AD feed-in tariffs "can be withdrawn"

Witnesses from the AD sector met with the Lords’ Science and Technology Committee on Tuesday to discuss the future of these energy from waste plant in England and Wales.

Richard Barker, chief executive of AD developer Biogen, told the committee that, paticularly for those plants converting food waste to energy, FiTs were no longer neccessary and the government could consider withdrawing them. AD plants with an electricity generating capacity of up to 5MW can currently receive a FiT of between 9p and 15p per kWh.

“I think in the food waste market there is more latitude for the government to step back from supporting the sector financially through tariffs,” said Barker.

A Waste and Resources Action Programme (WRAP) report published earlier this year suggested that the median gate fee reported by local authorities for the treatment of food waste at AD facilities was £41 per tonne, compared to up to £111 per tonne charged by incinerator energy from waste (EfW) plants.

Barker said that removal of FiTs would drive up gate fees at AD plants, but given their low starting point they would likely remain price competitive with other forms of waste disposal.

Far more challenging to the growth of the AD sector than the issue of subsidies like FiTs, said Barker, were current practices and regulations around both supply of feedstock and the quality of AD plants’ outputs.

“I think the government could do a lot more in terms of sending the right signals, creating the right certainty [and] creating the right sytem view, encouraging local authorities to collect from commercial instiutions and provide that food waste into the market.”

Because of the downward trend on the gate-fees, it actually makes more sense to go towards smaller scale plants

EHV Engineering director Dr Prab Mistry

One of the key issues which affects the AD sector is being able to acquire organic waste, as much of it can be tied up in long-term local authority contracts, such as those created by 25-year Private Finance Initiative (PFI) deals.

“Local authorities will not be able to retrospectively take food waste out of these contracts,” said Barker.

“Indeed, local authorities may have given guarantees on minimum tonnages to their PFI contractors that they are struggling to meet under these contracts.”

Another problem is that often waste can arrive at AD plants mixed with non-organic materials and therefore has to go through a sorting process.

Barker said that issues surrounding source segregated collections could be a deterrent as the costs could outweigh the benefits.

“New rubbish trucks need to be invested in together with separate bins for food waste,” he said.

“This initial capital expenditure can be a deterrent for local authorities – especially if the existing trucks have useful life left.”

EHV Engineering director Dr Prab Mistry told the committee that the combined effect of these extra costs for waste sorting and the low gate fee is that large AD plants are facing high capital costs. As a result, he said, current regulations are driving the market towards small and micro facilities, such as AD plants on farms.

“What’s happening is that large-scale plants are driven by large capital costs which are required to manage the more heterogeneous waste that comes in,” said Mistry.

“Because of the downward trend on the gate-fees, it actually makes more sense to go towards smaller scale plants, because if you look at the system, the smaller the plant - the smaller the area it has to pick waste from, which creates a kind of synergy.”

If we want to get a vibrant AD community putting gas into the grid we need to solve [these] issues

Biogen CEO Richard Barker

A further problem raised by the witnesses centred on the issue of only being able to use AD for electricity generation.

They suggested that a more effective use of the biogas currently being burned by plants to generate electricity would be if it was fed into the gas grid. For this to be successful, however, it would require less strict regulations around the quality of gas fed into the grid, as is the case in Germany.

“The way Germany treats biogas going into the gas grid is completely different to the UK,” said Barker.

“Every small AD plant [in the UK] would have to add propane to odorise locally and have a high quality of spec of gas, whereas in Germany they have a more relaxed approach which means the cost of cleaning up the gas is cheaper.

“If we want to get a vibrant AD community putting gas into the grid we need to solve [these] issues.”