Fixed price or day-ahead market? A biogas plant in the second half of 2024

Still not on RDN alone, but FIP with 2× operation exceeded FIT for the first time since 2022. In the second half of 2024 the average RDN price was PLN 456.5/MWh (55% of the FIT of PLN 828.4/MWh). 2× operation raises revenue to PLN 599.1/MWh (72% of FIT), and 3× operation to PLN 667.6/MWh (81% of FIT), so the gap to FIT is PLN 229.3/MWh with 2× and PLN 160.8/MWh with 3×. FIP with 2× operation reaches PLN 856.0/MWh, and with 3× operation PLN 924.8/MWh, that is 103% and 112% of FIT. The half-year ends with a change in the law that alters one important rule for a 0.5 MW installation.

A reminder of the mechanism

The support rules (Articles 70a–70f of the Act on Renewable Energy Sources (ustawa o OZE)), the scenarios and the model assumptions are described in the first analysis in the series. You will find the results for the previous half-year in the previous analysis in the series (H1 2024).

The amendment of 27 November 2024

The Act of 27 November 2024 (Dz.U. 2024, item 1847) entered into force in this part on 28 December 2024 and changes two elements that matter for biogas plants. First, in Article 70a the 500 kW threshold was replaced by a 200 kW threshold: installations smaller than 200 kW remain in FIT, and from 200 kW to 1 MW they use FIP. A 0.5 MW installation was in the FIP class before the change and remains in it afterwards. The transitional provisions (Articles 18–21 of the amending Act) provide transitional periods for existing declarations of 200–500 kW installations, depending among other things on the date of the certificate and of first production. Second, the negative price rule was changed in Article 93(4)–(5): until 27 December 2024, energy from hours with a price below zero was excluded from settlement only when negative prices lasted at least six consecutive hours; from 28 December, energy from every such hour is excluded. In the half-year there were 132 hours with a negative price, and only the last four days were covered by the new rule. The reference prices remain those from the regulation of 8 November 2023 (FIT PLN 828.4/MWh = 95% of PLN 872, FIP PLN 713.7/MWh = 90% of PLN 793; FIP with continuous operation, PLN 707.4/MWh, is below the fixed price because energy from negative hours is excluded from settlement); an installation from 2019 has PLN 874.9/MWh after indexation.

Figures for the half-year

The price of an "installation from 2019" is 95% of the 2019 reference price (PLN 617.5/MWh) after cumulative indexation by the annual average CPI for 2019–2023 (Article 70e(3); GUS: 102.3; 103.4; 105.1; 114.4; 111.4).

The FIT in the table is 95% of the reference price for the "up to 500 kW" class. From 28/12/2024 FIT is available to installations smaller than 200 kW, so for a 0.5 MW installation it is a reference point, and the support actually available remains FIP (the 200 kW – 1 MW class).

The monthly averages are stable (PLN 406.5–522.9/MWh), and November (PLN 522.9/MWh) is the most expensive. Excluding negative hours raises RDN revenue from PLN 456.5 to PLN 471.9/MWh.

The daily spread is the largest since H2 2022: from PLN 309.1/MWh at 12:00 to PLN 788.7/MWh at 19:00. The premium for 2× operation (PLN 142.6/MWh) and 3× (PLN 211.1/MWh) is therefore more than twice as high as in the previous half-year (PLN 68.6 and PLN 96.6/MWh).

Is FIP + flexibility the new FIT

FIP with 2× operation (PLN 856.0/MWh) is 103% of FIT, but the two different prices should be compared fairly: FIP is 90% of the price for the 500 kW–1 MW band (PLN 713.7/MWh), and FIT is 95% of the price for the band up to 500 kW (PLN 828.4/MWh). The gain comes from two sources: the premium to the fixed price and the premium from the price profile (average captured price of PLN 599.1/MWh against an average of PLN 456.5/MWh). The premium, however, depends on the balance: a positive balance from earlier months (Article 93(11)) reduces the negative one. The generator must also invest in an additional genset and gas storage, which FIT does not require.

