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The mechanics of renewables

Recently, AEA completed a study for the Welsh Assembly Government on the performance of a number of different Energy-from-Waste facility configurations for residual waste treatment after the achievement of target recycling levels.  The findings showed that energy recovery options which make use of heat consistently outperform alternative scenarios such as the production of electricity alone. Despite the reduction in electrical power, where the heat produced offsets fossil fuel use, the increased benefit of heat recovery more than compensates for the sacrifice in electrical output. This study has fed into ongoing policy discussions within Wales about the setting of thermal efficiency thresholds for new treatment facilities.

A question which naturally follows from this study, and one which is of interest to a broader UK audience is whether or not the appropriate market incentives are currently in place to deliver the identified greenhouse  benefits from EfW incorporating combined heat and power (CHP).  Most EfW schemes in the UK are designed for energy production only, reflecting the historical difficulties of finding end uses for the heat and the costs incurred in retrofitting district heating into the existing urban / industrial fabric.

Until recently, the key incentive for renewable energy schemes has been the Renewables Obligation Order (2009) and the associated renewables obligation certificates (ROCs).  Applying these to the waste market, only CHP schemes which achieve a Good Quality CHP index of greater than 100 are eligible to receive this benefit.  Unfortunately, examples of where this is being realised in the UK are few and far between. Notwithstanding this, because the scheme is designed to promote the up-take of renewable electricity and cleaner technologies, conventional technologies such as incineration are only eligible to receive one ROC per MWh of electricity produced from renewable (non fossil) fuels as opposed to more “advanced” technologies (gasification or AD) which benefit from two ROCs.

One aspect of the scheme which is subject to some uncertainty is that of deemed biomass content of the feedstock.  While it is understood that no official position has been put forward, Ofgem has indicated that fuels incorporating fossil and non-fossil components such as waste will be deemed at 50% biomass to minimise testing requirements.  After 2012/13, the deemed biomass content is expected to drop to 35%, reflecting the uptake of treatment systems for source segregated organics.

Perhaps more significantly, the Renewable Heat Incentive (RHI) Scheme was released for consultation on 1 February 2010 and is designed to help the UK meet its renewable energy target of 15% by 2020. The scheme, expected to take effect from April 2011, is extremely positive news for potential sources of large scale renewable heat including EfW schemes.  At this stage, it is understood that renewable energy schemes which generate both heat and electricity to market will be eligible for both benefits, representing a significant boost to EfW solutions incorporating CHP. Perhaps this will help shape the type of facilities that are proposed in the coming year, facilities that are sited close to heat sources and that operate CHP?

Looking at the projected energy income levels however, it becomes clear that these market instruments alone may not present sufficient incentive for the development of conventional EfW schemes incorporating CHP if no income is attached to the heat produced, and this remains the biggest uncertainty for the sector – what value will the heat be sold at? On the flip side, an overly optimistic outlook reveals that there is the potential to “over egg” the interaction between renewable incentives which in turn could draw funding away from much needed heat distribution infrastructure.

This means further adjustment of the market instruments for renewable energy will probably be required to promote the most beneficial greenhouse outcome from EfW schemes, and almost certainly require an increased focus on creating distribution networks to enable heat to be distributed more effectively to end users.  While it remains to be seen what impact these incentives will have on the waste sector, the lessons learnt during the early years of these schemes will be critical in ensuring that the right support is in place to develop the renewable energy systems to help the UK meet its long-term energy and waste treatment targets. The findings of the current consultation should prove interesting reading, offering an insight to how the energy and waste sectors see this mechanism playing out.

Euston Ling is Waste Technologies Knowledge Leader and Dr Adam Read is Practice Lead for AEA’s Resource Efficiency and Waste Management Group 

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