Plant Life: Tariffs and Incentives - Why It's Time to Act on Biogas

Posted by Clare Burns on 02-Jul-2015 09:00:00

Act now to take advantage of financial incentives that encourage the installation of biogas plant to generate your own renewable energy.

Tariffs_and_Incentives_-_Why_its_Time_to_Act_on_Biogas

In energy-intensive manufacturing, such as the food and drink industry, energy and facility managers are always looking for compelling ways to reduce energy costs and their carbon footprint.

Importantly, now really is the time to act if you want to receive optimal financial benefits.

That’s because the UK government has introduced time-limited financial incentives to encourage the use of low-carbon renewable energy generation, as well as non-fossil fuel for road transport. In other words, if you are looking to optimise income from these incentives then time is of the essence.

How to install biogas plant for renewable energy from anaerobic digestion

A revenue-boosting method of generating your own renewable energy is via anaerobic digestion. This is the controlled breakdown of organic matter in a closed digester vessel. The air supply is restricted to stimulate anaerobic decomposition (unlike composting, which takes place in the presence of air). This process of decomposition, accelerated in the presence of bacteria, producing a methane-rich biogas which can then be turned into heat and electricity via a Combined Heat and Power (CHP) unit. Biogas can also be upgraded to biomethane which can be injected into the natural gas grid or used as transport fuel.

Energy reduction targets by 2020

The UK government has made a commitment to meet challenging EU energy reduction targets:

1.

EU Renewable Energy

  • 15% of UK energy from renewable sources

  • 10% of energy used in transport from renewable sources

 2.

EU Landfill Directive

  • 35% reduction in biodegradable waste sent to landfill

 3.

Food and Drink Federation

The UK government is aiming for an 80% reduction in greenhouse gas emissions by 2050. The Energy Savings Opportunity Scheme (ESOS)  also requires large businesses to identify energy reduction measures under mandatory energy efficiency audits.

The benefits from financial incentives

Feed-in Tariffs (FiTs), the Renewable Heat Incentive (RHI) and Renewable Obligation Certificates (ROCs) complement renewable energy savings with valuable revenue streams. The FiT and RHI tariffs present a fixed income for the life of the installation, based on the rate at time of construction. However, these tariffs are subject to a biannual degression which can affect new projects.

For electrical generation between 50kW and 5MW, select the best income from either FiTs or ROCs.

Feed-in Tariffs (FiTs) – guaranteed income for renewable electricity over 20 years.

Anaerobic digestion total installed capacity

Income (p/kWh)

<250kW

10.13

250kW – 500kW

9.36

>500kW

8.68

Electricity exported to the grid can receive a minimum 4.85p/kWh – but it’s negotiable with the electricity supplier.

Important: farmers should act as early as possible to qualify for the best offer. That is because the degression process will reduce the financial benefits according to the rate of take up of the incentive by early adopters.

Renewable Obligation Certificates (ROCs) – tradeable certificates for renewable electricity generation (rates vary with market forces). An anaerobic digester is eligible for 1.9 ROCs/MWh – currently 9.6p/kWh.

Renewable Heat Incentive (RHI) – fixed income for renewable heat for 20 years.

Biogas combustion thermal output capacity

Income (p/kWh)

<200kW

7.5

200kW – 600kW

5.9

>600kW

2.2

Biomethane injection to grid (BtG)

7.5

Road Transport Fuel Certificates (RTFCs) – tradeable certificates for biomethane fuel. 1.9 RTFCs per kg fuel supplied – currently 7.5p/kg.

Time to act

‘Locking in’ to these tariffs to negate degression makes it essential to act in a timely manner – it may take a year to plan and install biogas plant. Pre-accreditation ‘lock in’ is possible, but this will depend on successful planning approval and an agreed electricity connection (which can take three to four months).

According to Deloitte, landfill tax increased by £2.60 per tonne in April 2015, raising the cost for those businesses sending their process food waste to landfill. Also, from 1 April 2016 the standard and lower rates of landfill tax will increase in line with the Retail Price Index, rounded to the nearest 5 pence.

Longevity of the schemes may also be subject to changing government policies unless you’re locked in!

Takeaways:

  • Using low-carbon and renewable energy can provide additional financial income.
  • Tariffs (FiTs, ROCs and RHI) complement energy savings with guaranteed revenue streams.
  • Time is of the essence if you want to receive optimal financial benefits.

Discover more about how to install biogas plant – don’t miss out on available tariffs and incentives: download our free eGuide: An Introduction to Biogas for the Energy Manager

An Introduction to Biogas for the Energy Manager

Topics: Anaerobic Digestion / Biogas, Food and Drink Manufacturing, Farming

Clare Burns

Clare Burns is a technical marketer with many years’ experience in the energy arena, as well as in fashion, telecoms and education. Fluent in 3 languages, Clare has worked across Europe. She currently works for ENER-G, a UK manufacturer of carbon reducing, energy efficient products exporting its cogeneration technology across the globe.