The industry awaits news in the government’s forthcoming Budget on 8 July of future funding for the Renewable Heat Incentive (RHI). Ex energy minister and ADBA advisor, Chris Huhne, warned of policy changes ahead while reassuring delegates of the government’s stated commitment to renewables in general and to its climate change obligations.
Speaking of the “dispatch ability” of AD, Huhne painted an economically bright future for the market, particularly by increasing the gas-to-Grid yield and through growing use of biogas by bus and commercial vehicles.
According to CEO Charlotte Morton of ADBA, with a continuing surge in bio methane-to-Grid projects, she said the industry was ready to ‘step on the gas’. 60-100 new plants are likely to be commissioned in 2015, following the huge growth in 2014.
ADBA has recently launched their report namely ‘Anaerobic Digestion Market Report 2015’, Charlotte Morton commented:
“Our report shows how far the industry has come, and how much potential we still have to realise. This baseline information will support our policy and regulatory work, and we hope it will also provide members, funders and anyone else interested in the AD market with the data they need.”This report shows that 2014 was a record-breaker for the UK Anaerobic Industry; in 2014 the sector saw its biggest growth to date, partly due to the rush to commission plants to receive higher Feed-in Tariffs and Renewable Heat Incentive tariffs, with 102 plants being commissioned. Growth in 2015 is looking a little slower, due primarily to lower tariffs, restricted feedstock availability and policy uncertainty (e.g. tariff reviews and sustainability criteria uncertainty). However, we still expect 2015 to be the second biggest year for the industry, with growth in terms of new plants commissioned being greater than all years except 2014.
It is apparent that the bio methane market is booming, and therefore continuing to develop, despite the demand for bio methane, there is a high degree of uncertainty about the future for gas to grid developers.
The Renewable Heat Incentive remains crucial to new project development, and the industry cannot expect any certainty about future budgets until the Chancellor’s spending review in the autumn.
The exceptional demand from transport markets, especially for use in Heavy Goods Vehicles, demonstrates that the future for bio methane is not just for heat. However transport policy is not providing sufficient direct support. Before the election, the DfT was actively considering what support would be required to ensure the supply of bio methane for the Heavy Goods Vehicle market, and we and others will be pushing them to continue that work.
With a forthcoming consultation on the Feed-in Tariff, future plans on electricity plants are also highly uncertain. The Department of Energy and Climate Change (DECC) will be considering tariff levels based on capital and operational cost evidence, and the new government has also been clear about the need to cut carbon in the most cost effective way.
Anaerobic Digestion has a particular role to play as a dispatch able technology offering a low-carbon option to balance intermittent renewables – which should be taken into account in comparing the value for money offered by different renewables.
However, with the scheme as a whole already overspending its budget, it is going to be very challenging to make the case for significant changes.
ADBA is therefore also gathering data and considering arguments for how the non-energy benefits of anaerobic digestion, for example slurry management on farms and greenhouse gas savings for onsite AD in general, could better be recognised. The potential here is huge as they calculate that the industry could save 4% of the UK’s total greenhouse gas emissions.
Tony Baker, Compliance & Safety Manager at GPT Waste added:
“GPT see AD as the most effective method of processing food waste (now that we cannot feed pigs with it!).”
“The problem we have in the C & I sector is that there does not seem to be an effective logistics network in place to actually collect from food waste producers and transport it to the AD facilities.
Biomethane produced as a result of AD can be used as a fuel for transport, so government support for the sector is crucial to ensure that food waste collections (where available!) are carbon efficient.”
Looking to the future of the industry, investment in new research and development within the industry and in the academic community is vital and has already been delivering significant returns. With limited scope for capital cost reduction, process improvements and the development of higher value bio products offer the greatest opportunities to reduce the impact of digressing incentives and improve returns to investors. They are also important for increasing the overall potential of the industry to contribute to government targets, for example by making more feedstocks available for digestion, improving gas yield, or increasing the value of the organic fraction.