The total awarded capacity for all rounds now sits just under 300 000 Smc/h. Of note, the original decree (DM biometano 15-9-2022) calls for at least five competitive auction rounds to secure 257 000 Smc/h capacity; the total subscriptions for the fifth round exceed that original target. The GSE announcement mentions that the Ministry of the Environment and Energy Security (‘MASE’) has already initiated discussions to secure extra funding for the unexpected surplus.

Why the dramatic increases?

The main reason for the surge in bid and subscribed volumes is believed to be uncertainty around future auctions. While the GSE have recently stated their intention to hold a sixth round, as mentioned above, there was no guarantee of this heading into the fifth round in November last year.

Also notable was the development of the tariff rates: while the third round saw a sizeable 13% increase in the base tariff rate for all plant categories, the fourth round saw rates drop 1.3%. This may have depressed bids in the fourth round, with participants instead choosing to wait until the fifth round in anticipation of higher rates. The maturity of the auctions may also have increased subscribed volumes as the rounds progressed, with participants becoming more comfortable with the competitive bidding process.

Further fueling the bidding frenzy was uncertainty surrounding older agricultural biogas plants. In the fifth auction round, more than 60% of the awarded volume came from bids involving converted agricultural plants (75 629 Sm3/h). This marked a significant increase from the fourth round, where this category contributed 31 952 Sm3/h, about half of the subscribed volume.