The Value of Flexible Bioenergy – an empirical assessment of the electricity markets in selected European Countries

As Europe shifts towards high shares of variable renewable energy (VRE) such as wind and solar, managing seasonal and intraday variability becomes critical. Bioenergy, particularly when operated flexibly, offers dispatchable generation capacity that can support grid stability and reduce procurement costs for electricity consumers.

This study by Task 44 (Flexible Bioenergy and System Integration) evaluates the economic value of flexible bioenergy in the electricity markets in selected European countries: Austria, Germany, and Finland.

Download the full report “The Value of Flexible Bioenergy – an empirical assessment of the electricity markets in selected European Countries”

Using historical electricity prices and generation data from ENTSO-E (Transparency Platform of the European Network of Transmission System Operators for Electricity), the study compares two scenarios:

1. one where bioenergy operates flexibly based on market signals, and
2. another where it runs inflexibly at baseload.

The authors construct an empirical merit-order market model to assess how bioenergy influences market-clearing prices.

Key findings include:

• In Austria, flexible bioenergy operation resulted in €93 million savings in 2023 due to seasonal modulation.
• In Germany, both seasonal and intraday flexibility from biogas led to €266 million savings, although its specific price impact was smaller due to pre-existing baseload-biased policies.
• In Finland, where flexibility was mainly seasonal, savings were the highest at €719 million, driven by strong merit-order shifts despite limited intraday variation.

The report concludes that flexible bioenergy significantly reduces wholesale electricity prices and provides essential system value by filling gaps left by intermittent renewables. While model accuracy varies, the seasonal flexibility—primarily from solid biomass—and short-term modulation—mainly from biogas—show consistent economic advantages across contexts.

Two Key Highlights for Policymakers

1. Quantified Cost Savings from Flexibility:
Policymakers should note that flexible bioenergy directly reduces electricity procurement costs, even in mature electricity markets. This makes a compelling case for incentivizing flexible operation over traditional baseload generation models.
2. Strategic Role in Renewable Integration:
Flexible bioenergy acts as a critical ‘bridge technology’, supporting the grid when wind and solar are unavailable. By stabilizing prices and supply across intraday and seasonal scales, it offers a controllable, renewable alternative to fossil back-up capacity—vital for achieving net-zero targets efficiently.