Anaerobic Digestion and Biogas in the UK
August 24, 2012
Here’s an overview of the renewable incentives available to anaerobic digestion (AD) and biogas plants in the UK.
Feed-in Tariffs (FITs)
The Feed-in Tariff FIT is designed to encourage the provision of small-scale low carbon electricity and provides a guaranteed index linked price for a fixed period to small-scale electricity producers.
The current tariffs for AD are as follows:
- Facilities of less than or equal to 250kW – 14.7 p/kWh.
- Facilities of between 250 and 500kW – 13.6 p/kWh.
- Facilities of greater than 500kW – 9 p/kWh.
NOTE: The Feed-in Tariff is not available if the plant has received any other state aid such as a WRAP grant to help with the capital coat of the plant.
Go to the DECC Feed-in Tariffs page for more info.
Renewables Obligation (RO) and Renewables Obligation Certificate ( ROC)
The Renewable 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 UK and supplied to customers also within the UK by a licensed electricity supplier.
Anaerobic digestion is among the technologies that receive additional support in the form of multiple ROCs and is eligible for 2 ROCs/ MWh.
The value of ROC’s fluctuates but £45/MWh is a reasonable figure to factor into financial models. This also give parity with the FIT at £90/MWh (9p/kWh).
AD operators have the choice of ROC’s or FIT’s and a decision over which scheme to opt for can be taken when the plant is commissioned.
Renewable Heat Incentive (RHI)
The RHI provides a fixed income for the generation of renewable heat, from biogas and bio-methane (as well as other Renewables). AD plants completed after 15 July 2009 are eligible for the RHI. The lifetime of the tariff is 20 years and is indexed linked. The current rates for AD are:
- Biogas combustion up to 200 kW scale receives 7.1 p/kWh.
- Bio-methane injection to the grid receives 7.1 p/kWh.
- Heat from CHP up to 200kW – 7.1 p/kWh. Note – digester heat is not eligible for the RHI so must be deducted from the 200kW but other uses within the facility such as pasteurisation are eligible.
See the DECC pages on the renewable heat incentive for more information.
The Climate Change Levy and Levy Exemption Certificates (LECs)
The Climate Change Levy (CCL) is a tax on energy used by non-domestic consumers. Suppliers add the charge to the bills of commercial users with the money generated used by government to fund energy saving measures.
Electricity produced from designated renewable sources is exempt from the CCL and is entitled to Levy Exemption Certificates (LECs) which can be sold along with the power.
LECs are issued monthly in electronic form to accredited generating stations for each megawatt hour (MWh) of electricity generated. Before it can receive LECs, a generating station must apply to Ofgem for accredited status.
The maximum value if an LEC’s is set by Climate Change Levy (CCL) which currently is set at £4.85/MWh.
Find out more from Ofgem about LECs.
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. Bio-methane is eligible for Renewable Transport Fuel Certificates provided that it is dutiable and produced wholly from biomass.
One Renewable Transport Fuel Certificate (RTFC) is issued per litre of biofuel, or kilogram of bio-methane, supplied.
There is no guaranteed value to RTFCs. Rather, the value is set entirely by the market. From April 2010, the 20p duty incentive that has previously been available to biofuel ended (except for biodiesel from used cooking oil which continues until April 2012). At that point, the potential income stream represented by the awarding of RTFCs will become the main Government support mechanism for biofuels in the UK.
More information can be found from the Department for Transport RTFO page.
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