Anaerobic Digestion (AD) facility
29th March 2011
Companies planning to develop anaerobic digestion (AD) facilities and claim Feed-in Tariffs will soon no longer qualify for investment through Venture Capital Trusts or the Enterprise Investment Scheme.
The Feed-in Tariff (FiTs) system, which was introduced in April 2010, was conceived as a means of helping stimulate investment in small-scale low carbon energy generation facilities by subsidising the energy they generate.
- AD plants are set to benefit from a higher-than-expected return under the FiT scheme
However, the government unveiled plans to review the working of the system in February 2011, in order to assess the higher-than-expected uptake of photovoltaic solar panels.
As part of the review, the government also examined what it deemed a “disappointing” uptake in on-farm anaerobic digestion (AD) technologies to date and intended to amend this by offering a greater subsidy.
And, it last week (March 18) revealed that it had discovered that the current subsidy level for anaerobic digestion is perceived as currently “not high enough” to make such schemes worthwhile.
It has therefore been amended to mean that the proposed rate of 12.1p per kWh for AD installations up to 500kW, which was set to come into effect from April12011, has been replaced by a higher rate of 13p per kWh for AD up to 250kW and 14p per kWh for AD installations with total installed capacity of between 250kW and 500kW.
“Ambitious”
Announcing the outcome of the review, climate change minister Greg Barker said: “I’m committed to the ambitious roll-out of micro-generation technologies as part of the coalition government’s green vision of a much more decentralised energy economy.
“These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FiTs scheme was never designed to be a profit generator for big business and financiers.”
The proposed changes to the FiTs levels are subject to a seven week consultation, which will also be used as an evidence base for a comprehensive review of the FiTs system.
The government said that it does not intended to act retrospectively and any changes to generation tariffs implemented as a result of the review will only affect into the FiTs scheme. Installations which are already accredited for FiTs will not be affected, it added.
Government
Anaerobic digestion has emerged as a particular area of attention in the coalition government’s waste and renewable energy policies, with the Coalition Agreement stating an intention to foster a “huge uptake” in use of the treatment technology.
And, the government published an AD Action Plan in December 2010, which outlined its proposals for increasing uptake of the technology (see letsrecycle.com story http://www.letsrecycle.com/news/latest-news/compost/defra-publishes-plan-to-increase-ad-uptake).
The Department of Energy and Climate Change said it would be undertaking work with Defra following the publication of the review outcomes over implementing controls on energy crops being used as feedstock for anaerobic digestion.
Within the document, the government also announced that a joint government and industry strategy for AD is set to be published in May 2011.
Response
Despite the change in FiTs levels, the Anaerobic Digestion and Biogas Association (ADBA), which represents companies and organisations involved in AD, questioned the impact that the revised tariffs would actually have.
Charlotte Morton, chief executive of ADBA, said: “ADBA welcomes the consultation on FiT levels, but is deeply concerned by the proposed tariff levels and the Government’s language.
“The proposed levels will do virtually nothing to change the current situation, which DECC themselves have said is failing to promote anaerobic digestion in the way they expected and the coalition promised.”