Time is running out-the end of UK farm AD as we know it.....?
UPDATE: 28/11/13 - Industry welcomes small scale FIT review by Greg Barker. This is a huge step forward and a very positive move for both farmers and UK Climate change targets. Background to the review is detailed below:
After months of talks between industry and government, DECC have decided that they are able to do nothing about a year-end announcement of an Anaerobic Digestion (AD) Feed-In Tariff degression (reduction) of 20% for the under 500kWe sector. This will have a disproportionate effect on British companies and British jobs, as many of the British AD companies concentrate at this end of the scale. It will also mean that the majority of UK farmers will not be able to access the most effective GHG reduction and pollution mitigation agri-technology available to them.
This tariff reduction will favour the larger, primarily crop-based digesters built by the well-established European companies who have had years of consistent government support, but whose governments are now beginning to realise (and incentivise) the myriad benefits of slurry/manure-based AD at scales less than 100kWe, far more appropriate to the size of the average UK farm; for example, a 500 cow dairy farm can produce 50kWe using slurry. Unlike Defra, who recently launched a loan fund to encourage farm AD of manures and slurries, DECC is effectively discouraging the inclusion of these feedstocks into AD and jeopardising investor confidence in the sector.
A 20% degression would be understandable if 9MW of effective plant had actually been built; however, the degression is triggered on those plants which have got pre-accreditation, ie the plant has planning permission and grid connection approval, but has not been built. Records show that, in the sector’s very short history, only 15% of these pre-accredited plants are built.
The relatively tiny capacity of 9MW for the sub-500kWe (see table below) has been further eroded by the Extensions Rule, where large plants apply for the first 500kWe at the higher tariff (which has lower capacity), subsequently installing further capacity at the >500kWe tariff.
Tariff rates are currently 15.16p/kWh for AD plants less than or equal to 250kWe, 14.07p/kWh for plants > 250 & less than or equal to 500kWe and 9.24p/kWe for plants over 500kWe.
Table 1 - Degression triggers (click table to enlarge)
Currently, only around 20% of UK farm digesters are over 500kWe and more than half of the digesters in the UK are farm digesters, so it is apparent that the capacity bands do not reflect reality.
The UK AD industry has agreed that a crisis can be averted if DECC carries out the following relatively minor changes to policy:
Consolidated Degression: Merging the 2 FIT bands (for under and above 500kW) to create a single overall degression trigger. Consolidating total AD capacity in a single budget will create a simpler and less wasteful FIT mechanism.
Change Pre-accreditation: Combining consolidation with allocation of capacity to the year of actual deployment will not increase net FIT expenditure. Pre- accredited capacity must be counted in the year the installation is deployed (i.e. when payments will be made) not the year of accreditation. The current situation means that plants (including larger ones) that are not yet producing biogas or receiving FIT payments count towards the degression for under 500kW. If capacity is allocated when a plant is ready to begin producing biogas, DECC’s FIT expenditure will be more in line with deployment. But pre-accreditation must be retained to give certainty to investors.
Revert to the old ‘extensions rule’: The current FIT rules allow the opportunity for “gaming” (increasing the cost to the taxpayer) as they encourage developers building larger plants to split their CHP capacity. Hence, a 1MWe AD site can accredit a 499 kWe CHP unit at 14.02p per kW, then immediately install a further CHP unit at 9.24p, at added cost to the FIT budget. Reverting to the old extensions rule that required a delay of a year before plants were extended – would provide better value for money.
The greenhouse gas (GHG) emissions from the storage, handling and spreading of the 90 million tonnes of slurry in the UK are considerable and include methane, oxides of nitrogen, ammonia and carbon dioxide, not to mention issues surrounding potential pollution from nitrates and phosphates in ground water and water courses, from both these and from the use of fossil fuel fertilisers. Anaerobic digesters can not only produce renewable energy (in the form of heat, vehicle fuel or electricity), but they produce an excellent fertiliser, reducing fossil fuel reliance and considerably reducing GHG emissions.
The agricultural sector is one of the most significant producers of GHG emissions. Whilst much public focus has been on food waste, the environmental impact of the hugely larger volumes of manures and slurries is much greater and more diffuse. Without consistent policy which allows for sustained growth in the farm AD sector, the UK will continue to struggle to meet its climate change commitments and farmers will be unable to de-carbonise using this agri-technology, recognised worldwide as being the best way to turn the ‘slurry problem’ into a solution.
If you agree that this unfair degression disadvantages British jobs in farming and manufacturing, you can help by writing to your MP, to DECC or to Greg Barker. Or, if you are members of the NFU, NNFCC, RASE or CLA, the REA or ADBA, please register your support with them, as they have been working very hard to support their members in this area.
















