AD sector welcomes review of RHI tariff

The AD sector has welcomed a government review to address the risk of large gas-to-grid plants being overcompensated under the current Renewable Heart Incentive (RHI) tariff.

The review, which has been initiated by the Department of Energy & Climate Change (DECC), follows initial analysis of the evidence underpinning the biomethane injection tariff, which incentivises investment in the technology.

DECC has concluded that there may be a risk of overcompensation for larger plants or sites with existing assets, where the costs may not justify the current levels of support from the taxpayer.

In a statement DECC said: It is vital that we get the level of support right so that the market can invest with confidence, RHI support is spent efficiently and the market can grow sustainably.

As part of the review, DECC will be updating the cost and performance data underpinning the tariff to determine whether any changes are required.

If changes are needed, the department plans to launch a consultation on how the tariff should be restructured from summer 2014 a process the Anaerobic Digestion & Biogas Association (ADBA) has confirmed it is seeking to be involved in.

Incentive

Commenting on the government decision, Charlotte Morton, chief executive of ADBA, said: We welcome the announcement that the government plans to review the Renewable Heat Incentive (RHI) biomethane injection tariff. The industry needs tariffs which will fairly incentivise all scales of biomethane injection, and biomethane support needs to be on a long-term footing to give certainty to developers and investors.

This early announcement from government should help to provide certainty for the industry, allowing early sight of forthcoming changes. We will continue to work closely with DECC and our members to gather evidence to ensure tariffs are set at an appropriate level.

Biomethane injected into the gas grid can deliver huge benefits to the British economy, helping to decarbonise gas supply to homes, businesses and transport, while boosting UK energy security by delivering a domestic source of energy which reduces the UKs dependence on overseas fossil gas.

Data

Speaking to letsrecycle.com, ADBA policy manager Matt Hindle added the industry simply did not have the data at present which could confirm the level of risk of overcompensation but explained the long-term benefits of RHI depended on funding being applied appropriately.

The review follows an upgrade to the non-domestic RHI tariff scheme in December last year, which saw an increase in the scope of RHI subsidies to include biogas combustion over 200kW, an increase in permitted waste feedstocks, and increased tariffs for large biomass plants (see letsrecycle.com story).