Government Incentives for AD
There are several policies that can benefit AD:
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Feed-in Tariffs -
Renewable Heat Incentive -
Renewables Obligation and accreditation for Renewables Obligation Certificates -
Levy Exemption Certificates -
Renewable Transport Fuel Obligation
Feed-in Tariffs (FITs)
Since April 2010, Feed-in Tariffs (FITs) have provided a guaranteed price for a fixed period to small-scale electricity producers. This is intended to encourage the provision of small-scale low carbon electricity. AD facilities of less than 5MW completed after 15 July 2009 are eligible for the FIT. The lifetime of the tariff is 20 years. The current tariffs for AD are as follows:
- Facilities of less than or equal to 250kWe are entitiled to 14.7 p/kWh.
- Facilities of between 250 and 500kWe are entitled to 13.7 p/kWh.
- Facilities of between 500kWe and 5MWe are entitled to 9.9 p/kWh.
See the DECC pages on the Feed-in Tariffs for more information.
In October 2011, the Government announced a comprehensive review of FiTs. The consultation closed on 26th April 2012. Full details of the Government's comprehensive review of FiTs are available from DECC's small-scale low-carbon electricity page. The proposed changes are as follows:
- To freeze tariffs at their current levels for AD up to 500kWe (they will however increase with inflation from 1st April 2012).
- Reducing the tariff for greater than 500kWe to 9.0p/kWh from October 2012; equivalent to 2ROCs.
- Applying a minimum degression in tariff rates of 5% per year from April 2014 with a capacity trigger which would accelerate degression; for AD this is 56MW for April 2014 and 75MW for April 2015.
- Preliminary accreditation for AD, with a guarantee that the project will be eligible for the tariff payable at the time of accreditation.
- Monitoring use of purpose grown crops; accepting they are important for co-digestion, but not ruling out limiting future FITs eligibility to plants treating waste, if voluntary measures to limit their use prove ineffective.
Subject to Parliamentary and State aid clearance, the revised tariffs will be introduced from July 2012.
Renewable Heat Incentive (RHI)
Powers in the Energy Act 2008 allowed the setting up of a Renewable Heat Incentive (RHI). The 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:
- Biogas combustion up to 200 kW scale receives 7.1 p/kWh.
- Biomethane injection to the grid receives 7.1 p/kWh.
See the DECC pages on renewable heat for more information.
Renewables Obligation
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. Anaerobic digestion can receive 2 ROCs/MWh.
To get accreditation for the RO 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.
Will my AD plant get ROCs or FIT? How will the transition be managed?
AD plant installed after 15 July 2009:
- Eligible installations will benefits from FIT payments
- Schemes up to 50kW will automatically transfer to FITs at a fixed rate (11.5p/kWh- index linked) even if claiming ROCs currently
- Schemes between 50kW and 5MW will get a one off choice between support under ROCs or FITs.
AD plant installed before 15 July 2009:
- If below 50kW and claiming ROCs will automatically transfer to FITs
- If not claiming ROCs then not eligible for FITs
- If selling electricity under a Non-Fossil Fuel Obligation (NFFO) arrangement then not eligible for FITs, but if over 50kW will remain eligible for ROCs.
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 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. Biogas is eligible for Renewable Transport Fuel Certificates provided that it is dutiable and produced wholly from biomass. The guaranteed buy-out + duty incentive was 30p in 2010/11.
More information can be found from the Department for Transport, who administer the RTFO.
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