Revised biogas tariffs confirmed
9 Dec 2014
The government today confirmed the restructuring of feed-in tariffs paid for biomethane fed into the gas grid, confirming the levels that plant operators will be paid.
Under the new rules announced by the Department of Energy and Climate Change (DECC) today, the existing flat rate of 7.5p per kWh paid through the Renewable Heat Incentive (RHI) will be replaced by a tiered structure that sees support decrease in relation to plant output.
From February 2015 DECC will pay 7.5p for the first 40,000MWh of biogas injected into the grid each year, 4.4p for the next 40,000MWh and 3.4p for any subsequent biomethane injected during 12 months.
“Biomethane is set to be an important contributor to renewable heat under the RHI and I want to ensure the scheme allows the burgeoning biomethane injection to grid market to grow sustainably and offer good value for money to the taxpayer,” said energy minister Amber Rudd.
“Tiering was overwhelmingly popular amongst consultation respondents, particularly a three tier approach. Tiering is less prone to unintended consequences such as gaming, as opposed to the alternative option we consulted on, a banding solution which encourages clustering around band thresholds which could lead to inefficient sizing of plants. Tiering the tariff also means there is no longer a requirement to accurately determine the system capacity of the plant. This is because the meter readings relating to volume of g as injected can be used to determine the ‘tiered’ payments.”
This announcement will reassure developers and investors that they can continue to deliver the biomethane projects they have in planning
ADBA chief executive Charlotte Morton
Reform of the RHI payments is being pushed through by DECC due to concerns that the current 7.5p flat rate risked overcompensating some larger biogas projects with better economies of scale.
However, after the government announced it was reviewing the payments there were fears that the uncertainty could delay the construction of projects. In July former energy minister Greg Barker was forced to reassure the industry in a bid to stop projects from stalling.
The anaerobic digestion (AD) industry, the main sector to be affected by the new rules, welcomed the announcement.
“This announcement will reassure developers and investors that they can continue to deliver the biomethane projects they have in planning,” said Anaerobic Digestion and Bioresources Association chief executive Charlotte Morton.
“These proposals will help put the biomethane RHI support on a more secure footing.”
Subject to parliamentary approval, the regulations will come into force in February and the new tariffs will be protected from further rate cuts until 1 July 2015.
