Matt Hindle, ADBA
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This document discusses the current state of anaerobic digestion (AD) on UK farms and proposals to incentivize more on-farm AD through changes to the UK Feed-in Tariff (FIT) program. The panel discusses how current FIT rates are too low to support 8% project returns for small-scale AD plants. While a tight budget may prevent across-the-board FIT increases, new mechanisms for pre-accreditation and a separate small-scale AD tariff are proposed to better support on-farm projects and recognize wider environmental benefits. The panel predicts FIT reforms and any new tariffs would likely be announced in early 2016 following government consultation later in 2015.
Matt Hindle, ADBA
- 1. SHOULD THERE BE AD ON EVERY FARM? #UKADBiogas @adbioresources CHAIR: MICHAEL CHESSHIRE, EVERGREEN GAS PANEL: MATT HINDLE, ADBA NICKY CONWAY, FORUM FOR THE FUTURE DAVID KANER, ADVANCED ANAEROBICS DR STEPHEN TEMPLE, JF TEMPLE & SON ROGER ABBOTT, ENERGY NOW
- 2. Should there be AD on every farm?
- 3. Incentivising on farm AD Current deployment 2015 FIT consultation ADBA data Taking part What happens next?
- 5. So, what’s the problem 0 2 4 6 8 10 12 14 16 18 30 September 2011 to 31 March 2014 1 April 2014 to 30 September 2014 1 October 2014 to 31 March 2015 1 April 2015 to 31 March 2016 1 October 2015 to 31 March 2016 1 April 2016 to ?? Feed-in Tariff rate (p/kWh, sub 250kW AD)
- 6. FIT 2015 data Banding (kW) Current tariff (p/kWh) From 1 October 2015 (p/kWh) <250 10.13 9.12 >250-500 9.36 8.42
- 7. 2015 FIT consultation: context • Tariff review required by state aid approval • Scope of review is a decision for ministers • New notification to State Aid should not be required • Constraints imposed by the Levy Control Framework remain • Other technologies have similar asks e.g. on pre-accreditation • Consultation now unlikely before summer recess Pre-accreditation Proposals • Offer mechanism to deal with delays in approval/build outside developers’ control • Realign degression triggers and bands • Break direct link between pre-accredited capacity and degression
- 8. ADBA data: small scale tariff £0.00 £0.05 £0.10 £0.15 £0.20 £0.25 £0.30 £0.35 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 £/kWhe kWe Draft FITs required for 8% project IRR (25 June 2015). Excludes sub-40 kWe plants. FITs required for 8% project IRR FITs from 1 April 2015 FITs from 1 April 2015 FITs from 1 April 2015 Power (FITs required for 8% project IRR)
- 9. ADBA data: VfM case £- £50 £100 £150 £200 £250 £300 £350 Sub-100 kWe AD tariff Wind 15-100 kWe from 1 April 2015 Solar 50-100 kWe Middle Rate from 1 April 2015 Hydro 15-100 kWe from 1 April 2015 Draft cost of CO2 mitigation £/ MWh £/ tonne co2
- 10. Taking part • Parsons Brinckerhoff data collection now closed... • ... but DECC have not yet signed off data, so we don’t know exactly what it says • Our data collection is continuing – see website for latest http://adbioresources.org/news/decc-feed-in-tariff-review-cost-data
- 11. What happens next? • Consultation now unlikely to take place before summer recess, but we may have more indication from DECC on likely dates by then • Possible timings: • Consultation launched in September/October, to close c. December • Government response in the New Year • Earliest date for new tariffs and structures would be April 2016
- 12. Crystal ball... • Cost data exercise shows tariffs at all scales are too low... • ... but tight LCF and cost reductions in other technologies means across the board increases unlikely • Changes to pre-accreditation mechanism across all technologies likely... • ... but DECC/Treasury will want to retain strong ‘cost control’ • Gap between tariffs and costs for smaller scale AD particularly clear • New small scale tariff plausible • Opens discussion for other measures to recognise wider benefits • Clear story on future cost reduction over time would help
- 13. SHOULD THERE BE AD ON EVERY FARM? #UKADBiogas @adbioresources CHAIR: MICHAEL CHESSHIRE, EVERGREEN GAS PANEL: MATT HINDLE, ADBA NICKY CONWAY, FORUM FOR THE FUTURE DAVID KANER, ADVANCED ANAEROBICS DR STEPHEN TEMPLE, JF TEMPLE & SON ROGER ABBOTT, ENERGY NOW