Is a double-membrane roof enough

In the model, "2×" operation means that a genset with its capacity increased to about 1.0 MW runs only in the 12 most expensive hours of the day, and "3×" that a genset of about 1.5 MW runs in the 8 most expensive hours; the same daily energy (about 10.96 MWh) is therefore produced in a shorter time, at higher power. Biogas from fermentation flows around the clock (in the model about 216 Nm³/h, resulting from the 0.5 MWel capacity, 40% electrical efficiency and 53% methane content), so the rest of the day is storage in the double-membrane roof. The gas balance for this half-year gives an average of 2,696 m³ of capacity for 2× (95th percentile: 3,629 m³) and 3,669 m³ for 3× (4,839 m³). A single double-membrane roof with a diameter of 26 m has, according to DLG, a gas capacity of about 2500 m³ (we adopt this as an assumption for Polish installations too): in this half-year it accommodates the 2× demand on 47% of days, and the 3× demand on 2% of days. Two roofs, that is 5000 m³, cover all days of the half-year in the model in both variants (the maximum demand did not exceed 5000 m³).

How much can be spent on flexibility

The premium for operating in expensive hours is, in this half-year, PLN 142.6/MWh for 2× and PLN 211.1/MWh for 3× relative to continuous operation. After annualisation (×2, an assumption) this gives an annual surplus of PLN 575 thousand for 2× and PLN 851 thousand for 3×; divided by the instalment factor (12-year depreciation, cost of capital of 10% or 6%), this gives a budget for an additional genset and gas storage of PLN 3,919–4,823 thousand for 2× and PLN 5,799–7,136 thousand for 3× (the lower value at a 10% cost of capital, the higher at 6%). The cost ranges are assumptions, not quotations: €500–800/kW of additional capacity plus €20–70/m³ of missing storage, at an exchange rate of PLN 4.3/€, which gives PLN 1,092–1,779 thousand for 2× and PLN 2,251–3,792 thousand for 3×. Conclusion from the calculation: both variants (2× and 3×) pay back across the whole assumed cost range. The same benefit from the price profile occurs under FIP and in pure RDN (under FIP it is sometimes slightly larger, because flexible operation avoids hours excluded from settlement), because it comes from the market and not from support; FIT does not provide it, because it pays the same for every hour.

A third option: an energy store

A 0.5 MW / 1 MWh store, one cycle per day, 85% efficiency, adds PLN 48.3/MWh to continuous operation (revenue of PLN 504.8/MWh). The average of the daily differences between the average price of the two most expensive and the two cheapest hours of the day is PLN 659.5/MWh. The annual surplus is PLN 195 thousand; with 15-year depreciation, servicing at 2.5% of capital expenditure per year and average capacity degradation of 2% per year (assumptions), this allows spending PLN 1,070–1,309 thousand on the store, that is PLN 1,070–1,309 per kWh of capacity. The assumed system cost range is PLN 800–1,500/kWh, and an additional grid connection PLN 50–400 thousand; these are assumptions, because there are no firm Polish prices for a project of this scale. After deducting the connection (PLN 50–400 thousand) from the budget at a 6% cost of capital, the permissible system cost is PLN 909 to 1,259/kWh; the store would pay back only in part of the range (low connection cost, low cost of capital, a cheaper offer). The model ignores distribution charges for off-take, the capacity charge and the balancing market, so the result is rather optimistic.

Conclusions for this half-year

• RDN alone: PLN 599.1–667.6/MWh is 72%–81% of FIT, a gap of PLN 160.8–229.3/MWh.
• FIP + flexibility: PLN 856.0–924.8/MWh, that is 103%–112% of FIT; support plus evening operation matches the fixed price.
• The new negative-hour rule (from 28/12/2024) removes support for energy from every such hour, so continuous operation is less profitable than before.
• An additional genset and gas storage: both variants (2× and 3×) pay back across the whole assumed cost range; an energy store would pay back only in part of the range (low connection cost, low cost of capital, a cheaper offer).