Ukrainian biomethane will become competitive on the European continent
In early February 2023, Ukraine and the European Commission signed a memorandum of strategic partnership in the field of renewable gases such as biomethane, hydrogen, and other synthetic gases. This step aims to bring Europe closer to phasing out Russian fossil resources, including Ukrainian potential in alternative energy.
Georgii Geletukha, Chairman of the Board of the "Bioenergy Association of Ukraine" and member of the Board of the European Bioenergy Association, who was directly involved in developing the provisions of the memorandum, spoke about the prospects of biomethane production in Ukraine at an international online conference.
"There are currently 73 biogas plants in Ukraine that produce biogas for further electricity generation," said the speaker. "There are no biomethane plants yet, but active preparation is underway for the launch of 5 projects, and this year they are expected to produce and supply the first Ukrainian biomethane to the grid."
According to Georgii Geletukha, biomethane is completely ready for use in Ukrainian gas networks, both distribution and transportation. As one of the largest agricultural countries in Europe, Ukraine has the largest biomass potential for biomethane production, which creates conditions for Ukrainian biomethane to become the most competitive fuel on the European continent. In addition to biomethane, biogas plants produce digestate - fermented organic matter that is used as an excellent organic fertilizer, replacing mineral fertilizers and associated greenhouse gas emissions.
Ukraine has geographic preconditions for the development of the biomethane sector, as it is located near Europe, which has set a very ambitious goal to achieve biomethane production of 35 billion cubic meters per year by 2035. By 2050, Europe is considering goals of 120 billion cubic meters of biomethane per year. For comparison, Europe currently produces 3.5 billion cubic meters of biomethane per year. According to experts, Ukraine is capable of covering a significant portion of this market with Ukrainian biomethane. Ukraine's potential ranges from 10 billion to 21 billion cubic meters of biomethane per year. The use of so-called cover crops, which can be grown in 3-4 months while one harvest is already collected and a new crop has not yet been sown, promises even greater potential. This green mass can also be used for biomethane production. Thus, Ukraine's potential for producing this important carbon-neutral gas is equivalent to the forecasted possibilities of France and Germany.
The distribution of biomethane production potential across Ukraine's regions is uneven. The leaders are the regions of the central part of Ukraine: Vinnytsia, Kyiv, Cherkasy, Poltava, and Dnipropetrovsk oblasts. The regions with the least potential are Chernivtsi and Ivano-Frankivsk oblasts. Georgii Geletukha noted that in addition to having a resource base for producing biomethane, logistical capabilities are also necessary for its transportation. Experts are considering the Ukrainian gas transportation system and distribution networks in this context. Regarding the gas transportation system, biomethane plants should be built at a short distance from it. The problem is that not all territories of Ukraine can be connected to the logistics of the gas transportation network. Meanwhile, the distribution network has a 10-fold advantage in length and significantly more connection points. However, a typical problem is that in summer, due to low gas consumption, it is not possible to supply a significant amount of biomethane to the gas transportation network. In winter, when natural gas consumption increases by about 10 times, it is possible to supply a large amount of biomethane to virtually all networks. Therefore, it is more interesting to connect biomethane plants to the system in regions where there are other productions, and thus gas is consumed even in the summer season. Another limitation today is the inability to transfer biomethane from the distribution system to the gas transportation system because the system does not have the necessary compressors.
At the end of the presentation, the speaker presented interesting economic calculations. For example, a plant producing 10 million cubic meters of biomethane per year will cost approximately 16 million euros, with raw material costs at 40 euros per ton. The planned selling price of biomethane is 900 euros per 1,000 cubic meters. Thus, the internal rate of return will be 28 percent, taking into account the costs of reimbursing bank interest on the loan.
As for the legislative basis for biomethane production, Ukraine has something to be proud of. The basic law of October 21, 2021, adopted by the Verkhovna Rada, defines biomethane and the conditions under which guarantees of its origin will be issued, and sets the task of creating a biomethane registry. In July 2022, a Cabinet of Ministers resolution regulated the operation of the biomethane registry, and the first version of this registry has now been created.
"I hope that in the near future, the first Ukrainian biomethane will receive a guarantee of origin and will be exported to one of the European countries. In this way, we will see how the mechanisms that exist on paper work," concluded Georgii Geletukha.