Delayed deliberation – autopsy of the French biomethane tender

The deliberation (2024-85) was dated May 2024, but was only released in recent days, possibly due to administrative delays and/or the State aid decision for the Contract for Difference (CfD) scheme approved in July 2024, which would require a revision of the tender conditions.

The first round was opened in February 2024, but closed with only one bid awarded, out of a total three submitted. While two more competition tender rounds were scheduled for 2024, these subsequent rounds were postponed in the aftermath of the results.

Of the 500 GWh annual capacity sought, only 90 GWh was bid upon, with the lone conforming bid amounting to 37 GWh. The feedstocks for the proposals were higher end waste feedstocks (that is not municipal nor landfill waste), which made the proposal eligible for the higher tariff rate (EUR 120/MWh, versus EUR 65/MWh).

The CRE suggested the dismal participation rate was due to higher compensation levels via the biomethane production certificates (CPB in French), associated with the gas blending obligation in France to commence in 2026; the penalty rate for not meeting the obligation is EUR 100 per MWh. With a lower estimated physical gas value of EUR 30/MWh (for comparison, November 2025 TTF Futures are currently at EUR 44/MWh), this results in a nominal compensation of EUR 130/MWh, or EUR 10/MWh higher than the support tariff for higher-end waste feedstocks.

In addition to postponing the next two auctions, the CRE also recommended providing further clarity over the blending obligation trajectory, which has since been addressed via the publication of the second Decree on 6 July 2024, with the related Order confirming the penalty rate at EUR 100/CPB. It is unclear what steps will be taken in order to resurrect the current tender process, or if this is even desired given that the CPB may accomplish the same effect on encouraging the installation of larger capacity (>25 MWh/year) plants.

Plants under 25 GWh/year capacity are eligible for tariffs without participating in a tendering, instead using “open” agreements, or “Appel d’Offres“. Between 2011 and 2020, these open agreements were available to plants of all sizes, although after 2020, competitive tender processes were introduced for the larger plants. The open tariffs rates are usually more favourable for smaller plants, to compensate for diseconomies of scale.

Almost all GO volumes in France are subsidised via tariff agreements; if support agreements via tenders are eschewed in favour of receiving CPBs, this will reduce the supply of GOs. Current trends suggest that there would be a significant drop in GOs from plants above 25 GWh in size going forward.

In France, biomethane purchase agreements or BPAs have seen an increase in uptake with utility Engie one of the main adopters. The volumes delivered via BPA are almost always production unsubsidised which distinguishes them from tender or open agreements. A producer cannot enter into a BPA and simultaneously receive CPBs for a given biomethane volume; the decision between these two options will depend upon CPB market value and other obligation markets for biomethane (such as transport).