picture credit: Lienhard Schulz

The Department of Energy and Climate Change (DECC) will not consult on amending the Feed-in Tariff (FiT) scheme for small-scale anaerobic digestion (AD) plants, despite assurances to the contrary, it has been revealed.

The current FiT system has two capacity triggers: one for plants that produce more than 500 kilowatts (kW) of electricity; and one for ‘small-scale’ plants that produce less than 500kW. The triggers were designed to ‘prevent an unsustainable boom in the market’ by reducing FiTs once a certain level of capacity has come online.

However, the AD industry had called for the system to be reviewed as preliminary accreditations for FiTs count towards capacity triggers at the time of registration, rather than the time the plant comes online.

Current system makes AD ‘uneconomical for farmers’

The Renewable Energy Association (REA) warned that this is ‘artificially breaching the sub-500kW capacity trigger and causing a 20 per cent tariff reduction in April 2014’, thus making AD ‘uneconomical for farmers even though hardly any on-farm plants have been built’.

As such, Energy Minster Greg Barker wrote to members of the industry in November 2013, stating that the department would consult on the new measures, including the tariff review, in January, to ensure that the small-scale AD sector is not ‘unfairly disadvantaged’ (by the anticipated ‘degression’ of FiTs in April 2014).

He added that the consultation would ‘have the aim of closing the current loopholes and providing a long-term, stable investment framework for small-scale AD, as well as the sector as a whole.’

He concluded: ‘It is essential that we maintain a robust and stable FiTs scheme, so any potential amendments will require careful work to avoid unintended consequences.’

No consultation ‘at this time’

However, despite these assurances, members of the industry reportedly received a letter from DECC this week, which outlined that due to an ‘unexpected number of pre-accreditation applications’, the decision has been taken to not consult on amending the FiT scheme ‘at this time’.

The letter outlines that in 2013, over 100 AD projects in total (of which around 40 were said to be projects of less than 250kW) applied for pre-accreditation, thus affecting ‘cost controls’.

Options to change the extension rule for AD were also assessed but it was concluded that the changes that could be made over a short timescale would not ‘mitigate any immediate effects of degression’.

Instead, DECC has said it will consider any changes to the FiTs scheme, including for AD, as part of a wider review in 2015.

News is ‘deeply disappointing’

Members of the AD industry have voiced ‘bitter disappointment’ at the news, with REA Head of Policy Paul Thompson, saying: “We have worked hard with industry colleagues and DECC officials on proposals to fix the FiT for small-and mid-scale AD, so it is extremely frustrating that this has not been done. The government has kicked this issue into the long grass, leaving several projects and companies in the sector at extreme risk.

“Small-scale AD will be hit the hardest. Much of this takes place on farms, turning farm wastes and residues into self-supplied green energy and fertiliser, strengthening rural businesses, creating jobs and reducing emissions.”

He added that the REA will “continue to state the case to government for AD at all scales” and work to secure a ‘ viable’ solution as soon as possible.

Charlotte Morton, Chief Executive of the Anaerobic Digestion and Biogas Association (ADBA), added: “It is deeply disappointing that DECC have not been able to follow through on their commitment to ‘consult on measures, including a tariff review, in January [2014]’, and this decision appears contrary to the government’s stated support for small-scale AD on farms in particular…

“The window to save small AD is getting smaller but is not yet closed, as there are a number of plants already in construction... If ministers are serious about keeping small-scale AD alive, realising sustainable rural growth and delivering the recommendations of the Ecosystem Markets Task Force and the Agri-Tech Strategy, they will recognise that a stable FiT regime is central to the industry’s growth.”

Read more about the proposed changes to the FiT scheme regarding AD.