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Changes to biogas-to-grid subsidies postponed

Proposed changes to subsidies to biogas-to-grid production have been postponed, the Department for Energy and Climate Change (DECC) has said in response to concerns raised by renewable energy industry bodies and investors.

DECC has conducted a consultation on amending the Renewable Heat Incentive (RHI), which includes tariffs to biomethane produced via anaerobic digestion and injected into the gas grid.

It wanted to introduce different levels of subsidies according to the size of the plants to avoid “overcompensating” larger ones.

DECC has now announced that any change to the scheme will come into effect after 1 December, instead of in the autumn as previously indicated. It has also clarified that the current 7.5p/kWh tariff will apply to all plants registered before the new RHI scheme comes into force.

This was in response to the feedback during the four-week consultation, which closed on 27 June.

DECC said that the industry had “consistently raised” three points:

  • gate fees for new waste contracts are not at the levels assumed in the consultation document
  • gate fees are not bankable for every project
  • feedstock costs in general for biomethane to grid installations vary widely

It assured stakeholders that the subsidies levels presented in the consultation were just “illustrative tariff scenarios” and that it will take their concerns into account.

“Although we cannot pre-empt our eventual conclusions, it is clear that we must consider [industry] feedback, underpinned by robust evidence contributions, in our considerations over tariff levels and structures,” it said.

DECC will provide details of the new proposed tariffs as the review progresses.

Renewable energy trade bodies welcomed the announcement. They had expressed strong concerns that the original proposals could halt the development of plants already in construction.

Investors had also argued the measures could undermine confidence in the sector.

Energy and climate change minister Greg Barker personally wrote to Charlotte Morton, chief executive at the Anaerobic Digestion and Biogas Association and Nina Skorupska, chief executive at the Renewable Energy Association, to ensure them DECC was mindful of their concerns.

“It is good that the minister has acknowledged that they must consider the strong feedback they have received from industry on issues such as gate fees and capital costs, and acted to give some reassurance to existing developers,” said Morton.

Skorupska said DECC’s clarifications “took the sting” out of the consultation.

“It’s important to keep the lines of communication open between Government and industry,” she added. “In fairness DECC’s stakeholder engagement since publishing the consultation has been very good.”

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