Financial Incentives for anaerobic digestion

Transcription

1 Financial Incentives for anaerobic digestion David Collins Head of Biogas GROWING THE RENEWABLE ENERGY ECONOMY

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4 REA Biogas Scotland based in Scotland full back-up from REA policy staff workshops for PAS110/SEPA/ADQP and PAS100 digestate, compost and full range of waste technologies regular members meetings mail-out every two weeks Contact Jenny Grant

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7 National Renewable Energy Action Plan for UK (electricity) Biogas Installation Capacity April 2012 MWe Binding Targets for 2020/1 MWe NREAP Targets for Biogas 1300 (Est) 1100 Landfill industry estimates Water Treatment Shortfall 716 Purpose Built AD FiTs Purpose Built AD - RO In Defra Strategy - Future Potential (Section 85) the forecast potential for AD deployment for electricity could reach between 3 5 TWh by 2020 UK Government is currently actively opposing EU 2030 Binding Targets

8 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb Cumulative capacity of AD in UK - MWe Feed in Tariff Renewable Obligation

9 AD Industry Snapshot Installed capacity end 2013 New capacity Jan to March this year Approved FiTs Pre-accreditations Potential in pipeline - Biomethane to Grid 3 Plants Biomethane Plants now under construction Biomethane Injection to Grid CHP 129MWe 10MWe 9.5MWe 100+ CHP Plants 6MWth 16 (15 in 2015?) 2013: 4.1 million m3 Estimated 2014: 52 million m3

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11 Crouchland Location: West Sussex Type: Cattle Farm Fed 57 Plants

12 Westwood, Northants Capacity: 1700 kwe Feedstock: Food waste Input: 45,000 tonnes 52 - Food Feedstock Plants

13 Industrial 24 plants Capacity: 400 kwe Feedstock: Outgrade Potatoes Location: Lincoln Commissioned: 2009 Input: 10,000 tonnes p.a.

14 Rennie & Sons Capacity: 460 kwe Feedstock:Pig slurry, abattoir waste, fish waste, cow slurry, glycerol & animal fats Location: Gask Farm,Turriff, Input: 15,000 tonnes per annum

15 Poundbury Biomethane to Grid 3 Plants UK s first commercial project Membrane CO₂ removal plant Gas injected into 2 bar grid 500 kwh CHP The development is a joint venture between Duchy of Cornwall and some of its tenants Achieving 98% availability Flow of biogas m 3 /hr First gas to grid October 2012

16 FiTs Annual Degression Thresholds Deployment & pre-accreditations capacity in each band is totaled for calendar year New tariffs announced January 31 st New tariffs in force from 1 st April 2014 Three tariffs but two capacity bands Protection for small AD? Toxic mix plus extension gaming

17 40 35 Jan - Dec Banded Degression - MWe 10% degression Headroom for >500kWe = 18.19MWe Over 500kWe % degression Sub 500kWe 5 0 (Sub 250kWe portion)

18 Sub 500kWe - Jan Nov MWe Total Capacity Pre-Accredited 42% Deployed 24% Sub 250 Deployed 6% Genuine Sub 500kWe Deployment was 3.8MWe Linked to Extensions 28%

19 Estimated tariff degression 6 monthly & total year kwe Pre-1 st April st April 2014 (20% degression) 1 st October 2014 (10% degression) 1 st April 2015 (10% degression) Sub No degression 10% degression 0% degression >

20 FiTs Actions on degression in 2013 Requests to Minister for change from early th September Minister agreed to review AD FiTs industry originally divided - so worked with larger & smaller companies to achieve consensus The final proposal was: o Consolidate the annual capacity o Remove pre-accreditation counting from total o Retain pre-accreditation of tariffs o Change the extension rule Minister confirms review on 27 th November aim to launch review before degression announcement at end January

21 FiTs Actions on degression in rd February - Ofgem publishes pre-accreditation figures 19 th February - Senior DECC official sends - withdraws review o unexpected number of pre-accreditation applications in 2013 & Impact on cost controls o discuss how to support sector through to 2015 o Defra/WRAP support for small on farm Industry responds with a demand for a Ministerial meeting

22 Pre- & Full Accreditations by Dec MWe 153 plants Average 183kWe Average 499kWe Sub 250kWe kWe 500KWe -5MWe Capacity MWe Plant Numbers Average 1.9MWe 32

23 Ministerial Round Table Set for 2 nd June Greg Barker (DECC) and Owen Patterson (Defra) chairing Short term measures to mitigate degression o Enterprise Investment Scheme/Venture Capital Trusts o RHI no digester heat deductions o counting commissioned plant only o Extend the pre-accreditaton period Long term measures including FiTs review in 2015 o consolidated capacity o Extended pre-accreditation period o Revised tariffs sub 100kWe

