Ministry of Climate and Environment plans auctions and contracts for difference for biomethane for 20 years

In July 2024 the Ministry of Climate and Environment announced a support system for biomethane plants in which installations larger than 1 MW would receive aid through auctions, in the form of a two-way contract for difference (CfD) lasting a maximum of 20 years. For the industry this meant filling a gap: the existing FIP premium applied only to installations up to 1 MW of electrical capacity.

Assumptions of the system

According to the proposals presented:

• installations above 1 MW would enter the auction system, and auctions would be run by the President of the Energy Regulatory Office, on rules similar to the wind and photovoltaic auctions,
• support would take the form of a contract for difference awarded after an auction bid, preceded by preliminary qualification,
• reference prices would be set for three capacity bands, separately for biomethane from biogas and from agricultural biogas,
• the support period would be a maximum of 20 years (in the FIP – 15 years),
• the producer would have 5 years from the auction result to start production,
• operating aid could be combined with investment aid (e.g. from NFOŚiGW) subject to the cumulation rule.

The ministry also announced a definition of a direct gas pipeline for biogas, which would allow it to be transported to upgrading stations or to industrial customers without entering the grid. In addition, from 1 January 2024 guarantees of origin can be issued for biomethane and renewable hydrogen, and the ministry signalled that the gas system operator cannot reliably verify the data in applications, so verification should be taken over by another entity.

Why this matters

CfD auctions are used in many EU countries as a way of obtaining a competitive price while preserving long-term revenue predictability. For investors this is a key element in assessing bankability: banks financing a biomethane plant expect stable revenue for 10–15 years. For the state, in turn, the auction limits the risk of excessive support, because the price results from competing bids.

Significance for the industry in Poland

At the beginning of 2024 there was not a single biomethane plant in Poland injecting gas into the grid, and investors declared plans for several dozen to over a hundred installations. The announcement of auctions set project planning in motion at scales above 1 MW, which make up most economically justified biomethane plants. Beyond the reference price, the details would matter: size definitions, connection regulations and cumulation rules.

What next

The assumptions are to go into a draft amendment, which will then be consulted on and processed. For the industry the details will be key: reference prices in the three capacity bands, the pace of announcing auctions, the rules on cumulating aid and the provisions on direct pipelines. It is worth remembering that on the EU side every operating aid programme requires notification or compliance with State aid frameworks. Until the rules are passed, investors should treat auctions as a direction, not a guarantee.