Expanding biogas markets

The UK’s National Centre for Biorenewable Energy, Fuels and Materials

NNFCC

Expanding Biogas Markets The potential for anaerobic digestion in the UK

Lucy Hopwood

Head of Biomass & Biogas

November 2011

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UK Renewable Energy Targets

• Renewable Energy Strategy (RES)

– UK RED delivery plan

– 15% renewable energy by 2020

10% transport fuels

14% heat

32% electricity

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UK Progress to Date

0 5 10 15 20 25 30 35

Electricity

Heat

Transport

Energy contribution (%)

UK Energy Production vs. 2020 Targets

2006

2010

2020

= 10% by 2020

= 14% by 2020

= 32% by 2020

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Biogas Contribution

- present

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Anaerobic Digestion: Key Facts

The UK has 214 anaerobic digestion plants, as of 30th September 2011

Processing capacity of >5 million tonnes per annum

Installed capacity of >170MWe

Two biomethane injection plants

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www.biogas-info.co.uk

Biogas Map

= 24 Farm-Fed plants

+ c.54 plants with planning consent

Last updated 04 November 2011

= 44 Waste-Fed plants

+ c.64 plants with planning consent

Last updated 04 November 2011

Plus 146 existing sewage treatment facilities

http://www.biogas-info.co.uk/




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Biogas Contribution

- future

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Resource Availability

Food Waste ≈ 16 Mt/y

≈ 8.3 Mt/y household

≈ 6.3 Mt/y commercial & industrial

≈ 1.3 Mt/y food service & retail

Agricultural Waste ≈ 90 Mt/y

≈ 13 million cattle

≈ 33 million sheep

≈ 4 million pigs

≈ 166 million chickens

Sewage Sludge ≈ 1.73 Mt/yr

Purpose Grown Crops…

“…Government policy is to deliver an

increase in energy from waste through AD.”

“We recognise that at farm-scale, some

energy crops may be required…and that

such crops can be grown as part of the

normal agricultural rotation. Furthermore,

there is land available which is not suitable

for the production of food crops but which

may, therefore, be used to supply energy-

crop only AD plants.”

“It is not our policy…to encourage energy

crops-based AD, particularly where these are

grown to the exclusion of food producing

crops.”

!

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Build Rates for AD – UK

Source: ARUP, 2011

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AD Potential – UK to 2030

Source: ARUP, 2011

=1.8TWh

=5.6TWh

=3.0TWh

“…AD could deliver between 3–5 TWh of electricity by 2020”

AD Strategy & Action Plan, 2011

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Current Government Support

- Policies & Incentives

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Coalition Agreement

Treasury, May 2010:

• “We will introduce measures to promote

a huge increase in energy from waste

through anaerobic digestion”

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Renewables Obligation

The Renewables Obligation (RO) for large-scale (generally >5MW) renewable electricity

projects.

ROCs issued to accredited generators for renewable electricity.

Introduced in April 2002

Banded from April 2009

Double ROCs for Anaerobic Digestion

• ROC value c. £44 – 50 per MWh

Banding Review due 2013, consultation open now.

– Proposing 2 ROCs in 2013 – 14

– Degression of 0.1 ROC per year thereafter

EMR post-2017, details yet to be published

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Feed-In-Tariff

Feed-in Tariffs (FITs) provide a guaranteed price for a fixed period to small-scale (< 5MW)

electricity producers;

– Generation Tariff – the generator is paid for every kWh of electricity generated.

– Export tariff – for electricity exported onto the National Electricity Grid.

[Generators can opt in or on an annual basis, deciding whether to claim this or

the market value for the electricity.]

06th April 2010:

FITs Launched

07th Feb 2011:

Fast-track review announced

09th June 2011:

Fast-track review complete

30th Sept 2011:

Revised rates apply

End-2011:

Comprehensive review consultation

April 2012:

First review rates implemented

April 2015:

Second full review scheduled

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Capacity Original Tariff – from

April 2010 RPI Adjusted Tariff –

from April 2011 New Tariff – from September 2011

<250 kWe

11.5 p/kWh 12.1 p/kWh

14.0 p/kWh

250 – 500 kWe 13.0 p/kWh

>500 kWe 9.0 p/kWh 9.4 p/kWh 9.4 p/kWh

For Comparison:

PV (<50* – 100kW) 31.4 32.9 19.0 (12.9 *)

PV (<100* – 5MW) 29.3 30.7 15.0 – 8.5 *

Wind (100 – 500kW) 18.8 19.7 19.7

Feed-in-Tariff (FIT)

* Proposed banding differs – aggregated here for comparison only.

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Impact of Feed-In-Tariff (2010 – 2011)

Source: Ofgem – Feed in Tariff Newsletter, September 2011

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Renewable Heat Incentive

• The Renewable Heat Incentive is intended to provide financial support to encourage

a switch from fossil fuel heating to renewable sources.

• England, Wales and Scotland

• Two-phase approach:

2011: non-domestic sector e.g. from large-scale industrial heating to SMEs and

community heating projects.

2012: domestic sector and perhaps additional technologies (bioliquids, air-source

heat pumps, etc)

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RHI Structure

• Tariff levels are intended to provide a rate of return of 12% on the additional capital

cost of renewables over conventional heat systems.

• Opened for applications Monday 28th November 2011 (delayed since 30th September)

• Payment period is guaranteed for 20 years from installation.

• Payments will be made quarterly.

• A review of tariffs is scheduled every four years, from 2014;

– Interim adjustments will take into account inflation –RPI linked annually

– Degression will apply

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Technology Size (kWth) Tariff (p/kWh)

Biogas combustion Biogas combustion (excl. landfill)

< 200 6.8

Biomethane Biomethane injection All scales 6.8

For Comparison:

Small Biomass

Solid Biomass; Municipal Solid Waste (incl. CHP)

< 200 Tier 1: 7.6 Tier 2: 1.9

Medium Biomass 200 – 1,000

Tier 1: 4.7 Tier 2: 1.9

Large Biomass ≥ 1,000 1.0 (2.6)

Solar thermal Solar thermal < 200 8.5

Small ground source Ground-source heat pumps; water-source heat pumps; deep geothermal

< 100 4.3

Large ground source ≥ 100 3.0

RHI Tariffs

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AD Strategy & Action Plan

CREATION

DELIVERY

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Availability of finance

Perceived technology issues

Cost of energy crops

Security of incentives

Planning

Permitting

Health & Safety

Gas Quality Standards

Food waste collections

Markets for digestate

Skills & training

Food vs. Fuel conflict

Small-scale technology

Waste segregation

Biogas upgrading

Biomethane for Transport

KEY ACTIONS

Social Regulatory

Technical Economic

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Official AD Information Portal

www.biogas-info.co.uk

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Conclusion

• The UK has come a long way in just a few years,

• But, barriers to development remain in place.

• To see a “huge increase” in AD we need;

Long-term security

- Policy

- Incentives

- Feedstock supply

Confidence

Investment

Strategy & planning

Regulatory framework

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The NNFCC provides high quality, industry leading consultancy

for more information contact us

Email - [email protected]

Twitter - @NNFCC

+44 (0) 1904 435182

• Future Market Analysis

• Feedstock Logistics Planning

• Sustainability Strategy

Development

• Technology evaluation & associated

due diligence

• Project feasibility assessment

• Policy and regulatory support