The biogas sector is being held back by two key structural constraints – high costs and feedstock limitations – a new report has suggested.
The report, The biogas dilemma in today’s renewable power markets, which was published in Engineering Environment, noted that while wind and solar accounted for 96.6% of newly installed renewable electricity capacity globally in 2024, biogas accounted for just 0.5%, with the sector struggling to achieve the cost reductions seen in other renewable energy sectors.
Associated costs
Over the past decade, for example, the cost of wind and solar energy has dropped by between 70% and 90%, while costs associated with energy generation from biogas have remained relatively unchanged: rising slightly from $0.086 to $0.087 per kilowatt-hour.
In Germany, the levelised cost of electricity from biogas ranged from €20.2 to €32.5 cents per kWh in 2024, compared with €4.3 to €10.3 cents for wind and €4.1 to €6.9 cents for utility-scale solar photovoltaic generation.
Elsewhere, the report notes that biogas facilities often face recurring costs that do not apply to wind and solar installations, including biodigester installation, feedstock procurement, and processing and plant operations.
‘These challenges have created uncertainty for the future development of biogas projects, which are now heavily dependent on government subsidies,’ the authors state.
The availability of feedstock is another constraint, with energy crops used for biogas production occupying 1.35 million hectares in Germany in 2024. Each additional billion cubic metres of crop-based biomethane would require around 0.17 to 0.25 million hectares of agricultural land.
‘Case-by-case approach’
The report advocates for a ‘strategic, case‑by‑case approach’ to biogas development, including leveraging existing gas infrastructure for seasonal energy storage and rapid load balancing.
‘The numbers are clear: biogas cannot compete with wind and solar on cost, and it never will if we keep treating it as a primary electricity source,’ the authors note. ‘That doesn’t mean we should abandon biogas—it means we need to be smarter about where and how we deploy it.
‘The real value of biogas lies not in competing head‑to‑head with renewables on price, but in providing grid flexibility, managing organic waste, and enabling green chemistry. We need to stop subsidising biogas as if it were wind power and start funding it for what it actually does well.’ Read more here.
