Scandinavian Biogas enters “strategically important” German market
The company added it has signed an agreement with project development firm German Biogas i Sverige AB, which has initiated the development of two production plants in Germany with a combined capacity of approximately 240GWh.
Each production plant company will be co-owned by Scandinavian Biogas (85%) and German Biogas i Sverige AB (15%).
Closing will take place once each company is registered, and all other conditional agreements are met, which is expected to take place no later than 31 May 2023, according to Scandinavian Biogas.
It went on to say that it will focus on these two projects to begin with, and that final investment decisions are likely to be made in 2024 when, among other things, environmental permits are granted.
The total investment is estimated at approximately €90 million, and the operating EBITDA margin is estimated to significantly exceed 30%, which is in line with the group’s goals.
The group aims to build a strong pipeline of prospective biomethane plant projects in Northern Europe, and the German market has been prioritised due to its size, well-developed gas infrastructure and positive attitude towards biogas.
Production is, according to Scandinavian Biogas' growth strategy, mainly based on manure and other organic waste from agriculture.
The plan is to inject the biogas into the German gas network. Some or all the production may be liquefied. The rot remains will be post-processed into bio-fertiliser which is returned to nearby farms completing the cycle.
“Entering the vast German market is a strategic milestone and an important addition towards our production targets in 2026 and 2030. The very attractive German biogas market is in a transition process from electricity production to biomethane production, and we aim to be an important player in that transition,” said Matti Vikkula president and CEO, Scandinavian Biogas.
The next step will involve preparing for final investment decisions, such as securing land and environmental permits, specifications, choosing technology partners and catering for each facility to be financed.
Investment decisions are expected to be made within 12 and 20 months respectively. Commissioning typically takes place within 14-18 months from the investment decision.
“Through this collaboration, we get a partner to support us in our development of the German market. It feels very good to start the partnership with two established projects and options for further future biogas projects,” said Michael Wallis Olausson, head of growth at Scandinavian Biogas.
Scandinavian Biogas said its strategic goal is to reach a production capacity of 1.2 TWh of biomethane in 2026 and 3 TWh by 2030 by establishing several large-scale fertiliser and agricultural-based biogas plants in Scandinavia and Northern Europe.