Policy change could force waste rethink

26-Jul-2012 - Last updated on 27-Jul-2012 at 12:32 GMT

Incentives have doubled anaerobic digestion capacity

Changes to government incentive schemes could force food manufacturers looking to generate their own energy from waste into a rethink.

In a surprise move this week, the Department of Energy and Climate Change (DECC) announced that anaerobic digestion (AD) projects producing less than 5MW of energy would, from April 2013, no longer attract Renewables Obligation Certificates (ROCs).

The renewables industry has panned the proposal, which wasn’t part of the original consultation on changes to ROCs, and questioned the coalition government’s manifesto promise to “introduce measures to promote a huge increase in energy-from-waste through anaerobic digestion”.

Extraordinary

“Given that the DECC have claimed they want to provide certainty and clarity to renewable energy generators, publishing a change like this on that basis – and with little more than six months until it comes in – seems extraordinary,” Anaerobic Digestion and Biogas Association (ADBA) chief executive Charlotte Morton told FoodManufacture.co.uk.

“Increasing numbers of companies are clearly looking at how they use and dispose of resources across their operations. Tying up organic waste and energy demands – and making the most of that waste through AD – clearly makes a lot of sense. The government should be backing them in this, not removing one of the key mechanisms for AD support.”

Though food manufacturers are one of the few industries that can make larger-scale AD viable thanks to a reliable feedstock (food waste) and energy demand, few if any could support a 5MW plant.

That will leave those looking to develop on-site facilities relying on Feed-in Tariffs (FiTs), which are being reduced.

Doubling of AD capacity

Renewables incentives are one of the reasons for a doubling of AD capacity in the last year, but the ROC announcement and continued uncertainty around the FiT system, as well as challenges around the other incentive RHI (Renewable Heat Incentive) could see investors backing away.

“Renewables incentives have provided a real kick-start to the market … business cases will be developed around them and very few [AD plants] would be developed without incentives,” explained AEA consultant Sarahjane Widdowson. “The changes could mean that plans are halted, re-examined and possibly abandoned.”

AEA’s recent work on waste infrastructure has clearly shown the need for consistency of approach regarding incentives, said Widdowson. Clear timescales for duration, rate and review are required. “It’s this inconsistency that’s undermining investor confidence and making it very difficult to develop robust business cases,” she added.

Nigel Mattravers, principal consultant at Grant Thornton, agreed. However, he suggested the announcement on ROCs wasn’t as disastrous as the likes of the ADBA were making out.

“It’s all the uncertainty rather than the numbers that is the big issue,” he told FoodManufacture.co.uk. “I don’t think food manufacturers will turn their noses up at AD now. We’ll see more companies working together [on bigger plants].”

Without additional feedstock from surrounding businesses or farms, many food manufacturers would look at plants of 500kW to 2MW. FiTs for plants over 500kW are being reduced from December this year from 9.9p/kWh to 8.96p/kWh. “Ideally [you] want to be commissioning before December to secure the higher rate for 20 years,” said Lucy Hopwood, head of biomass and biogas at bioeconomy consultants NNFCC.