Q&A - VORN Bioenergy: Biomethane from feedstock to finance

VORN Bioenergy is a spinoff from BayWa, the German agricultural conglomerate. Last year [2022], the company was acquired by Green Investment Group, part of Macquarie Asset Management. VORN focuses explicitly on developing, building, and operating biomethane plants in Germany, with an ambition to grow this into an international platform.

inspiratia speaks to Thorsten Holl, CEO of VORN, about the focus on the company, the growth of the sector, and its expanding project portfolio.

VORN is involved across the entire value chain of its projects, from concept design to operation. What are the major challenges in ensuring consistency throughout, and how does VORN safeguard itself from risk? 

For new projects, we follow a bottom-up approach on sites with long-term potential sustainable biomass feedstock. The feedstock element is always the critical element when you are developing new projects.

Another critical factor is ensuring compliance with regulatory standards and delivering high-quality operations. This involves a certain degree of standardisation, the development of a digital environment to monitor operations and highly active risk management, which starts from the beginning with identifying the permitting and location risks.

In operations, we deploy an operational framework under the broader scope of risk management, which permits us to manage the value chain effectively.

Germany has been the primary focus for VORN. Are there any plans to expand into further jurisdictions?

Our current portfolio of assets is Germany-based, with our first plant in the country dating back to 2006. The company's history, however, is much more extensive and includes plant development and operations outside of Germany, such as the UK and Hungary.

Despite these projects no longer being part of our current portfolio, we are assessing the maturity and attractiveness of biogas/biomethane opportunities across many European countries. We have come up with several candidates where we find such environments, for instance, in Italy or Spain.

However, we want to go the extra mile. As an early adopter, we plan to start new projects in several additional geographies across Europe and are convinced that those opportunities are even more significant than currently projected overall. Therefore, our expansion will not stop with Italy and Spain, with many more jurisdictions in our focus in the longer term.

How does VORN choose its project portfolio? Will you focus primarily on greenfield or brownfield sites?

We do not focus on one or the other. Our ambitions are to pursue greenfield and brownfield opportunities simultaneously. They involve different methodologies for project development, project delivery, and project operations.

The greenfield implementation is more of a permitting and construction challenge, whereas the brownfield implementation relates much more to a conversion challenge. Scaling requires structure, which is why we want to industrialise both approaches. The brownfield development is more opportunistic, with opportunities more sporadic. This requires agility.

At VORN, we have the strength to possess competencies along all biomethane value chains. This enables us to offer our customers and partners alternative options for their natural gas dependencies.

Do you have a specific partnership model that you employ to choose companies or providers that you work with?

We are not an EPC contractor for biomethane plants. We want to develop and operate biomethane plants ourselves. On partnerships, we focus on development in areas where we are not present, on feedstock, on technology and on certain industries.

To give you an example, the food & beverage industry has a lot of waste that can be reused for different purposes. For us, this is an asset which can be used to produce biomethane, which then goes back in the form of energy or heat to the industry. This is a real win-win for both parties: they provide us with feedstock, and we provide the biomethane or other off-take back.

How critical are data and analytics in the management of VORN's assets?

The production of biomethane is a continuous process. We have the same controls and monitoring technologies that other process technologies employ. Likewise, we are using data that we are gathering to improve and optimise our operations.

There is still a potential for using the data and the analytics more intelligently for preventive purposes and not only for reactive purposes, particularly for brownfield projects. However, as assets are sometimes old, they are not always equipped with the required technology. Therefore, the financial benefit benefits of revamping need to be weighed against the capital investment needs.

Are there any technological developments that could change the Biogas and Biomethane landscape in the future?

We are still at the beginning of the technological development of the bioenergy sector. Therefore, there is a lot of potential ahead of us. One advancement is developing biorefineries that may provide valuable chemical feedstock that could expand the business model and the underlying value chain. However, we still have more research to do on the process. As a result, there is not a big technological step in the immediate future. Instead, we see a continuous improvement rather than a significant technological change.

VORN has previously deployed onsite PV on its Brandis biomethane plant. What role will renewable colocation play in the decarbonisation of VORN's operations?

Photovoltaics combine very well with green power production for process engineering, as they offer space to be used intelligently to provide clean power generation on-site. There is legislation in Europe, such as in Italy, where building PV around biomethane plants is encouraged.

What role does CCUS play in VORN's industrial process?

Carbon capture is the first logical step. We are using CO₂ from biomass, which is becoming an increasingly valuable commodity in combination with hydrogen or other synthetic fuels, as a raw material for chemical processes and the food industry. CCS can make an essential contribution to removing CO₂ from the atmosphere permanently. To support this, we need a sufficient political framework to provide incentives. One example from VORN is the construction of the first CO₂ liquefaction unit at our plant in Brandis, which will lead to a negative CO₂ footprint.

Overall, Europe and especially Germany are still lagging on concrete CCUS implementation. There are ambitions and plans but little tangible progress on these fronts.

How investable is the Bioenergy sector? Has it been challenging to draw investors?

Drawing in new investors has indeed been challenging in the past, but things have been changing quite a lot. Unlike wind or solar energy, biogas yield can be influenced and actively controlled. Therefore, biogas is an attractive investment if the feedstock supply is built on a solid foundation and a proven process technology. The biomethane technology is nothing new. It provides high intrinsic value, whether for flexible electricity generation or the provision of climate-neutral fuel for heavy-duty transport, as well as the reduction of greenhouse gas emissions for industrial heat uses. This makes biogas and biomethane interesting for investors. The perspectives of the bioenergy sector are positive, with multiple expansion opportunities.

The markets currently experience high liquidity; the operation of such assets, however, requires knowledge and experience. At VORN, we have all these competencies. We are, as such, well-positioned to deliver value for all stakeholders.