ANAEROBIC DIGESTION ENER-G
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How to gain finance for your on-farm AD project
For the right project, the overall return on investment on anaerobic digestion can be excellent, says Ian Gadsby, Managing Director of ENER-G Natural Power
N
ew EU CAP rules for 2015, requiring greater crop diversification, are good news for farmers when it comes to
ensuring bankability of anaerobic digestion (AD) schemes. The ‘greening rules’ linked to payment of the new Basic Payment Scheme require some farms with more than 30 hectares (75 acres) of arable land to grow three different crops. By breaking crops with cereals, farmers can create a stable, long-term feedstock for an AD scheme, and attract higher value for that crop than would be traditionally achieved through the commodity markets.
Feeding the AD is critical When we examine the viability of investing in AD projects without a reliable, minimum 10-year feedstock supply, the project will not stand up. Another key factor is the availability of a ready outlet for the digestate. We also seek opportunities to capture and utilise the heat output from AD, therefore qualifying
for payments through the Renewable Heat Incentive (RHI). In an era of Feed in Tariff digression and the uncertainty that surrounds this, it is increasingly important for the more marginal projects to make up any shortfall via the RHI, and the returns are highly attractive.
Accessing finance For the right project, with heat and digestate demand and a robust feedstock pipeline, the overall return on investment on AD can be excellent. But accessing finance can be tricky, as evidenced by the high numbers of pre- accredited projects that are failing to launch. As the AD market matures, it is essential that technology providers adjust their pricing to reflect the proven market and the government tariffs available. With ENER-G’s experience of developing a total 170 MW of biogas generation projects, we are continually finding innovative new ways and economies of scale to drive costs down.
De-risking AD investment Our wide AD experience and proven technologies gives us the confidence to provide a fully or partially funded AD model. This flexible AD ENER-G finance model is attractive to landowners and farming businesses. We offer the de-risking of projects
22 REview Renewable Energy View 2015
for farmers that are not fully comfortable with investing, owning and operating their own AD facility. The flexibility of our model means we also welcome shared investment for those who want to split the benefits of the scheme directly, as well as offering to fully finance for those who want to host and supply the facility with feedstock without making any capital outlay. Among those farms partnering with ENER-G, organic cheese maker Lye Cross Farm has agreed to a 15-year feedstock contract. This gives ENER-G the security to invest in the design, installation and operation of the complete AD facility. This project will create renewable energy from lactose permeate and plant washings. The farm will take on responsibility for re- using the digestate – assisted by ENER-G, which is installing a system to separate solids and liquids – creating a valuable organic fertiliser from land spreading the solids. The liquid fraction will be recycled via an aeration system, with this treated water used to hydrate the farm’s dairy herd.
FOR FURTHER INFORMATION: Tel: 0161 745 7450; email:
scott.tamplin@energ.co.uk www.energ.co.uk/biogas
www.r-e-a.net
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