The Official Information Portal on Anaerobic Digestion

Incentives

There are a number of financial support mechanisms that apply to AD, as described below.

Feed-in Tariffs (FITs)

Since April 2010, Feed-in Tariffs (FITs) have provided a guaranteed price for a fixed period to small-scale electricity generators in England, Scotland and Wales. FITs are intended to encourage the provision of small-scale low carbon electricity. Only AD facilities with less than 5MW capacity, completed after 15 July 2009, are eligible for FITs. The Government offers preliminary accreditation for AD, with a guarantee that the project will be eligible for the tariff payable at the time of accreditation. Each tariff runs for 20 years.

There are two elements to the scheme; the generation tariff for every kWh of electricity generated, and the export tariff for every kWh of electricity exported to the national transmission network. The current generation tariffs for AD are as follows (from 01 April 2015):

  • Facilities with a total installed capacity of 250kWe or less          = 10.13 p/kWh
  • Facilities with a total installed capacity >250kWe to 500kWe      = 9.36 p/kWh
  • Facilities with a total installed capacity >500 kWe                       = 8.68 p/kWh

The export tariff is 4.85 p/kWh; a generator can claim either this or the market value payable by their electricity company.

Tariffs are Retail Price Index (RPI) linked; see the Ofgem website for a table of annual RPI linked increases to FITs. From April 2014, a flexible degression mechanism was introduced to control costs; this is set at a baseline of 5% per year but can accelerate (to 20%) or decelerate (to 0%) based on annual accredited and pre-accredited capacity.

Renewable installations using “generating equipment” that has previously received support under the Renewables Obligation or Feed-in Tariff schemes are not entitled to receive support through the FIT scheme. Installations receiving grant support for “generating equipment” are also not entitled to support through the FIT Scheme.

Renewables Obligation (RO)

The Renewables Obligation (RO) is the main support scheme for large-scale (>5MW) renewable electricity projects in the UK. A Renewables Obligation Certificate (ROC) is a green certificate issued to an accredited generator for eligible renewable electricity generated within the United Kingdom and supplied to customers within the United Kingdom by a licensed electricity supplier.

Anaerobic digestion is among the technologies that receive additional support in the form of multiple ROCs. In England, Scotland and Wales an anaerobic digester could receive 2 ROCs/MWh until April 2015, reducing to 1.9 ROCs/MWh for 2015/16 and 1.8 ROCs/MWh in 2016/17. The value of ROCs varies - an indication of values can be found here.

Generators are accredited by The Office of Gas and Electricity Markets (OFGEM). All information including application forms and guidance notes can be found on the OFGEM website.

In 2014, the Contracts for Difference (CfD) scheme was introduced for generators of 5MWe and above in England, Scotland and Wales as part of the Electricity Market Reform; new generators have the option to claim the RO or the CfD. After 2017 the RO will close to all new generators. For more information on the CfD visit the BEIS webpage on the Electricity Market Reform.

From October 2015, Sustainability reporting for solid and gaseous biomass plants is mandatory.

Northern Ireland Renewables Obligation

The Northern Ireland Renewables Obligation (NIRO) is the main support scheme for renewable electricity projects in the NI. Anaerobic digestion is among the technologies that receive additional support in the form of multiple ROCs. The current ROCs available for AD in Northern Ireland are as follows:

  • Facilities with a capacity less than or equal to 500kWe     = 4 ROCs per MWh
  • Facilities with a capacity of 500kWe to 5MWe                    = 3 ROCs per MWh
  • Facilities with a capacity > 5MWe                                        = 2 ROCs per MWh

From April 2016 the banding levels for anaerobic digestion above 5MWe will be reduced to 1.9 ROCs per MWh and from April 2017 this will be reduced further to 1.8 ROCs per MWh. For more information please visit the DETINI website.

To get accreditation for the NIRO by OFGEM, an AD plant needs to pass OFGEM's test of reasonableness and use an approved electricity meter. All information including application forms and guidance notes can be found on the OFGEM website.

Renewable Heat Incentive (RHI)

The Renewable Heat Incentive (RHI) provides a fixed income (per kWh) to generators of renewable heat, and producers of renewable biogas and biomethane. AD facilities completed after 15 July 2009 are eligible for the RHI. The lifetime of the tariff is 20 years.

The current RHI for AD is as follows (from 01 April 2015):

Small biogas combustion (less than 200 kWth) = 7.5 p/kWh
Medium biogas combustion (>200kWth but less than 600kWth) = 5.9 p/kWh
Large biogas combustion (600kWth and above) = 2.2 p/kWh
Biomethane injection (all scales) = 7.5 p/kWh

 

Useful information on how to apply for accreditation can be found on the Ofgem website.

In April 2013 DECC implemented a transparent budget management mechanism in the non-domestic RHI scheme, called degression. Data is published on a quarterly basis and degression can occur quarterly, dependent on forecast expenditure over the next 12 months and growth over the previous period.

From October 2015, Sustainability reporting for solid and gaseous biomass plants is mandatory.

The Northern Ireland RHI (NIRHI) policy and tariff rates are set by the Department of Enterprise, Trade and Investment (DETI). Ofgem administer the scheme on behalf of DETI. Tariffs are currently only available for biogas combustion below 200kWth and biomethane injection at all scales - the current rate is 3.3p/kWh (from April 2015), see further details on the DETI website.

 Levy Exemption Certificates

Combined heat and power (CHP) generated from eligible renewable resources is exempt from the Climate Change Levy (CCL). CHP Levy Exemption Certificates (LECs) are the primary evidence that suppliers use to demonstrate to HM Revenue & Customs the amount of electricity supplied from certified 'Good Quality' CHP sources to non-domestic customers in the UK. For more information on CCL CHP exemption, see the relevant pages of OFGEM's website. For information on getting certification for quality CHP, see the CHP Quality Assurance programme.

Renewable Energy Guarantees of Origin (REGOs)

The purpose of the REGO scheme is to promote and increase the contribution of renewable energy sources to electricity production across the EU, providing a common platform to facilitate the trade of renewable electricity between member states. The primary use of REGOs in Great Britain and Northern Ireland is for Fuel Mix Disclosure (FMD). FMD requires licensed electricity suppliers to disclose to their customers, and potential customers, the mix of fuels (coal, gas, nuclear, renewable and other) used to generate the electricity supplied annually.

One REGO Certificate is issued for each megawatt hour (MWh) of eligible renewable output generated (with effect from 5 December 2010). For more information on REGO Scheme see the relevant pages of OFGEM’s website.

Renewable Transport Fuel Obligation

The Renewable Transport Fuel Obligation (RTFO) requires suppliers of fossil fuels to ensure that a specified percentage of the road fuels they supply in the UK is made up of renewable fuels. Biomethane is eligible for Renewable Transport Fuel Certificates provided that it is dutiable and produced wholly from biomass. More information can be found from the Department for Transport, who administer the RTFO.

Green Gas Trading

Two green gas trading schemes have been established to enable tracking of green gas through the national gas distribution network.

  • The Green Gas Certification Scheme (GGCS) is a simple and reliable way to eliminate double-counting of registered green gas. It provides certainty for consumers who buy the gas, confidence in the green gas sector and an incentive for gas producers to inject green gas into the grid instead of using it to generate electricity.
  • The Biomethane Certification Scheme (BMCS) is an independent certification scheme run by Green Gas Trading Limited. Green Gas Trading was set up to provide both a credible process for certifying biomethane and a trading platform to facilitate the trading of certificates.