IN ASSOCIATION WITH
AD 2010: POWERING THE WAY FORWARD
AAre we FIT for re we FIT for AD?AD?
Further to DECC’s announcement on feed in tariffs, Dr Les Gornall asks: Where next for the UK?
I
N FEBRUARY 2009, Defra published a p/kWh) was required to achieve the DEFRA if the plant is designed to use the hot water
document entitled Anaerobic Digestion 2020 goals. It ranged from 45p/kWh for from the engines that contains the same
- Shared Goals. Ambitiously, it stated micro schemes (10kw scale) to 15p/kWh for amount of energy as the electricity for export.
that: “By 2020 anaerobic digestion digesters producing several MegaWatts For good quality CHP schemes, the investor
will be an established technology in this of power. can reclaim 40% tax in the year of investing.
country, making a significant and measurable The industry held its breath while the Also the Renewable Heat Incentive has not
contribution to our climate change and wider government checked its revenue budget. been announced yet and a wise government
environmental objectives.” AD projects were put on hold. These ranged may wish to stimulate proper use of the
To help achieve this laudable aim, the from farm scale digesters running on relatively enormous amount of wasted hot water by
industry lobbied for a feed in tariff (FIT) similar poor organic manures and expensive grass placing an incentive price for the hot water
to the one that has produced over 4,500 and maize silage to ‘merchant’ plants able equivalent of a FIT. However the FIT is not the
anaerobic digesters in Germany. to accept most of the organics heading for largest problem with funding digesters.
FITs require the AD generator to install the landfill sites. In February, a collective sigh That lies with the duration of the feedstock
two meters, one at the generator terminals of disappointment ran through the industry contract providing gate fees as the duration of
and one to manage the export of surplus when the FIT was announced. The Anaerobic the feedstock contract is seen by the lenders
electricity to the grid. The FIT is applied to Digestion and Biogas Association said the FIT as the term of the bank loan. Right now, one
the total amount of electricity generated. The announcement “had the effect of significantly year feedstock contracts produce one year
contract allows the digester site to consume reducing the level of support in the sector”. bank loans and this is a show stopper. The
some of the power generated on their site to Rob Heap from digester company UTS is golden key would be for the government to
maintain the AD process. The surplus is sold quoted on the ADBA website as saying: “It make it mandatory for large waste producers
through the export meter. Administration is is likely that between 60% and 80% of farm to prove they have a secure, non-landfill
simpler than the Renewables Obligation based plants …will now not be developed”. contract for organic wastes for six years
Certificate (ROC) scheme, especially for The reason for this despair? into the future.
smaller produces it was argued. The AD sector FIT was set at 9p – 11.5p. The total FIT incentive package is not
With a FIT, when the quarterly The FIT as announced is unfortunately only yet complete and does not appear to
electricity bill arrives it contains an a partial solution and it clearly does not have been written with AD in mind. In
electricity bill for any grid power meet the expectations of the whole industry fact, it has the shape of an incentive
used as well as a FIT payment – especially the farm sector that comprises the for households and while the
based on the power generated greater part of the potential for biomethane administration of a registered FIT is
at the ‘Generation Meter’ and production. AD plants characteristically simple, the process of registration
a payment for the electricity operate with a double contract. For larger of existing projects and new ones
exported to the grid at the plants there are gate fees at the front of is not. There is still some confusion
‘Export Meter’. the plant that are being supported by the as to which office will end up with the
The industry realised that escalating landfill tax which is moving ever registration process. Also, there is a
FITs are good for cash flow and closer to £75 a tonne. particularly difficult deadline coming up
a 20-25 year guarantee would For schemes that remove organic matter on the last day of March when existing
underpin loan funding for the from landfills, the FIT will probably work. It has plants will either compulsorily convert
capital cost. In 2009 the been set for 20 years and linked to the retail from ROCs to FITs or may fall
AD industry worked with price index. Other support mechanisms are into a limbo.
the Renewable Energy available for the investor in AD This means the industry is
Association to produce especially currently watching the DECC
an honest and transparent website for signs of biological
assessment of activity.
RWW
what FIT (in
004 UK STATE OF PLAY.indd 44 UK STATE OF PLAY.indd 4 88/3/10 18:10:57/3/10 18:10:57
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