Energy
A number of government incentives exist which support the utilisation of the biogas produced via anaerobic digestion.
Feed-in Tariffs (FITs)
The Feed-in Tariff (FIT) scheme was introduced by the UK Government on 1st April 2010 to promote widespread uptake of small-scale renewable and low carbon electricity generation technologies. The scheme provides a guaranteed price to small scale electricity producers. AD facilities of less than 5 MW that were installed after 15 July 2009 are eligible for the scheme.
FITs consist of two tariffs; a Generation Tariff and an Export tariff. The generation tariff is a fixed rate that the generator will receive for every kilowatt of renewable energy generated regardless of where the energy is used. For 2011/12 the energy generation tariffs relevant for AD are:
• <250 kW 14.0 pence/kWh
• 250-500 kW 13.0 pence/kWh
• >500 kW 9.4 pence/kWh
Generators who send the surplus energy back to the electricity grid will receive the export tariff (3.1p/kWh in 2011/12) in addition to the generation tariff. The proposed lifetime of the generation and export tariff is 20 years from its introduction in 2010.
All installations that are eligible will need to apply to Ofgem for accreditation via their Renewable and CHP Register. Upon completion of this process, applicants will need to contact a supplier with the accreditation details. www.ofgem.gov.uk/Sustainability/Environment/RCHPreg.
Further details relating to Feed In Tariffs are available at the Department of Climate Change (DECC) website http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspx
Renewables Obligation (RO)
The Renewables Obligation (RO) is the main support scheme for large-scale (>5 MW) renewable electricity projects in the UK. It places an obligation on UK electricity suppliers to source an increasing proportion of their electricity from renewable sources.
A Renewables Obligation Certificate (ROC) is a green certificate issued to a UK accredited generator of renewable electricity and supplied within the UK by a licensed electricity supplier. Anaerobic digestion is among the technologies that receive additional support in the form of multiple ROCs; currently 2 ROCs are issued for each megawatt hour (MWh) of eligible electrical output (produced from feedstocks other than sewage sludge). Generators can sell these certificates plus any exported energy to an energy supplier. Where suppliers do not have sufficient ROCs to meet their obligations, they must pay an equivalent amount into a fund, the proceeds of which are paid back on a pro-rated basis to those suppliers that have presented ROCs. Alternatively, ROCs can be bought and sold in the market place avoiding the wait for payments via the recycle fund. Average prices achieved at auction for ROCs in October 2009 and 2010 were £45.52 and £46.92, respectively. It is the intention of the government that suppliers will be subject to a renewables obligation until 31 March 2037 although the value of support provided to specific technologies is likely to be regularly revised.
Further information and details for accreditation for the RO can be found on the Ofgem website http://www.ofgem.gov.uk/Sustainability/Environment/RenewablObl/Pages/RenewablObl.aspx
Transfer between FIT and Renewables Obligation (RO)
As of 1 April 2010, micro-generators (capacity of ≤50 kW) are not eligible for support under the RO, instead they are covered by FITs. Small generators (capacity 50 kW - 5 MW) who had applied for accreditation under the RO before 15 July 2009 will remain in the RO and will not be eligible to transfer to FITs.
All small generators who elected to receive support through FITs, whether they transferred from the RO or joined FITs directly will not subsequently be able to receive support through the RO. The one exception to this will be where a generator ceases to be eligible for FITs having added additional capacity to exceed the 5 MW maximum. In these circumstances the generator would be eligible to transfer to the RO for the remainder of their duration of support. Any generating stations whose electricity is sold under a NFFO arrangement will not be eligible to join FITs, but will remain eligible to receive support through the RO.
Levy Exemption Certificates
Combined heat and power (CHP) generated from eligible renewable resources is exempt from the climate change levy (CCL). Levy exemption certificates (LECs) are the primary evidence that suppliers use to demonstrate to HMRC the amount of electricity supplied from good quality CHP sources to non domestic customers in the UK. For 2011/12 the Climate Change Levy for electricity is 0.485 pence/kWh.
Ofgem is responsible for administering the CCL CHP provisions in respect of electricity produced or supplied in Great Britain. Ofgem responsibilities include certifying electricity as qualifying power output
(QPO) electricity to eligible plants and issuing LECs. Further details on exemptions from the CCL can be found on Ofgems website http://www.ofgem.gov.uk/Sustainability/Environment/cclrenexem/Pages/CCLRenewablesExemption.aspx
Information on getting certification for quality CHP can be found at http://www.chpqa.com
Renewable Transport Fuel Obligation
The Renewable Transport Fuel Obligation (RTFO) requires suppliers of fossil fuels to ensure that a specified percentage of the road fuels they supply in the UK is made up of renewable fuels. Biofuel suppliers are advised that in order to qualify for Renewable Transport Fuel Certificates (RTFCs), the fuel that they supply needs to meet the criteria set out in the Hydrocarbon Oils Duty Act 1979. These are the same criteria as HMRC apply when determining whether a road transport fuel qualifies for the reduced duty rate available for biofuels.
Biomethane is eligible for RTFCs provided that it is dutiable and produced wholly from biomass. By January 2011 RTFC prices had increased to 24.1 pence / kg biomethane.
Further information and registration details for the RTFO can be found at the Renewables Fuel Agency website (http://renewablefuelsagency.gov.uk) and the Department for Transport website http://www.dft.gov.uk/topics/sustainable/biofuels/rtfo/
The Department for Transport is currently developing and implementing modifications to the RTFO in order to accommodate the requirements of the European Renewable Energy Directive (RED) and the Fuel Quality Directive (FQD). As a result, it is likely that fuels generated from wastes, residues, non food cellulosic and ligno cellulosic materials (including biomethane generated from these materials) will receive double RTFCs.
Renewable Heat Incentive (RHI)
Details of the Renewable Heat Incentive (RHI) were announced in March 2011. The aim of the RHI is to increase the amount of heating (and cooling) undertaken using renewable energy. The Incentives relevant to anaerobic digestion are:
Biomethane Injection (All Scales) 6.5 pence/kWh
Biogas Combustion (<200 kWth) 6.5 pence/kWh
Heat generated (from biogas combustion) must be for an eligible use (as determined by Ofgem). Heat returned to the digestion process is not eligible for RHI.
Whilst the UK government is investigating potential mechanisms for excluding the large scale use of energy crops from RHI, the Government does recognise that small scale utilisation of crops or crop residues may be of benefit to farm based systems.
Further information relating to RHI can be found at the DECC website http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/incentive/incentive.aspx