A rapid government consultation on revising biomethane tariffs is causing concern among AD project developers.
Renewable energy and agricultural trade associations jointly agree there is a case for reducing support for the very largest sizes of gas-upgrading AD plants, which would otherwise be over-compensated, consuming too much of the RHI budget and potentially damaging the reputation of the entire AD sector.
However, the four-week consultation published on 30th May implies cuts to the biomethane tariff across the scale of most of the projects currently deployed or in development, whether based upon waste or agricultural feedstocks (up to 5MW thermal capacity or 500m3/hour of biomethane is fairly typical, equivalent to 2MW electric output).
DECC recognises the “important contribution biomethane has to meeting renewables and climate change targets” – but their financial modelling (based on a small waste plant receiving substantial gate fees of £41/tonne) suggests that all projects over 200m3/hour of biomethane are presently receiving too high a tariff. If the consultation proposals are implemented as drafted, the industry fears that biogas will only ever be used for electricity generation rather than grid injection. NFU members and AD developers are already reporting nervous reactions from their financial backers, but DECC officials have emphasised the consultation scenarios are only illustrative and no firm decisions have yet been reached.
Time to respond is limited – until 27th June only. The NFU will feed members’ concerns into a joint industry response with REA and ADBA. Government officials have already met directly with trade associations, and further open “surgery” meetings with consultees will take place in London on 12th and 20th June. Call DECC on 0300 068 8014/8069 if you would like to attend (further meetings may be arranged if there is sufficient demand).