RHI tariff changes could halt AD development

The Renewable Energy Association is extremely concerned over a consultation published by DECC today (May 30), which sets out plans to adjust financial support for biomethane from anaerobic digestion projects.

Under the proposed government changes, biomethane projects injecting over 850KWe to the gas grid a year would become unviable for support under the Renewable Heat Incentive tariff just half the size of a typical biomethane plant currently registered on to the scheme.

All of the biomethane projects currently in development also have projected outputs larger than 850KWe, and the likelihood of being able to deliver the 400 million kWh of biogas projected for 2015 would be put at risk.

Biomethane injection to the gas grid is projected to generate an estimated 15% of the total renewable heat deployment under the RHI by 2015/16, but DECC, basing its calculations on waste plants with gate fees of 41 per tonne, suggest that any project over 2MW biogas capacity is overcompensated at current tariff levels.

In response, the department has put forward two different approaches to level the playing field; tiering, which would reduce rates based on the overall MWh output of a plant each year, and banding, which would see larger plants get the same rate initially for their output but with rates reduced as they increase in size.

However, REA claims that the banding would distort choices over the size of plants that are registered, while it remains unclear how capacity would be measured.

Compensation

The consultation, which had been proposed by DECC earlier this year, was at the time largely welcomed by the AD sector, after it was decided the risk of overcompensation for large gas-to-grid plants under the RHI tariff had to be addressed (see letsrecycle.com story).

With a deadline for responses to the review set for June 27 this year, REA states time is tight and that DECC could be looking to implement the changes as early as October 2014.

REA chief executive Dr Nina Skorupska confirmed the association would meet to discuss the proposals with its members and DECC officials in London on June 5.

She said: It is right that government looks again at the green gas RHI tariff because the original policy design preceded any actual development in the UK, yet the pace and depth of the changes give real cause for concern.

Green gas can be injected into the grid and drawn upon at any time for heating or transportation. Shrinking the tariff so it only works for very small plants is simply inefficient in terms of maximising the value of the biomethane feedstocks. The whole industry is going to have to work fast, hard and smart to ensure these proposals help rather than hinder the sustainable growth of the UK green gas industry.

200kW

Meanwhile, on Wednesday (May 28), DECC decided to extend support through the RHI to biogas installations with a thermal capacity of over 200kW that have been commissioned from December 4 2013.

In contrast to todays announcement, the move has been welcomed by the AD sector for recognising the potential benefits such plants can bring in delivering heat to a wide range of users.

Charlotte Morton, chief executive of the Anaerobic Digestion and Biogas Association (ADBA), said: Biogas is an extremely low-carbon energy source, and this support will help meet the costs of making good use of heat. We are disappointed that support will not be available to existing plants which also need funding to make use of the heat they generate, as this would be an easy way to help deliver the UKs renewable heat targets.