In 2008, the Danish Parliament passed a renewable energy act. This act is a step in the right direction and our target of 20 % of energy generated in Denmark to come from renewable sources by 2020 is achievable. But there are many sides to this issue.
Energy crops for biogas production
The Danish Renewable Energy Act fixes the electricity price at DKK 0.745 per kWh produced at biogas plants, i.e. a price rise of about 20 %. Energy crops like maize and grass can be used as a dry matter supplement to slurry in biogas production to increase the gas production. But so far, energy crops have only been used to a very limited extent in biogas plants.
Naturally, a rise in the settlement price of electricity from biogas plants will result in an increased interest in gas production and hence in energy crops. However, it is doubtful whether this increase in electricity prices will result in an increased use of energy crops in conventional biogas production. When generating electricity from biogas, only about 35-40 % of the biogas energy is converted into electricity, whereas 55-60 % is converted into heat. Consequently, the profitability of using energy crops depends to a great extent on the share of heat sold, e.g. to district heating plants, and the price it is sold at.
The use of e.g. grass for biogas production may, however, also be encouraged by the fact that this type of production protects the water environment when harvesting grass and hence removing nutrients from wetlands which will otherwise not be used. Moreover, energy crops may prove very interesting to producers of organic biogas.
Besides generating electricity and heat, the use organic clover grass in biogas plants can also generate increased income through the production of organic manure which is in short supply in Denmark. Consequently, organic energy crops may be an important element of biogas production in the future – even though this development is only partially supported by the Renewable Energy Act.
Energy crops for solid fuel production
Another aspect of the Danish Renewable Energy Act is that it ensures an increase in the grant support for electricity generated by burning biomass from DKK 0.10 to DKK 0.15 per kWh. This grant is awarded to electricity producers who use straw, willow wood chips, elephant grass or other energy crops. However, it is expected that suppliers of biomass will also benefit from the grant in the form of higher biomass prices.
Theoretically, a willow plantation with a production of 10 tons of dry matter per ha per year will produce 160 GJ or 44,600 kWh per ha per year. At an electricity utilisation rate of 40 % a grant of DKK 0.15 per kWh would amount to a total grant of DKK 2,676 per ha. A part of the grant is likely to be passed on to willow producers, thus improving their financial situation and making willow production more interesting to farmers. However, other factors may have a greater influence on whether a farmer decides to switch from conventional farming to willow production. For example the prospect of higher gross margin in connection with willow production is an important factor which may partly compensate for the reduced flexibility of land use – rotation length of willow crops is typically 15-25 years.
Another important incentive for growing willow is the environmental benefit in terms of reduced nitrogen leaching. Willow may be grown on land which is expected to be subjected to land use restrictions in the future as a consequence of the Water Framework Directive. In this case, willow production will be able to contribute to both energy production and environmental protection.
A step in the right direction
All things considered, this act is a step in the right direction and is expected to stimulate optimism and contribute to meeting our renewable energy target. However, the use of energy crops will also depend on many other factors, and hence it is not certain that the Danish Renewable Energy Act alone will result in a booming production of energy crops.