Off to the stock exchange? Direct marketing of biogas electricity from a marketing perspective

At the beginning of 2012, the EEG 2012 introduced the market premium model to promote the system integration of renewable energies. What does the balance sheet look like in the biogas sector after more than a year from a marketing perspective and what opportunities does the use of a virtual power plant offer?

At the beginning there was great skepticism. There would not be many operators who would leave the "safe haven" of the fixed EEG remuneration and market their biogas electricity directly on the electricity exchange. There are too many uncertainties in the way:

  • the unpredictability of the market and market price developments
  • the cooperation of the distribution network operators when converting to Direct marketing
  • the assumption of the balancing energy costs
  • the creditworthiness of the marketers in contrast to the creditworthiness of the network operators
  • the VAT problem

In retrospect, it can be said after more than a year that many of the questions initially discussed were either unfounded or have since been resolved. The design of the market premium model already ensures that the biogas industry carefully approaches the free market by fully absorbing the unpredictability of price developments due to the sliding market premium. The operators of biogas plants were able to take the first steps on a marketplace without any pitfalls, which will probably be predominant for the marketing of biogas electricity after the end of the EEG funding. Cooperation with the distribution system operators was and remains largely unproblematic, even if many processes were initially unknown or not yet established.

On the financial and contractual side, there are differences between the different marketers, so that a legal examination of the contract is recommended in many cases; after all, it's about big sums. An example here is the assumption of balancing energy costs, which are always incurred when a plant does not produce and feed in the forecast amount of electricity. A few marketers assume the full balance of energy costs, some take on the operator, some pass the costs on to the operator. Trading costs are also passed on to the operator by some marketers, especially those who do not have direct access to the stock exchange. The creditworthiness of direct marketers has also proven to be reliable. We are not aware of any cases of late payment or even default, which would indicate a lack of creditworthiness of the direct marketers in comparison to the network operators. Thus, concerns regarding the security of income on the part of the plant operator have not been justified. There is also the question of whether sales tax is levied on the market premium fortunately clarified now.

Photo biogas line for virtual power plant

The more the initial skepticism waned in the course of the past year, the more plant operators switched to the market premium model of direct marketing according to EEG 2012. At the end of December 2012, 1.936 MW of electricity generation capacity from biomass (including solid biomass such as wood or similar) was available for direct marketing reported to the network operators regarding the claim of the market premium, by May 2013 this number had even increased to 2.418 MW. Thus, just over half of the biomass plants in Germany now market their electricity production using the market premium model. Quite a success, but the pure marketing via the electricity exchange was and is not the goal of the EEG 2012. So what are the actual positive effects of direct marketing for plant operators and for the energy industry as a whole?

Virtual power plant enables direct marketing on your own

As operator of a virtual power plant With over 500 biogas plants, we see the positive effects above all in the improved system integration of renewable energies (EE). With the strengthening of direct marketing through the EEG 2012, renewable energy plants have taken on more responsibility in many systemically relevant areas.

On the one hand, this affects controllable plants (such as biogas plants), which are now permitted on the balancing energy market, where they ensure grid stability in addition to conventional generation plants. We assume that around 10% of the advertised balancing power in the area of ​​the minute reserve can already be provided by virtual power plants from renewable energies. Even today, some renewables (especially biogas plants) "regulate" the fluctuations that other renewables (especially solar and wind) cause. The tendency to network controllable systems via a virtual power plant and use it for system stabilization will in all likelihood increase, so that in a few years we will probably only smile at today's market share of 10%. It is also foreseeable that biogas plants in particular will play an increasingly important role in the area of ​​the secondary reserve, which is used to regulate the network frequency even before the minute reserve.

On the other hand, the direct marketing of renewable energies via a virtual power plant leads to very interesting results in balancing group management. In the fixed EEG feed-in tariff, renewable energy systems feed their produced electricity quantities into the distribution network without registration and transfer them to the grid operator's balancing group, which transfers the balancing energy costs to the EEG surcharge. In direct marketing, on the other hand, the marketer assumes responsibility for the schedule with the transmission system operators and reports all quantities of his balancing group for the following day. The marketer is naturally interested in the most accurate possible feed-in forecasts for the individual renewable energy plants in order to close his balancing group, since he cannot pass the balancing energy costs on to the EEG surcharge and also not on the plant operators, at least not if he does not risk a competitive disadvantage compared to other marketers would like to. Direct marketing thus takes account of weather forecasts for individual plant locations in the field of wind and solar energy and an increased interest in adherence to timetables in the field of bioenergy. Every hour of operation counts. Plant operators in our virtual power plant therefore report maintenance and malfunctions in our web portal so that the lowest possible balancing energy costs are incurred by our balancing group - and thus the need for control power is reduced. On the one hand, the renewables physically take care of part of the regulation of network fluctuations via the provision of balancing energy and minimize the need for the same through increased adherence to timetables and improved weather forecasts. In addition, in our virtual power plant, which has its own trading department with direct access to the stock exchange, the shortfalls in our own balancing group are further minimized by short-term electricity trading (so-called short-term trading).

Photo: power lines of a virtual power plant

power lines

The big question that the bioenergy industry also poses for us as marketers after the difficult year 2012 is: what's next? At the relevant industry events at the turn of the year there was some information on how the Direct marketing of biogas electricity will continue to develop. The expansion of the provision of balancing energy to the technically more sophisticated secondary reserve is certainly a path that is receiving increasing attention, all the more as the prices in the secondary reserve area are currently stable at a high level in contrast to the unfortunately very volatile prices on the minute reserve market last year. But the demand-oriented generation of biogas electricity in connection with the flexibility premium is also becoming more important, as we can see from the lively interest of our existing customers. After going to the electricity exchange via the market premium model in 2012, the year 2013 will be marked by the skill of the trader, which will lead to additional revenues for operators on the electricity exchange if they increasingly feed electricity into the grid when demand and price are high. Completely new concepts in the biogas segment, such as regional direct marketing to customers in close proximity to the plant to save parts of the electricity tax, will also become more important. The triad of flexibility, communication and trust, which is the basis for playing off the trump card of bioenergy, its controllability, is the same for all marketing channels.

Johannes Päffgen, Jan Aengenvoort, Next Kraftwerke GmbH

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