ADBA welcomes tariff review findings

The AD industry has welcomed the confirmation of new support levels for biomethane, published on the day of the ADBA National Conference 2014. DECC’s response to the RHI biomethane tariff review follows a consultation over the summer which gathered evidence on whether economies of scale justified reducing tariffs for new, larger scale projects. The RHI supports biomethane injected into the gas grid, and currently pays a flat rate of 7.5p/kWh to all plants (degressing to 6.75p/kWh on 1 January), irrespective of their scale.

Following joint lobbying efforts between ADBA, REA and their members, DECC has agreed to apply a ‘tiered’ approach. This is important to avoid some of the distortions which can be caused by tariff banding, where projects can be incentivised to reduce their size to fit under caps. Instead, projects subject to the new rules will receive the first ‘tier’ tariff level for the first 40,000MWh they generate, the second tier tariff for the next 40,000MWh, and the final tier tariff for biomethane produced and injected beyond that. The tariff levels have increased significantly compared to the consultation proposals, which the industry warned were far too low to stimulate new deployment.

The new tariff levels will be as follows:

Speaking at the ADBA National Conference, ADBA’s Chief Executive, Charlotte Morton, said:

The industry will welcome this announcement, which will reassure developers and investors that they can continue to deliver the biomethane projects they have in planning.

Although we had concerns around the original consultation document, this has been a good example of DECC working closely with industry towards a common goal. These proposals will help put the biomethane RHI support on a more secure footing.

Biomethane is a vital weapon in the fight for lower-carbon energy. It is one of few renewable options for the gas grid and heavy goods transport, and it deserves full-throated political support.

Once the regulations have been approved in parliament, the new tariffs will be protected from degression until 1 July 2015, giving existing developers certainty about tariffs if they can complete projects by then.