Government’s FiT Response “Continues To Limit AD Deployment”

Government’s response to its Feed-in Tariff (FiT) consultation on anaerobic digestion (AD) continues to limit its deployment, according to the Renewable Energy Association (REA).

The generation tariffs (figure 1) are calculated based on the consultation evidence supplied, the inclusion of new data points from industry, latest evidence on price projections and additional sources of information (WRAP2, NNFCC3, 2014Biomethane Model), the government says.

It says it also acknowledges the calls from a number of respondents suggesting the need for a new <100 kW band for AD. However, it says current data do not suggest significant differences in capital costs for plants below 100 kW and up to 250k.

Figure 1

James Court, Head of Policy and External Affairs at the Renewable Energy Association said: “Whilst we see marginal increases, it is disappointing the government hasn’t heeded warmings from the industry with AD not escaping the same slash in support seen by other small scale renewables last year.

“AD was once heralded as a key technology by the Government, as it should be. AD has the potential to be a large contributor to our efforts to decarbonise, across heat, transport and in this case, electricity. It’s good for farmers and the wider rural economy, it’s good for reducing our waste and it’s a key part of any future circular economy. Yet it now faces a huge decrease in support.

“There is now a serious policy gap for the industry, which needs to be addressed.”

Figure 2

There have also been amendments to the digression rates to a quarterly basis so that it aligns with the timing of the deployment caps (figure 2).

Regarding the sustainability criteria, the majority of respondents agreed with the consultation and the government intends to introduce the criteria set out in the consultation (the land criteria reflecting the requirements in place on the Renewables Obligation and Renewable Heat Incentive), with two amendments.

  • Government intends to introduce the sustainability criteria as set out in the consultation, except for two amendments: one to the land criteria and one to the impact of non-compliance on payments. In line with a number of responses, the land criteria will reflect the requirements currently in place on the RO and RHI, allowing the use of material from a protected area (including wetlands), where the production of the material does not interfere with the nature protection of the area.
  • Government has also decided that export payments will not be deducted if a generator does not comply with the sustainability criteria. This is because the export payment is offered as an alternative to a power purchase agreement for small-scale generators, offering them a route to market. Independent power purchase agreements would not be affected by these criteria, and the export tariff should be treated in the same way.

Regarding feedstock restrictions, the industry response was more split, and the government intends to introduce option two.

  • Government intends to introduce Option 2 which limits payments in relation to electricity generated through the anaerobic digestion of feedstocks not derived from wastes and residues to 50% of the total biogas yield, but to apply on an annual as opposed to a quarterly basis.

In regards to timing, the government will be laying the new tariffs in parliament “as soon as practicable” and will come into effect on the 1 April 2017.

The AD sustainability criteria and feedstock restrictions will be implemented on 1 May 2017, to align with the implementation of similar requirements for the RHI scheme.

The government also announced a Budget Reconciliation Review looking at the balance of deployment caps between and within technologies, taking into account deployment patterns and wider government priorities. This will be coming out later in the year.

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