TTF gas in February 2024 cheapest since May 2021. What does it mean for biomethane?

The average price of nearest-delivery TTF contracts in February 2024 was €25.76/MWh, the lowest level since May 2021 and about 51% lower than a year earlier. For the biomethane market this is a clear reminder that its profitability depends not only on the natural gas price, but also on support mechanisms and guarantee of origin prices.

What happened

After the price shock of 2022, the European gas market calmed down. In February 2024 prices fell below €26/MWh, and according to some reports the benchmark briefly dropped below €25/MWh. According to Gas Infrastructure Europe data, on 21 February 2024 storage was about 64.7% full, while the five-year average for that day of the season is about 48%. A mild winter, large LNG supply and high stocks reduced demand for gas purchases.

What this means for biomethane

Biomethane is today more expensive than natural gas in most countries. The difference is covered by:

• subsidies or contracts for difference (e.g. in France, Denmark, Italy),
• investment grants,
• the market for guarantees of origin and sustainability certificates,
• renewable energy obligations in transport, industry and heating.

A fall in the gas price increases the level of subsidy needed in systems based on contracts for difference, because the gap between the reference price and the market price grows. In premium-based systems, it also reveals that revenue from the gas alone does not suffice to cover operating costs and loan repayments.

Significance for the industry in Poland

Polish biomethane investors, such as operators of biogas plants considering upgrading, looked at the market in 2024 from two perspectives. First, cheap gas made it harder to justify an investment without operating support, and no such system for larger installations existed in Poland yet. Second, price stability in long-term contracts with industrial customers and transport operators was gaining importance.

What next

Gas prices remain volatile, and predictability comes from the architecture of support rather than from exchange quotations. For a reader assessing a biomethane project, a useful rule is that the financial model should work in a scenario where natural gas costs €25–30/MWh, and not only in a crisis scenario.

How to plan with a low gas price

For biomethane projects, long-term biomethane sales contracts with industrial customers or transport operators, in which the price includes a "green premium", are important, as are agreed rules for settling guarantees of origin. The TTF price changes from day to day, whereas the value of guarantees and subsidies is shaped by regulation and demand for renewable fuels. The sensitivity analysis should therefore take both factors into account at the same time.

Additional context

It is worth adding that wholesale prices (TTF) differ from prices paid by end customers, in which network charges and taxes make up a significant part. For this reason a fall in quotations does not translate linearly into bills, and comparisons of biomethane costs with natural gas should always be made on the same settlement basis.