The Chancellor of the Exchequer, George Osborne, today unveiled plans in today’s Spending Review and Autumn Statement announcement to extend the Renewable Heat Initiative (RHI) with additional funding for new projects until the end of this Parliament.
The Government’s energy policy “reset” announced last week will see support for indigenous sources of gas prioritised, and with the financial resources provided by HM Treasury today, the anaerobic digestion industry will look to play a leading role in the UK’s future energy mix.
The industry remains concerned, however, by the risk of hiatus before significant additional resource is available within the allocated RHI budget from 2017-18. ADBA is calling for DECC to set out their plans as quickly as possible in order to provide certainty for developers and investors.
ADBA’s Chief Executive, Charlotte Morton, commented:
We welcome the government’s commitment today to delivering renewable heat. Indigenous green gas will continue to be a vital part of UK heating, and ultimately biogas alone has the potential to deliver 30% of domestic gas demand. Making RHI funding available for new projects to 2020/21 will clearly help support our industry’s ambition.
We look forward to continuing to work with the government to ensure the best possible outcome for green gas within the RHI budget, and to help our members deliver new biomethane and biogas heat projects.
The Chancellor’s decision to delay significant growth within the RHI budget next year, however, leaves uncertainty around the level of funding which will be available for new projects in 2016. It’s challenging for any industry to endure a period of hiatus where jobs and investment are put on hold – or even at risk – as businesses wait for government policy to catch up with growth capability.
Given that the UK still needs 20TWh more renewable heat by 2020 to meet the government’s 12% target – with AD able to deliver a third of that – delays in biomethane deployment will jeopardise our ability to meet this target.
And of course delays impair the industry’s ability to improve energy security as the UK becomes increasingly reliant on imported gas from volatile parts of the world – a concern which was raised during yesterday’s House of Commons Energy & Climate Change Committee hearing with the National Grid.
Biomethane has quadrupled in scale over the last year alone, with over 40 gas-to-grid plants now generating enough indigenous gas to heat over 100,000 homes or fuel around 10% of the UK’s bus fleet. ADBA will be continuing to call for a strong allocation for biogas and biomethane within the RHI budget, for a technology which has the potential to inject an extra 6TWh per year of indigenous baseload gas into the grid by 2021– enough to heat 500,000 homes based on average gas consumption.
Watch ADBA's Head of Policy Matt Hindle comments on the investment confirmation (via Biogas Channel):