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DECC finalises changes to biogas-to-grid tariffs

The Department of Energy and Climate Change (DECC) has confirmed it will change subsidies for plants producing biomethane for the gas grid, a move that was welcomed by renewable energy trade bodies.

After launching a consultation on changes to the renewable heat incentive scheme in May, DECC has announced it will now amend the current single tariff using a three-tiered mechanism.

This means every year the department will pay a higher tariff for up to 40,000MWh of biomethane injected into the grid with lower tariffs beyond that: the second tier will be for the next 40,000MWh with the final tariff set at 80,000MWh and above (see table below).

The department said the levels were set based on a feedstock mix of 70% food waste and 30% energy crop following responses from the industry. Consultation respondents had pointed out that energy crops were widely used in the industry to hedge the risk inherent in short-term waste contracts.

DECC also used a lower gate fee assumption, £15 per tonne, to calculate the tariff thresholds. Respondents had raised concerns that the level presented for consultation was unrealistic.

“This has been a good example of DECC working closely with industry towards a common goal,” said Charlotte Morton, chief executive at the Anaerobic Digestion and Bioresources Association (ADBA). “These proposals will help put the biomethane RHI support on a more secure footing”.

The Renewable Energy Association welcomed the confirmation of the amended tariff levels, saying: “The original document could have led to far more drastic impacts on almost all projects.”

DECC said that after the regulations have been approved in Parliament, the new tariffs will remain fixed until 1 July 2015.

According to data from ADBA, the number of biomethane-to-grid plants has doubled each year since 2011. There are now ten of those facilities in the UK, generating nearly 1TWh.

TierTariff
up to 40,000MWh7.5p/kWh
40-80,000MWh4.4p/kWh
80,000MWh and over3.4p/kWh

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