DECC consults on reviewing the tariff for biomethane injection to grid under the RHI

The technology involves producing biogas through anaerobic digestion (AD) of crops, waste, slurries or sewage feedstock. The biogas is then ‘upgraded’ to remove the carbon dioxide and other impurities (known as ‘scrubbing’) and propane is added to ensure the calorific value closely matches that of natural gas. The resulting gas is then odorised and compressed and injected into the gas grid — a way of partly decarbonising the gas grid with the advantage of using existing gas infrastructure.

When DECC first introduced the ‘one-size fits all’ biomethane to grid tariff under the Renewable Heat Incentive (RHI) in November 2011, there were no full-scale biomethane to grid plants in commercial operation. The RHI kick-started the market for biomethane to grid and there are now three plants registered to the RHI and many more, of much higher capacities than the 1MW on which the original tariff was based, planned or in the pipeline. The RHI tariffs were calculated on a 12 per cent rate of return but it was recognised that they might need to be changed over time. DECC is now reviewing the tariff because there is a risk that the measure is excessive, providing significant upside for large plants and/or plants with existing assets that are converting to biomethane injection.

At present, the tariff is set at 7.5 pence per kWh. Rather than introducing degression, which DECC think would destabilise the market and investor confidence, DECC propose two new tariff options…

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