thanks to the anti-wrapping and anti-clogging systems developed and patented by the company specifically for this type of material.

Download here the case study.

Biomethane represents a promising solution for energy transition in both Italy and Europe, offering a sustainable alternative to natural gas and promoting a circular economy. The incentives currently available, such as FER 2 and those under the PNRR, provide significant opportunities for investors interested in developing new biogas and biomethane plants. With the right regulatory and financial support, biomethane can substantially contribute to achieving decarbonization goals and building a sustainable energy future.