24 400,000 Pre 1st April 249kWe food AD at tariff 15.57p kwh - no RHI 345, , , , ,000 Gate Fees 28% Electricity Sales 19% FiT Income 53% Net Income 156,000 Gate Fees 106,000 Electricity Sales FiT Income 200, , ,000 50,000 0

25 284, ,000 Post 1st April 249kWe food AD tariff 12.46p kwh - no RHI 241, , , , ,000 Gate Fees 31% FiT Income 48% 106, ,000 50,000 Electricit y Sales 21% Net Income Gate Fees Electricity Sales FiT Income 0

26 433,000 Pre-accredited - 249kWe food AD tariff 15.57pkWh with RHI 302, , , , , , ,000 Heat Sales 6% Gate Fees 24% FiT Income 46% Net Income 156,000 38,000 50,000 Gate Fees Heat Sales RHI Income 106,000 Electricity Sales FiT Income 200, , ,000 50,000 0 RHI Income 8% Electricity Sales 16%

27 conversion of December applications to actual build in 2014? if approval from Ofgem from 6 weeks to 4 months - therefore reduced time to build? how many projects will not be delivered within the 12 months? finance, capacity of industry to build, weather if projects run out of time, currently no mechanism for the capacity to be deducted What may actually be built? o Estimated 75% sub 250 o 50% o 80% - over 500kWe Optimistic?

28 Contracts for difference (CfDs) for AD CfDs now available Renewable generators can choose between RO or CfDs from 2014 to RO closes to new entrants Final strike prices (support levels) were published in December 2013 Minimum capacity 5MWe o AD will receive 150/MWh until 2016/17 o Step down to 140/MWh until 2018/ until 2019 support levels set by Government (CfD Strike Prices ) From 2019 onwards support levels set by auction, starting in stages (technology specific, biomass first) Mid-2020s : technology-neutral auctions

29 Renewable Heat Incentive 4 th December Government decision paper RHI Order has been approved by Parliament imminent announcement of implementation this week? Tariffs for heat o Sub 200kWth 7.5p (unchanged) o kWth 5.9p (new) o 600kWth and over 2.2p (new) Eligibility o 4 th December for >200kWth o sub-200kw this remains 15 July For new installations meaning?

30 RHI Cost Controls Pre-Registration for biomethane to grid No tariff guarantee only applies to other criteria

31 DECC has announced a review of RHI biomethane injection tariffs Perceived risk of overcompensation for large biomethane to grid plants only one tariff at present 7.5pkW have taken industry input on all scales of plant Capex, Opex different components/technologies feedstocks/build times summer 2014 full consultation grandfathering except for sustainability

32 New proposed State Aid Rules FiTs scheme remains until Sub 500 kwe not affected RO should not be affected as is closing anyway 500 1MWe "premium in addition to the market price" without a need for competitive allocation. Existing FiT may be ok under this definition, dependent on UK interpretation. Over 1MW Aid must be granted by cost-competitive technology neutral allocation. UK could use "get out clauses Will UK decide to "gold plate" or ring fence certain technologies this is the area in which discussion with DECC would be fruitful to protect AD Heat Total levelised costs of producing the energy (LCOE) should not exceed the market price of the energy produced (meaning that a normal return on capital is expected) Aid continues only until the plant is fully depreciated

33 14 Development of AD in Scotland by feedstock cumulative capacity in MWe Distillery Food Farm Crop

34 Operating & under construction plants by capacity in Scotland Farm 2% Crop 7% Food 36% Distillery 55%

35 planning permissions granted by capacity in Scotland Farm 4% Crop 3% On Site 2% Distillery 36% Food 55%

36 major themes for AD Capacity cost controls & degression thresholds financial incentive stability FiTs, RO, RHI, CfDs wastes versus purpose grown crops Defra promoting on farm manure/slurry model DECC lowest cost energy production PAS110 / ADQP / SEPA - review of PAS110 standards, training, links/learning - other countries Regulation permitting Industrial Emissions Directive o BREFs, reference documents for Best Available Techniques (BAT) o REACH chemicals incidents safety equipment specifications

37 How to get an AD industry going? Before x 25kWe plant Plants 2 X 250kWe 3 X 500 kwe 1 X 1MWe Feedstocks Slurries/Manures/Gr ass/crop residues ON ROCs!

38 Could Scotland go for NI RO model? FiT is not devolved changes are for DECC in London RO in Scotland is devolved to the Scottish government Needs state aids EC approval. NIRO - pending. Current NIROs are: o 4 ROCs (up to 500kW) o 3 ROCs (>500kW 5MW) o 2 (above 5MW) RO works to periods of a year, starting on 1 April ROCs in 2015/16, 1.8 in 2016/17 ends for new projects in 2017 then back to reformed FiTs?

39 David Collins next Biogas Meeting 5 th June