The anaerobic digestion (AD) industry has urged the Government to reconsider its “uneconomical” subsidy policy for on-farm AD before the end of the year.
There are two capacity triggers for the AD subsidy known as Feed-In Tariffs (FITs) - one for plants that produce more than 500kW and one for below. When capacity is reached within either category it activates a degression, which is a fixed annual percentage reduction in tariffs.
Most farm-scale AD plants are below 250kW and very few have been built, according to the Renewable Energy Association (REA).
But the capacity trigger for plants under 500kW was reached in September (see table below), initiating a 20% tariff reduction from April 2014.
The REA and the Anaerobic Digestion and Biogas Association (ADBA) said that this trigger has been “artificially breached” as a disproportionate amount of the capacity has been filled with plants between 250-500kW.
They said plants with preliminary accreditations, which allow a plant to have a fixed tariff level for a year, currently count towards capacity triggers at the time the plant is registered rather than from the time the plant is built.
This year was the first year that plants have been able to pre-accredit.
ADBA policy manager Matt Hindle told MRW: “This year there has been a particular crunch.”
The REA and ADBA are calling for the Department of Energy and Climate Change (DECC) to review the situation.
Hindle said: “The review would have to take place next year, but we want the Government to announce their intention before Christmas.”
The two associations want to consolidate the capacity trigger so that there is only one for the whole industry. They also want to remove preliminary accreditations from counting towards the trigger.
Hindle said the changes will help avoid similar problems in the future. “Everyone wants a strong, growing AD market in general,” he said.
The two bodies say that the degression could seriously inhibit on-farm AD even though hardly any plants have been built at this stage.
REA head of biogas David Collins told MRW: “We have been working for months, in close co-operation with our members, fellow trade associations and other stakeholders, to present the case to Government as clearly as possible. We are confident that we can secure a positive outcome for this sector of the industry.”
Last week, Roger Williams, MP for Brecon and Radnorshire (Lib Dem) said in Parliament that the problem could affect investment in the technology and he asked if DECC would be rectifying the problem.
Stephen Crabb MP for Preseli Pembrokeshire (Con) replied: “A discussion is taking place with officials and colleagues at DECC. They are in contact with the trade body for the developers of such projects, and I hope a solution will be found soon.”
|Deployment period to date||Number of Installations||Aggregate capacity deployed in period (kW)||% towards next degression point||Comment|
|AD 0-500kW||1 Jan - 31 Oct 2013||26||11,046||123%||Exceeded 20% degression threshold|
|AD >500-5000kW||1 Jan - 31 Oct 2013||14||20,209||53%||Current level in 5% degression band|