Annual investment allowance

    Anaerobic Digestion

     

    After well over five years of encouragement by the Government, Anaerobic Digestion (AD) has gained traction and plants are popping up around the country.  Technical efficiency varies and is dependent upon a large number of factors, which makes any costings complex.  However, in common with other renewable electricity generation, the expectation is that the period of opportunity will not last indefinitely.

    The Government’s intention was that anaerobic digesters consumed waste products in order to avoid any  conflict with food supply.  In practice, the digestion process is extremely sensitive to changes in feedstock so a consistent supply of substrate is needed even if mixed with wastes.  While animal wastes might seem the obvious solution, the energy content is so low that the capital cost per unit of energy is high even for a very large livestock unit.  Therefore, crop often provides a significant proportion of the feedstock.  The subsidy is sufficiently high to make this a viable proposition and will continue to do so where energy prices rise faster than crop prices.

    The highest returns are invariably produced where the electricity and heat can be used on site or where the gas can be exported to the gas grid.  Invariably in most instances the electricity is exported and some heat is used to support the plant operation.  Subsidy is via either the Renewables Obligation Order scheme for larger plants or via Feed in Tariffs (but not both).  In practice, even the larger plants can qualify under either scheme and the decision on which scheme to adopt is based on factors such as long-term view of payment rates, view of investors in the project and availability of grant under either scheme.  While the value of Renewable Obligation Certificates (ROCs) are not guaranteed their price has not fluctuated considerably and current price is around £42.0 per MWh.   Anaerobic digestion is awarded 2 ROCs per MWh.  The FiT payment ranges from 15.16p/kWh for a plant below 250kW down to 9.24p/kWh for a plant over 500kW.  The payment is lower than for similar sized units producing electricity from the other renewable sources such as wind, water and PV.  The FiTs rise with inflation and are guaranteed for 20 years.   Where use for the heat can be found or alternatively the biomethane injected into the gas grid the Renewable Heat Incentive may also supply additional subsidy and return.

    For those considering constructing a plant it is important to have some understanding of relative scale of production needed.  There are a large number of variables including:  variation in methane yield as the quality of feedstock changes; plant failures leading to gas wastage; and engine servicing intervals and breakdowns. 

    Crop yields also vary and given that the most important crops for anaerobic digestion are maize and sugar beet, and both are at risk in dry springs and wet autumns, this is not to be underestimated. 

    Biogas yield is a function of dry matter produced and the volatile proportion of the dry matter which determines the methane yield and percentage.  While a little simplistic, in broad terms the methane production per ha depends on the amount of dry matter that can be harvested, so whole-crop will usually produce more methane per ha than just the grain.  Some energy is also lost in the ensilage process although the greater consistency obtained following ensiling is likely to be preferable to the variation with fresh material.  The energy used to produce the crop also varies although since most of the energy input is likely to be through the fertiliser application, and a high proportion of the fertiliser is retained in the digestate, the variation in energy between crops is not usually large.

    Plant capacity is given in kilowatts or megawatts (1000 kW = 1 MW).  This is the capacity to produce energy per hour.  Ideally, a plant should run 24 hours per day 365 hours per year so a 1MW plant would be expected to produce 8760 MWh of electricity if there were no breakdowns or breaks for maintenance.  In practice, operation of the generator for even 95% of the available time can prove an optimistic target.  Production of methane continues even when the engine fails and if not used may have to be allowed to flare to waste.  Some of the electricity produced is also needed to operate the plant.

    Very crudely, we estimate that using average crop yields the following areas would be needed for a 1 MW plant.  To put this into perspective, a dairy herd of over 8,500 housed for the whole of the year would be needed for a plant of this size.

    View the graph.

     
     

    Key contacts

    Ashley Lilley

    Ashley Lilley

    Director
    Food & Farming

    Savills Cheltenham

    +44 (0) 1242 548 012

    +44 (0) 1242 548 012