Poles apart – why is the German biomethane sector so much bigger than the Polish one, and is this about to change?

Needless to say, as my friend comes from a rather less gentrified part of London, things got fairly terse fairly quickly, and they are no longer on what you or I would regard as good terms. Which is unfortunate, because the chap lives just across the road and is likely to remain my friend’s neighbour but probably not his friend for the next twenty years.

That’s the problem with neighbours. You don’t get to choose them. At a national level, it’s even worse. You can’t simply move house.

It is perhaps a slight oversimplification to say that most European countries have had disagreements with their neighbours at various points over the last thousand years, but relations have generally improved in recent decades, notwithstanding the war still unfolding in Ukraine. One of the more remarkable reconciliations of our lifetime has been between Germany and Poland. Today, the relationship is considerably healthier than the one between my friend and the self-appointed chairman of the Cul-de-Sac Aesthetic Committee.

That said, you might have expected Poland to have looked over the border fence a little more often when it comes to biomethane.

Germany has been Europe’s poster boy for biogas and biomethane for decades. It now operates around 9,800 biogas plants, producing approximately 6 GW of electrical capacity, alongside around 1.5 bcm of biomethane annually. It has been turning manure, crop residues and agricultural waste into useful energy for over thirty years. Drive through rural Germany, and you are never very far from either a sausage shop, a beer Keller or an anaerobic digestion plant.

Meanwhile, neighbouring Poland has barely got started.

Which is odd, because Poland possesses almost exactly the same raw ingredients as its Germanic friend. It has a similarly sized agricultural sector, extensive livestock farming and abundant organic waste.

Germany has around 21 million pigs, while Poland has approximately 11 million. Germany also has around 11 million cattle, compared with approximately 6.5 million in Poland.

Furthermore, Poland is also one of Europe’s largest poultry producers, with more than 240 million chickens generating millions of tonnes of manure every year.

It also has a sizeable gas market, consuming around 20 bcm of natural gas annually, alongside a well-developed transmission network capable of supplying domestic demand and exporting gas to the rest of Europe.

In other words, Poland has the waste, the agricultural base, the gas network and the demand. Unlike its German neighbour, however, it has almost no commercial-scale biomethane plants.

Why is this?

Undoubtedly, a key factor has been the lack of coherent government policy. The huge growth in the number of plants across Germany, France and elsewhere in Europe was driven by subsidies and incentive schemes, designed either to generate electricity from biogas or to upgrade it into biomethane.

There was nothing comparable in Poland, so unsurprisingly nobody built plants.

That’s the whole point of government intervention: to create markets and infrastructure that simply do not emerge naturally through market forces alone.

The Poles have belatedly realised this and have therefore, somewhat late in the day, announced they are developing a biomethane Contract for Difference (CfD) support scheme.

Unlike its Western European variants, the Polish system is effectively a one-way CfD or feed-in premium. The government establishes a reference price. If the market value of biomethane falls below that level, the producer is topped up to the reference price. If prices rise above it, the producer keeps the upside.

It is therefore not quite the UK-style two-way CfD. It is closer to a guaranteed floor with some merchant upside, making projects fantastically more bankable.

The initial reference prices published were around:

• PLN 538/MWh for biomethane produced from biogas
• PLN 545/MWh for agricultural biomethane

This equates to approximately EUR 125–130/MWh, which is enough to finance a medium-sized plant.

It is fair to say this is a pivotal moment for European biomethane. Given the availability of feedstock, Poland could ultimately produce around 5 bcm of biomethane per year, equivalent to roughly a quarter of the country’s current gas consumption and making a meaningful contribution towards Europe’s ambition of producing 35 bcm annually by 2030.

There is, of course, a big gap between potential and reality.

Every energy report contains a sentence beginning with, “The country could produce…” Turning that “could” into concrete, pipes and CH₄ molecules is the difficult part.

The legislation is moving from ambition to execution

The important point is that Poland has peered over the fence, seen what the Germans have achieved and come up with its own plan.

The legal framework recognising biomethane and establishing draft reference prices is already in place.

The next stage is the tricky bit of creating policies with actual auctions, rules and just generally making things happen.

The expectation is that the full support framework becomes operational somewhere between late 2026 and early 2027, with development accelerating through the second half of the decade.

The prize is not one plant. It is a platform

One of the stranger characteristics of the European biomethane market is how atomised it is. There may be around 10,000 biogas plants across Europe, but most owners have only one. The number of companies owning more than five is probably fewer than twenty, so there is enormous potential for consolidation.

Almost every infrastructure investor I speak to says almost exactly the same thing:

“Michael, what we really want to invest in  is a European platform with two or three operating plants and a pipeline of developments.” Not many of these exist.

This consolidation from plants to platforms is  exactly what happened in wind and solar. Nobody stopped after building a single turbine or one solar farm. Developers built hundreds then refinanced with debt then hopefully retired somewhere warm and sunny. 

I expect the same thing to happen in Poland. There are huge economies of scale from building multiple greenfield plants, so now the CfD has been announced, I expect to see developers rushing to secure site options from probably somewhat bewildered Polish chicken and pig farmers, submit planning applications and then approach the infrastructure market for capital.

That process has already started, but I suspect the dam of pent-up development will burst over the rest of this year and into 2027.

Which means we are all going to become rather more familiar with obscure-sounding Polish towns whose names appear to contain too many consonants, the price of Polish chicken manure, and the daily fluctuations of the zloty-to-euro exchange rate.

However, despite the undoubted attractions of the Polish opportunity, you still need to get the fundamentals right: robust feedstock arrangements, proven technology, digestate offtake, grid connections and experienced management.

These are all drearily familiar requirements for existing developers, but they are the nuts and bolts of building valuable infrastructure assets.

It is not enough to say:

“Poland has lots of potential.”

You need to be able to say: “And here is my portfolio of actual projects with planning, feedstock agreements and a credible route to construction.”

Conclusion

In my experience, looking over the fence and copying your neighbour is pretty much always a good idea.

Our brick-built barbecue is almost an exact replica of the one my elderly neighbour Chris built a few years ago, and many of our flower beds mimic the unusual planting ideas of that green-fingered lady up the road.

The Poles have done something similar with their German neighbours and biomethane, albeit twenty years later.

If their CfD scheme works as intended, the next decade could see hundreds of millions of euros invested, dozens of new biomethane plants built and the emergence of Poland as one of Europe’s most important renewable gas markets. This will be a good thing.

My friend will probably never reconcile with his new neighbour across the road. He still holds a grudge against people we both knew at school, fifty years ago. This is a bad thing.

Fortunately for Poland, they have learnt both how to get on with their neighbours and how to copy their best ideas so we can expect to see a lot of plants emerging over the next few years. “Mądry Polak po szkodzie” is an old Polish phrase which translates as “he is a wise Pole after the event”. Perhaps Poland is late to the biomethane party, but it has finally looked over the fence, borrowed the recipe from its neighbour and started building. But as another Polish saying goes, “Nie od razu Kraków zbudowano.” Kraków was not built in a day, and neither will Poland’s biomethane industry be.