The Changing Landscape for Bioenergy Incentives

Bioenergy project developers know how important it is to get to grips with the UK Government’s incentives for bioenergy technologies. Sizing your project correctly and selecting the right technology can make all the difference between a successful and profitable scheme – and an expensive failure!

If you’re developing a bioenergy project you can contact EBRI to find out about our Project Appraisal service and benefit from an expert and objective review of your project plus advice on how to maximise your profitability whilst reducing your risks.

Here, EBRI’s Dr Jim Scott shares his thoughts on the winners and losers latest from the changes to the Government’s financial support for renewable heat.

Jim writes: “At the end of 2013 the Department of Energy and Climate Change (DECC) released its response to the consultation on expanding the non-domestic RHI scheme. The consultation covered several areas relevant to biomass including fuel sustainability, direct air heating and good quality Combined Heat and Power (CHP). DECC also decided to remove the previous capacity limit on biogas schemes. Previously to receive incentives for the heat produced by burning biogas the total installed thermal output of the facility must have been below 200kW(th). This limit shielded the taxpayer from potential costs during a period where DECC felt they did not have sufficient evidence on the costs of larger Anaerobic Digestion (AD) CHP plants. The latest consultation response however lifts this limit as sufficient evidence is now available for large UK AD plants.

The RHI definition of biogas however does not define biogas only as biomethane from AD but also includes gasses from gasification and pyrolysis. For pyrolysis the indication is that oils from pyrolysis would also be eligible for RHI payments (paragraph 87 of the DECC response).

The tariffs DECC decided on are shown in the table below:

Thermal output (total) Pre April 2014 Post April 2014
< 200kW(th) 7.5p/kWh(th) 7.5p/kWh(th)
200kW(th) – 599kW(th) 0 5.9p/kWh(th)
>600kW(th) 0 2.2p/kWh(th)

The data DECC have used is based mainly on experiences with AD, however the introduction of this band introduces interesting opportunities for the advanced conversion technologies of gasification and pyrolysis.

For AD, especially large scale AD, a major barrier for using heat and therefore claiming the RHI revenue stream is moving the heat from where it is produced to where it is required. Running large scale AD close to large heat users is a niche market limited mainly to food and drink industries and the occasional process industry application. In these cases the savings against waste disposal costs are an important driver as well as revenue from heat or power generation.

Gasification and pyrolysis technologies however could be brought closer to end users of heat. They tend to use drier feedstocks so the conversion plant can be further from the fuel source without logistics costs crippling the project. Like AD they produce an energy vector gas or liquid that can be used in combined heat and power generators, usually engines. These energy vectors can also be stored until demand conditions are suitable for generation.

The introduction of the medium scale band into the biogas RHI creates a new motivation for technology providers and developers to move towards the 0.2MW(el) – 1MW(el) output range and develop relationships with potential heat customers. It is a trade off against the economies of scale associated with power only generation. If DECC’s incentive is sufficient this change will bring these ACT generating technologies into our cities and business parks, resulting in a more efficient use of our biomass resource, less waste and more resilient, local, lower cost energy systems.”

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