ANALYSIS: EfW hot winner in ROCs banding review
Energy-from-waste appears to have benefited ahead of other renewable energy technologies under the latest review of the renewables obligation certificate (ROC) subsidy banding.
The surprise announcement from the Department of Energy & Climate Change (DECC) just before the summer recess will be welcome relief for many operators in the sector who feared a cut in the level of support offered by the Government.
Towards the end of last year, DECC hinted that ROC subsidies may be halved or even taken away altogether for certain waste-to-energy recovery streams such as landfill gas generating stations. But for a coalition that is constantly changing stance at every corner, after two years of uncertainty over ROCs, this is one U-turn that will be warmly embraced.
So, onto the detail. For energy-from-waste with combined heat and power such as incineration, not much changes – the current level of 1 ROC (per MWh) remains the same, but crucially will not be halved as was widely expected. Maintaining this subsidy should ensure that a pipeline of around 500MW of new facilities can still be built.
For other thermal treatment technologies such as gasification and pyrolysis, there is now one advanced conversion technology band supporting both standard and advanced types at the same level. The level of subsidy for this band is 2 ROCs until 2014-15, before it falls to 1.9 in 2015-16 and 1.8 in 2016-17.
Considering standard ACTs currently only attract 1 ROC, this is a real boost and offers operators flexibility in terms of choosing the right technology mix for their particular development.
One waste-to-energy developer, Green Energy Parks managing director Chris Williams, has welcomed the simplified banding approach to ACTs, saying that the agenda for getting sustainable infrastructure off the ground “now stands a chance”.
“With clarity over the value of the renewable content of power generation, developers can move forward with projects, reassure investors and crucially, kick-start the drive towards a low carbon economy,” he said.
Likewise, the Environmental Services Association (ESA) has long argued against using what it calls “arbitrary dividing lines” to create different bands for ACTs and is pleased to have seen its views taken onboard.
Moving onto landfill gas, new bands have been introduced which will benefit gas extraction from closed sites. The current ROC of 0.25 will be axed altogether for open sites, and drop to 0.1 for waste heat and power projects at all sites. But for closed sites this only falls to 0.2.
While many in the sector have been calling for this differentiation, it remains to be seen whether the 0.2 rate will be sufficient to drive uptake of new projects. The ESA also points out that the ending of RO support for most open landfill projects risks undermining efforts to optimise gas capture across the UK.
Perhaps the greatest loser in all of this however is the anaerobic digestion brigade. A small but significant part of the energy-from-waste mix, it has had its proposed subsidy cuts confirmed which has infuriated the Anaerobic Digestion & Biogas Association, its main champion.
Its current level of 2 ROCs for anaerobic digestion will fall to 1.9 in 2015-16 and 1.8 in 2016-17. However given the strong government support the technology has received in recent years, some observers would argue the sector has had time to establish itself to investors as a viable renewable contender.
That said, many energy recovery projects come tangled in complexity, especially where risk is concerned. The ESA’s director of policy Matthew Farrow points out that many issues, particularly around planning and exit markets for heat or digestate, remain unresolved.
“Government and the industry need to continue to work together if the full potential of energy-from-waste is to be realised,” he said.
What happens next in terms of such collaboration will be scrutinised, but this review at least appears to be an initial move in the right direction.
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