Approaching two years on from the publication of the government’s Anaerobic Digestion Strategy and Action Plan, it is worth reflecting on how the profile of the industry has changed since 2011.
At the time of the Strategy there were just 54 AD plants outside the water sector – the size of the industry has since doubled, with 110 operational plants today. The composition of the industry has remained remarkably unchanged though, with 60% treating food and drink waste in 2011 and 40% treating farm wastes, while the equivalent figures today are 59% and 41%.
The significant growth in the sector is illustrated well by the fact that over this two year period, electrical capacity outside the water sector has increased from 35MW to 88MW and processing capacity increased from 1.05 million tonnes (mt)/annum to 5.1mt/annum. With DECC data from May 2013 showing that there are a further 129 AD plants within the planning system, the rapid rate of growth experienced over the last two years is only likely to accelerate through to 2015.
Financial incentives, particularly the Feed-in-Tariff (FIT) and Renewable Heat Incentive (RHI), have proven crucial in driving this growth since the strategy was published and issues around the incentives are likely to prove pivotal to industry development in the coming years.
Many in the industry are concerned that the government’s FIT degression plans will put the brakes on the pipeline. This would see FIT rates for new applicants reduced by 5%, 10%, or 20% as early as April 2013 if deployment under the scheme in 2013 reaches pre-determined levels. At present it is highly probable that at least a 10% reduction will be triggered next April, with a 20% reduction certainly not out of the question.
Changes to support under the RHI could however have a positive impact on industry growth. The RHI currently supports AD plants which have a thermal capacity up to 200kW and can use the heat generated, but this low cap excludes the majority of plants, harming the financial viability of many projects. From early 2014, however, it is anticipated that this cap will be amended such that plants of all scales which can use the heat generated will be able to receive RHI support.
A supplementary issue for the RHI is that under the degression mechanism which is set to come into force shortly, there is no preliminary accreditation system to allow developers to lock in a tariff rate prior to their project’s completion. While the industry does not have the same concerns over the likelihood of RHI degression as it does for FIT degression, many financiers still perceive the risk of reduced tariff rates as too great to invest in AD projects. Government has however announced their intention to work with industry to develop an appropriate preliminary accreditation model as soon as possible.
Regulatory changes in the form of “Hub and Pod” anaerobic digestion could also help the sector by making the co-digestion of food waste with farm-generated material a much more attractive proposition. At present, if the co-digestion of food and farm wastes occurs wholly on a farm the plant has to meet the Animal by-Products Regulations, creating a significant technical and financial barrier.
Hub & Pod describes where separated food waste is collected from households and depackaged and pasteurised at one centralised site (the ‘hub’) before being sent to one or more farm AD sites (the ‘pods’) for use as a feedstock.
Animal Health has recently published comprehensive guidance on the technical and regulatory requirements for hub and pod anaerobic digestion. The includes separation requirements between the livestock and AD plant, clarification on when approval from Animal Health is needed, details of the controls on transport of material between hub and pod, an outline of how the hub and pod are approved, and details on the sampling requirements.
The Scottish Government is also leading the way in making feedstock available for AD. Under the Scottish Waste Regulations, all businesses will have to present food waste for collection by the end of 2015 while local authorities will also have to complete their roll out of separate food waste collections by 2015. Biodegradable waste will be banned from being sent to landfill by 2020.
There has clearly been great progress since 2011 for Britain’s young AD industry, and the pipeline of projects shows how healthy the sector remains. Subject to urgent action to address concerns around the future financial support for the industry – and supportive waste policy across the whole of the UK – the market prospects remain bright.
Charlotte, Morton, chief exective, Anaerobic Digestion and Biogas Association