VZCZCXRO8368
PP RUEHAG RUEHDF RUEHLZ RUEHPOD
DE RUEHMZ #0463/01 2250540
ZNR UUUUU ZZH
P 130540Z AUG 07
FM AMCONSUL MUNICH
TO RUEHC/SECSTATE WASHDC PRIORITY 4080
INFO RUCPDOC/USDOC WASHDC 0030
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCLRFA/USDA FAS WASHDC
RUCNMEU/EU INTEREST COLLECTIVE
RUCNFRG/FRG COLLECTIVE

UNCLAS SECTION 01 OF 02 MUNICH 000463 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV EINV PREL ENRG TRGY KGHG GM
SUBJECT: BIOGAS IN BAVARIA: A MODEL FOR ENERGY INDEPENDENCE? 
 
 
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SUMMARY 
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¶1.  ConGen Munich visited a biomethane plant in Pliening, Bavaria 
built and run by Schmack Biogas AG, a leader in the biogas field. 
The plant is a showcase for the state of the art in biogas 
technology, and an example of the potential of biomass as a fuel 
source.  Schmack representatives are optimistic about the future, 
predicting that biogas could replace as much as 50 percent of 
Russian natural gas imports to Germany by 2020. 
 
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SCHMACK - A LEADER IN A GROWTH INDUSTRY 
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¶2.  Founded in 1995, Schmack Biogas AG 
(http://www.schmack-biogas.com/wEnglisch/inde x.php) is one of the 
pioneers in the field of high-utilization biogas plants.  Schmack 
offers a complete range of services for biogas plants, from project 
development, planning, construction, commissioning, technical and 
biological services, and financing assistance.  The firm holds 
patents on several of the main components used in its production 
process.  Schmack, a market leader in the industry, is headquartered 
in Schwandorf, Bavaria, and has about 300 employees.  In 2006 
Schmack had sales of 90 million Euros and a profit of four million 
Euros.  Sales this year are expected to be between 140 and 150 
million Euros.  Due to high commodity prices resulting in poor sales 
of gas production facilities to farmers (they can currently make 
more selling their crops on the open market than converting them to 
biogas), the company expects to incur a loss of 6 million Euros this 
year. 
 
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BIOGAS - ENERGY FROM FARMER'S FIELDS 
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¶3.  "Biogas" refers to a steam-saturated reactant gas mixture made 
up of 40-80 percent methane and 20-60 percent carbon dioxide formed 
through anaerobic fermentation.  The feedstock for the fermentation 
process can be most any agricultural fruits and grasses, and even 
sewage sludge.  Corn, grain and grass are the most commonly used. 
The Pliening plant utilizes shredded corn and grains.  The feedstock 
is fermented without oxygen in a closed and heated fermentation 
system.  The gas product can be burned on-site to generate 
electricity, or when high-quality feedstocks are used, can be 
purified and fed into natural gas distribution grids. 
 
¶4.  Before biogas can be fed into the natural gas grid, it must be 
purified to natural gas quality, which includes maintaining 96 
percent methane content and limiting nitrogen, oxygen and 
hydrogen-sulphide through low-level gas combustion.  In Pliening, 
the purified gas produced is then fed into the Munich municipal gas 
grid.  Part of the biogas can also be used to generate electricity 
on site, thus supplying the plant's energy needs.  Any excess 
electricity can be fed into the public power grid.  Additionally, 
the relatively odorless fermentation residue is returned to the 
feedstock farmers for use as solid and liquid fertilizer, reducing 
the need for petroleum-derived fertilizers.  The Pliening plant 
produces about 3.9 million cubic meters of biomethane a year (or 40 
million kilowatt hours of electricity) - the amount of natural gas 
used by about 1,300 four-person households.  The biogas produced is 
considered "stackable energy," in contrast to solar and wind power, 
it can be continuously produced and temporarily stored, providing a 
sustainable power supply. 
 
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SETTING-UP SHOP IN THE BUCKEYE STATE 
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¶5.  Schmack has teamed with the city of Akron, Ohio to construct a 
$7 million plant that will use bacteria to convert sewage sludge 
into electricity.  City officials say the operation will help reduce 
the $1.3 million Akron spends annually on electricity costs for 
sewage treatment, and estimate that the operation will use 20-30 
percent of the energy it generates.  According to Schmack, most 
current and planned biogas projects in the U.S. are designed 
primarily for waste processing, rather then energy production.  Our 
contacts noted that generating business in the U.S. is more 
difficult because prices for electricity are lower (the U.S. retail 
price of electricity is about a third the cost in Germany), taking 
away much of the economic incentive.  Nevertheless, Schmack views 
the U.S. as a viable market due to projects such as the one in 
Akron, and incentive programs established by various states -- they 
specifically mentioned Oregon -- to promote alternative fuel 
production and use.  Schmack currently has 10 employees in the U.S., 
all based in Ohio. 
 
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MUNICH 00000463  002 OF 002 
 
 
AN ALTERNATIVE ENERGY SOURCE WITH A BRIGHT FUTURE 
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¶6.  The Schmack representatives were optimistic about the prospects 
for biogas, claiming that by 2020 biogas could potentially replace 
as much as 50 percent of Germany's gas imports from Russia (Note: A 
recent study by the federal Economic Ministry suggested that up to 
10 percent of the Germany's total natural gas consumption could 
potentially be replaced by biogas).  They said there are currently 
3,500 biogas plants in Germany.  The bulk of them are operated by 
farmers producing electricity which is fed into the national grid, 
producing about one percent of Germany's total electricity output. 
Production of electricity for distribution is more common than gas 
production due to the difficulty in meeting the natural-gas quality 
standard, which requires more expensive equipment and higher-quality 
feedstocks. 
 
¶7.  Schmack's management maintains their technology promotes 
national energy independence because both the construction of 
facilities and the supply of feedstock materials benefit local 
firms.  They noted that while at present there are no direct 
government subsidies for biogas production in Germany, the federal 
law on renewable energies requires energy producers to pay a price 
of between eight and 20 Euro-cents per kilowatt hour for electricity 
generated from biogas, depending on the size and type biogas 
facility, as well as the feedstock material used (the cost is 
ultimately passed-on to the electric consumer).  The price remains 
in effect for a period of twenty years, providing a significant 
incentive for the construction of additional plants. 
 
¶8.  This report was coordinated with Embassy Berlin. 
 
¶9.  Previous reporting from Munich is available on our SIPRNET 
website at www.state.sgov.gov/p/eur/munich/ . 
 
NELSON