European biomethane attracting interest from asset holders due to its potential as a sustainable energy source
In the pursuit of a sustainable and carbon-low energy future, biomethane is emerging as a promising alternative to fossil gas. This renewable energy source has caught the attention of various investment firms across Europe, with a significant increase in investments being made in biogas and biomethane infrastructure.
Iulia Grosu, senior infrastructure portfolio manager at APG, emphasized the potential of biomethane to mitigate climate change, reduce waste, and provide renewable energy solutions while contributing to carbon negative practices. This perspective is shared by many, as evidenced by the growing number of investments in this sector.
One such investment is the €250 million that Dutch pension giant ABP poured into bioenergy infrastructure firm BioticNRG via its asset manager APG. Similarly, in Denmark, KK Invest, DBC Invest, and Copenhagen Infrastructure Partners, whose investors include several of the largest Danish pension funds, acquired a majority share of Sindal Biogas, a biogas plant in North Jutland.
The European Commission's bioenergy expert, Biljana Kulisic, has stressed the need for accelerated investment in biomethane plants to meet the 2030 target. This need is not going unmet, with investment growth driven by guaranteed long-term price and offtake contracts encouraging large-scale deployment across Europe.
Matteo Botto Poala, the managing director of an unnamed investment giant in the infrastructure business, considers biomethane "one of the most compelling segments in the energy transition for infrastructure investors". This sentiment is echoed by Martijn Olthof, portfolio manager at the ABP Netherlands Energy Transition and Biodiversity fund (ANEB), who notes a trend among various kinds of funds looking seriously at biomethane opportunities.
The advantage of biomethane lies in its ability to use the same infrastructure as natural gas, making it more advantageous in terms of investment and implementation compared to other alternatives like hydrogen, which requires an entirely different infrastructure and huge CAPEX investments from its developers.
Recent developments in the biomethane sector include MAPFRE launching Europe's first dedicated biomethane fund, aiming to raise €100 million for 20-25 biomethane plants in Spain over a five-year period. Goldman Sachs Asset Management has also established Verdalia Bioenergy, a new business focused on developing, acquiring, building, and operating biomethane plants across Europe.
The European Biogas Association predicts €25 billion in private investments for European biomethane by 2030, a 30% increase from last year's estimates. To reach this target, Europe will need to build an additional 950 biomethane plants, according to EBA estimates.
The REPowerEU Plan, a European Union initiative, aims for 35 billion cubic metres per year of biomethane production by 2030, up from 6.4 bcm today. This ambitious goal reflects the bloc's commitment to clean energy and energy security.
ANEB's recent purchase of Methaplanet, a company that turns horse manure into energy pellets boosting biomethane production in anaerobic digesters, is a testament to the growing interest in this sector. Energy transition infrastructure manager White Summit Capital is also buying a majority stake in Ferbgas Renewable, a Portuguese biomethane producer.
Strong regulatory and geopolitical tailwinds are the two main reasons for investor interest in biomethane, according to Olthof. The EU's strong targets and policy support for biomethane further underscore the bloc's commitment to clean energy and energy security.
As Europe continues to transition towards a carbon-low energy future, biomethane is poised to play a significant role in meeting the region's energy needs while contributing to the fight against climate change.
