Minister offers assurance on biogas tariffs
10 Jul 2014
The government is seeking to avoid the stalling of biogas projects under development by offering assurances over potential cuts to feed-in tariffs for biomethane fed directly into the grid.
Energy minister Greg Barker has written to trade bodies the Anaerobic Digestion and Biogas Association (ADBA) and the Renewable Energy Association (REA) regarding concerns that proposed cuts to the current 7.5p per kWh tariff could delay projects already under development.
In a consultation that ended last month, the government said that the current 7.5p flat rate risked overcompensating some larger biogas projects with better economies of scale. It proposed replacing this with a tiered system where plants are paid a tariff at a higher level of between 7.1p and 9.9p per kWh for the first 15,000 MWh of biomethane injected into the grid, and lower rate ranging between zero and 2.1p thereafter.
We need to ensure that government support for biomethane has viable tariffs on a long-term basis
ADBA chief executive Charlotte Morton
According to the consultation’s proposals, these changes would come into effect once changes to the Renewable Heat Incentive (RHI) legislation had passed through Parliament, most likely in December.
However, both ADBA and REA wrote to Barker claiming the reduced tariff levels set out in this proposal were based on gate fees (the fees charged by biogas generators for dealing with green waste) that were unrealistically high, and that the lack of a firm timeline over when changes would take place was making developers nervous.
“The consultation is having a significant impact on a number of projects that are under construction,” said the trade bodies’ joint letter to Barker last month.
“At present, biomethane projects can only be registered for the RHI once they are injecting gas into the grid. This means there is a high risk of the RHI tariff changing before the project is completed. REA estimates around £200m of capex is being spent in 2014 on biomethane projects, representing a significant amount of baseload renewable energy, around 10 of which will not be completed until Q4 2014.”
Today Barker responded to industry concerns by confirming that no changes to the 7.5p rate would occur before 1 December, and that the future rates set out in the consultation were merely “illustrative tariff scenarios” and that “final decisions on tariff levels will be taken in light of the consultation responses”.
ADBA chief executive Charlotte Morton said: “The RHI consultation is a key issue for the future of industry: we need to ensure that government support for biomethane has viable tariffs on a long-term basis. It is good that the Minister has acknowledged that they must consider the strong feedback they have received from industry on issues such as gate fees and capital costs, and acted to give some reassurance to existing developers. We will continue to work hard with our members, DECC and other bodies to provide the evidence the RHI team needs - and make the case that current medium-sized projects which will commission after 1 December will also be protected from reductions.”
