DECC to review small-scale AD feed-in-tariffs

A consultation on Feed-in-Tariffs for small-scale anaerobic digestion (AD) facilities is set to take place in January 2014, energy secretary Greg Barker has revealed.

Mr Barker wrote to members of the AD sector this week (November 27), stating that that he had asked Department of Energy and Climate Change (DECC) officials to consult on measures including a tariff review in January next year.

In the letter, the energy secretary also outlined the governments strong commitment to the generation of energy from waste through AD adding that he saw significant potential for the sector to contribute to economic growth.

Mr Barkers letter followed concern from sector organisations such as the Anaerobic Digestion and Biogas Association (ADBA) and the Renewable Energy Association (REA) that current arrangements for Feed-in-Tariffs (FITs) could make small-scale AD projects economically unviable.

The National Farmers Union; the Country, Land and Business Association; and AD design firm ClearFleau have also raised concerns about the issue with DECC.

They claim that current arrangements could trigger a tariff reduction for such projects from April, even though very few facilities of this size have been built.

Now, Mr Barker has said that a consultation will be launched in order to ensure that the small-scale AD sector is not unfairly disadvantaged by the anticipated reduction in FIT incentives for plants below 500kw April 2014.

The letter states: This will have the aim of closing the current loopholes and providing a long-term, stable investment framework for small-scale AD, as well as the sector as a whole.

Feed-in-Tariffs

The FIT for AD was adjusted by the government in 2012 to introduce capacity-triggered tariff reductions and preliminary accreditation for developers in order to prevent an unsustainable boom in the market.

The preliminary accreditation was designed to allow developers to fix their tariff so as to remove the risk of a tariff reduction while their AD plant is still in construction.

There are two capacity triggers one for above 500kw and one for below with most on-farm AD plants below 250kw in size.

However, preliminary accreditations are currently counted towards capacity triggers at the time of registration rather than the time the plant comes online, causing concern that this is artificially breaching the sub-500kW capacity trigger and causing a 20% tariff reduction in April 2014.

And, DECC-released figures confirm the capacity trigger for sub-500w plants has been reached and that degression of this trigger would therefore be initiated in April next year.

Mr Barkers letter states that the current degression arrangements are “resulting in some unintended consequences: larger plants are contributing to the small-scale AD degression trigger, meaning degression is likely to come sooner than expected, adding that the small-scale AD sector has yet to reach its full potential.

The REA believes that instead of the current system, the two capacity triggers should be consolidated into one overall trigger and that accreditations in the capacity threshold should count for the year the plant comes online, rather than from the year following registration.
As a result, REA, ADBA and other organisations have welcomed Mr Barkers decision to review and consult on the current FIT arrangements.

REA

Commenting on Mr Barkers letter, REA chief executive Dr Nina Skorupska said: Industry has been united in calling on Greg Barker to commit to a review of the AD FIT before Christmas, so we warmly welcome this letter from the minister. It is very encouraging ahead of the Autumn Statement to see ministers and officials really listening and responding to industry concerns.

The simple fact is that if this situation isnt resolved, the on-farm AD industry will grind to a halt. The timely announcement of the review gives Government a good chance of fixing the situation quickly enough to preserve the majority of existing projects and keep the door open for further growth.

ADBA

Chalotte Morton, ADBA chief executive, also welcomed Mr Barkers letter, stating that he had taken the opportunity to correct flaws in the FIT mechanism and save a hugely important sector from disaster.

She commented: Smaller scale anaerobic digestion has huge amount to offer – using slurry and farm wastes mitigates methane emissions on farms, generating employment in rural communities and creating a UK manufacturing sector with strong export potential.