FIT Consultation on AD & Micro CHP

Following on from the recent Feed-in-Tariff (FIT) scheme changes and Renewable Heat Incentive (RHI) consultation, the anticipated consultation on the support for Anaerobic Digestion (AD) and Micro Combined Heat and Power (mCHP) under the FIT scheme was announced yesterday. The deadline for consultation responses is 7 July 2016.

The proposed changes could be introduced on 1 January 2017 and the main points to consider from the consultation are:

  • Tariffs – a removal of all tariffs for AD above 500 kW. Schemes below 500 kW will maintain the current degression rate trajectory of 37 per cent reduction from the current tariff by 1 January 2017. Micro CHP tariff rates are to be retained at the same rate as previously with an annual 1.6 MW deployment cap.
  • Pre-accreditation – if you are already in the queue you may still be subject to the new tariffs from 1 January 2017 depending on certain circumstances – see the full release below for details.
  • Additional requirements for new AD schemes using non-waste feed-stocks.

Read the full consultation release here.

Following on from the FIT review and RHI consultation, the anticipated consultation on the support for Anaerobic Digestion (AD) and Micro Combined Heat and Power (mCHP) under the FIT has been announced. The deadline for responses is the 7 July 2016.

Tariffs and degression
The AD generation tariff for schemes larger than 500 kW is proposed to be removed. DECC believes that the returns from this size of project are currently too high and could, ‘achieve a 9.1 per cent rate of return without support from the generation tariff’.

The rates for schemes less than 500 kW will fall in line with the established degression system (10 per cent reduction if the quarterly cap is breached). Given that the queue of project applications currently stands at 18.7 MW and the quarterly deployment cap is 5 MW, the earliest new applicants could potentially hope to qualify for the FIT is the second quarter of 2017 (if there are no releases of capacity from the current application queue). From 1 January 2017 automatic degression is proposed at 0.5 per cent per quarter.
Table 1 – AD tariff comparison

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Under the consultation proposals, for those with schemes in the application queue (through pre-accreditation or otherwise), if you receive your tariff confirmation before 1 January 2017, and are accepted in the Q3 or Q4 2016 tariff periods, then you will receive the prevailing FIT rates at time of acceptance. However, if you are in the application queue and are placed in the Q1 or Q2 2017 tariff periods, you will receive the new tariff proposals. For those schemes larger than 500 kW that fall in the Q1 or Q2 2017 application period this would result in no tariff. At the current time three schemes in the application queue would be impacted by proposed changes as they stand.

For mCHP the tariff proposals are to maintain the tariff at the same level, with no automatic degression and an annual 1.6 MW deployment cap. The changes proposed for this technology bring it in line with others within the FIT.

New requirements for AD feedstocks
DECC are looking to incentivise AD schemes to use waste as a feedstock. For new schemes that are using non-waste feedstock and are not accredited under the RHI – where there are already existing obligations – then there may be new requirements, i.e.:

  • new sustainable land criteria
  • a greenhouse gas emissions limit
  • calculated eligible electricity – limit FIT payments to only 50 per cent of total biogas yield if non waste feedstock
  • independent annual audits

If the requirements are not met then, ‘Ofgem has the power to reduce, withhold or recoup tariff payments’.

The proposed changes are very likely to have a big impact on the AD sector, particularly new schemes larger than 500 kW, and those that use non-waste feedstocks. Regen SW will be responding to the consultation and would welcome evidence and comments from its’ members to put forward a positive case for continued support for the sector.