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We recently held our ninth Finance Forum at BDO in London, with over thirty attendees from a range of different funding providers in attendance.

The morning started with a comprehensive update on the AD market from our Chief Executive, Charlotte Morton, who highlighted the sector's impressive growth since 2010, and particularly the surge in new biomethane projects during 2014. Looking to the future, however, there is a high level of uncertainty around market projections for 2016 onwards, with a number of policy issues which need to be resolved.

Our Strategic Advisor, Chris Huhne, set the scene to discuss those issues, looking at the wider economic and political context for the incoming government. Although the economy is improving – and ministerial appointments suggest a positive attitude to renewable energy – central government spending is likely to remain severely constrained. He therefore set out the value-for-money case for AD, looking in particular at the financial benefit of dispatchability.

Matt Hindle, ADBA's Head of Policy, then led a discussion on the upcoming consultations and policy changes we expect from the new government. Delegates were particularly keen to explore sustainability criteria, which will be implemented for RHI plants from October. DECC is also likely to consider sustainability for electricity plants in the FIT review, which could follow a similar approach to the

RO. The overall future of the RHI, and the possibility of pre-accrediting RHI tariffs, were unsurprisingly identified as key issues for the market.

With a maturing market for operational plants, the meeting discussed valuing AD assets, led by a presentation from Fisher German. A market is also developing for the sale of sites with planning permission and a grid connection – in one recent case a 2 MW site was sold for £500,000 – and renting plants. Although agricultural plants are now producing some good performance figures, operational standards were still identified as a key concern for funders, with some noting that the risk of future problems and failures exists even where a plant is running well.

The Green Investment Bank's Dominic Noel-Johnson provided an update on the GIB’s involvement in the AD market. The bank has now invested in six AD projects, and produced a second report on the market in March. Despite feedstock constraints, the bank still sees the opportunity for new projects, particularly in Northern Ireland. Their minimum investment is around £1m through funds, or £10-15m directly.

In open discussion, the Finance Forum noted that banks are becoming more comfortable with AD investments, especially where these are linked to the overall viability of a farming business. The group felt that KPIs for operational projects need further development, recognising their complexity compared to other renewables. 6 AD & BIORESOURCES NEWS | JUNE 2015

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