Last year Greg Barker MP, the then Minister for Energy, challenged the AD industry to innovate and cut the costs of generating renewable energy. This was following his decisions not to consider reviewing the small scale FITs tariff. Since then it's become clear that, through the degression mechanisms in both the FITs and the RHI, and the closing of the RO to new applications in 2017, revenues from government support for energy generation to new AD plants are going to be lower.
With the current policy direction, by 2017 many current business models in the AD sector, whether focussing on income from energy production or from gate fees, may no longer be viable. We will of course make the case for those revenue streams to be protected in order to deliver the benefits that derive from new AD plants coming online.
But with pressure on these revenues streams, new revenue streams may be needed for the industry to survive.
The industry has talked for many years about the potential for making higher-value products from the primary feedstocks used by the industry, and of adding value to digestate. However, WRAP's latest survey showed that hundreds of thousands of tonnes of digestate are being provided free of charge to those prepared to take it. Of those reporting to WRAP, the average cost per tonne to operators of disposing of digestate was £3.73. This is when the value of the nutrients in digestate should make digestate sales a revenue stream for the sector, not a cost.
In January the ADBA member Centre for Process Industries (CPI) announced its demonstration project to focus on the production of graphene and hydrogen from food waste. A number of AD plants are also making use of waste carbon dioxide and heat to grow more high-value food products more efficiently (e.g. the Guy and Wright farm AD plant, using Edina engines), opening up and improving revenues streams.
We've put these potential revenue streams – digestate and other non-energy outputs from AD plants – as the core of our annual R&D Forum to be held in April we'll be holding our annual R&D Forum for the AD industry. We've now announced a great programme of speakers with the most expertise in these fields for both day one and day two.
By discussing the research being undertaken on these potential new revenue streams we can help the industry thrive while delivering on the Government's challenge of delivering afforable renewable energy and waste management. I hope to see you there.