The plan of the European Commission (EC) to introduce a revenue price cap on lower-cost electricity producers will lead to a sharp decline in power and heat generation from biomass and cause serious investment uncertainty among operators, according to a German bioenergy organisation.
The windfall tax is part of an emergency intervention plan presented by EC president Ursula von der Leyen on Wednesday. Under the proposal, revenues above EUR 180 (USD 179.82) per MWh generated by companies relying on lower-cost technologies such as renewables, nuclear and lignite will be collected by the governments of Member States and spent to reduce the energy bills of consumers.
Biomass plants already have comparatively high operating costs as they had to meet increasing technical requirements over the years and cover rising prices for repairs, maintenance and technology, said Sandra Rostek, head of Hauptstadtbuero Bioenergie.
The Berlin-based organisation bundles the resources of the Federal Bioenergy Association (BBE), the German Farmers' Association (DBV), the Biogas Association (FvB) and the Wood Energy Association (FVH).
In addition to biomass, biogas plant operators have invested to make energy production more flexible which raised the underlying cost structure of many plants close to the cap proposed by the Commission, Rostek said in a statement published on Thursday.
According to her, the proposed tax will deprive these plants of the chance to offset at least partially higher fuel costs caused by the crisis through additional revenues on the electricity market. This, in turn, will lead to a sharp decline in the production of heat and power from biomass and thwart the federal government's plan to support the expansion of biogas capacity, Rostek explained.
Rostek welcomed the plan to exempt biomethane from the windfall levy because it is considered a natural gas substitute that provides flexibility. However, she stressed that other bioenergy plants such as wood-fired power plants, biogas plants with direct electricity generation and storage facilities at biomass and biogas plants should also be exempted from the cap on the same grounds.
The introduction of the revenue cap will destroy the financial incentive for operators to invest in the flexible operation of the plants, according to Rostek.
(EUR 1 = USD 0.999)
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