Bioenergies can simplify the energy transition by upgrading existing infrastructure and using existing waste, resulting in significant savings for both dollars and the carbon budget.
Extantia, a climate-first venture capital firm accelerating the path to a decarbonised world, and Landwirtschaftliche Rentenbank have released new research urging further investment into bioenergy. The research, titled “Harvesting the Full Potential of Bioenergy,” highlights the critical role that bioenergies can play in simplifying the energy transition by enabling existing infrastructure upgrades, resulting in major financial and budgetary savings.
The study, conducted in collaboration with Landwirtschaftliche Rentenbank, Germany’s development bank for agriculture and rural areas, reveals that a higher share of biogas and biomethane in the future energy mix can increase supply security while simultaneously reducing the costs of the energy transition. The study reveals that this higher share of biogas and biomethane isn’t attributed to growing a higher volume of energy crops, but instead technological advancements allowing more efficient energy generation from the existing waste and new waste streams that are not currently used by anyone. This efficiency gain would mean that 70,000 fewer windmills would be needed.
“In order to remain sustainable, we need to make our energy supply resilient. Bioenergy plays a crucial role in this, as it makes us less dependent on fossil fuels and is also a climate-friendly alternative,” says Nikola Steinbock, Chairwoman of Rentenbank’s Management Board. “With the end of support under the Renewable Energy Sources Act, the bioenergy sector is facing a phase of development and transformation. In order to exploit its full potential, innovations are needed that make energy production in existing plants competitive and the construction of further biogas plants economically attractive. At the same time, innovations can ensure a more efficient and sustainable use of scarce raw materials.”
Germany aims to become climate-neutral by 2045, and with electricity demand expected to rise significantly, reaching over 1,000 TWh by 2045 according to the German Federal Government’s scenarios, a substantial expansion of renewable energies is necessary. A higher share of bioenergy would contribute significantly to Germany’s energy supply security. Bioenergy is flexibly deployable for base load demand and can be stored, allowing it to balance fluctuations in solar and wind energy. According to the McKinsey report Zukunftspfad Stromversorgung, Germany could potentially save up to 150 billion euros in investments between 2023 and 2035 by optimising the power supply mix with a higher share of dispatchable capacities, such as bioenergy, compared to the current plans announced by the German government.
The report explores two scenarios: a base-case scenario with incremental changes and a full potential scenario where all reasonable measures are taken to maximise bioenergy’s cost-effectiveness. In the full potential scenario, technological innovations along the bioenergy value chain could increase electricity yield by up to 140 per cent, while the costs of bioenergy production could be lowered by 10 to 50 per cent, making it competitive in the energy market. Improvements in anaerobic digestion technology, such as maximising biomass potential and accelerating the digestion process, are key drivers for increasing biogas-to-electricity output and reducing costs.
“The role of bioenergy has been underestimated so far, but we are committed to supporting entrepreneurs and driving technology and infrastructure advances to make this possible. In addition to technological innovation, financial and regulatory incentives focused on resource efficiency, waste avoidance, and sustainability are crucial for the scaling and competitiveness of bioenergy production,” says Sebastian Heitmann, investor and partner at Extantia.
Bioenergies are a resilient source to replace predominantly green hydrogen as a grid-balancing alternative. The distribution of bioenergy can take place via existing gas networks, considerably reducing the need for new infrastructure specifically developed for hydrogen. This could significantly reduce the costs of the energy transition, as the transmission system operators estimate the cost of a hydrogen network at 19.8 billion euros.
By harnessing the power of bioenergy and implementing the strategies outlined in the report, it is possible to move closer to a sustainable, low-carbon future. The report serves as a call to action for decision-makers, investors, and industry leaders to prioritise the development and deployment of bioenergy technologies, ensuring a cleaner, more secure energy system for generations to come.
