The decision on the Renewable Heat Incentive (RHI), which will be taken by the Treasury and the Department for Energy and Climate Change (DECC) as part of the Government’s Comprehensive Spending Review next month, is critical about the future of the anaerobic digestion (AD) industry, according to a report.
Realising the potential for anaerobic digestion: the 2010 challenges, produced by the Anaerobic Digestion and Biogas Association (ADBA), said the RHI must be funded at a higher level than the Feed-In Tariff (FIT), brought in under the Labour Government, otherwise the UK is at risk of not meeting its renewable energy and climate change targets.
The coalition manifesto committed to a “huge increase in energy from waste through AD” but ADBA believes this will not happen unless the Government commits to setting the RHI at a certain level. The reason given is that the FIT has had a limited effect so far on the expansion of AD because it was set too low.
The report stated: “The current banding for financial return from electricity generation is greater than that for biomethane under the proposed RHI level, and therefore developers have no incentive to invest in conversion to biomethane.”
The proposal outlined by ADBA is to introduce two bands for biomethane injection under the RHI: one for injection below 1MW thermal input to the grid set at 9p/kWh and the other for injection above 1MW thermal input set at 6p/kWh. ADBA also proposes an increase of 25% on the bands to encourage the rapid uptake of biomethane and development of the technology.
ADBA chairman Lord Redesdale said: “The AD industry can provide a much-needed boost to the UK economy, generating 30TWh of energy worth £2bn annually at today’s prices, creating an estimated 35,000 new jobs, many of which are in rural communities.
“The prime minister promised that his Government would be the ‘greenest ever’. The time has come for them to deliver.”
The Chancellor is due to make a decision on support for the RHI in a statement on 20 October, and ADBA is hoping that he will take notice of its suggestions before making a final decision.
ADBA board director Dorian Harrison said: “The AD industry has been held back for far too long. We have got the expertise, the knowledge and the interest from potential customers. If the Government does not set the right incentive now, we will lose out to our European neighbours.”