Renewable Energy

Mar 28, 2017
Author: Dan Wood
Dan acts as a commercial partner for a wide range of clients. Dan specialises in advising businesses in the agriculture sector.
renewable energy

Anaerobic Digestion (AD): Biogas

Renewables have grown rapidly in the last 10 years, mainly because of public financial support. However, the cost to the Exchequer has seen support levels cut over the past few years. Actual renewable energy was 8.3% in 2015 compared to a target of 15% in 2020.

AD is the natural process of digestion of organic material in an oxygen free environment by micro-organism. The process is usually based on waste products but any non-woody organic matter can be used. It is similar to composting but is normally in sealed containers to exclude air on which the biogas is dependent.

Animal slurry is the focus but a low biogas yield is produced and poultry litter gives 2-4 X biogas output of pig slurry. In Europe, crops are often used and maize silage has a high energy yield – 10 X that of slurry. Others include food waste and supermarket waste.

Consistency and reliability in quality and quantity is vital to the process. AD produces biogas which is:

  • 40% carbon dioxide
  • 60% methane
  • and a digestate (soil improver)

Biogas is used in a combined heat and power generator and electricity is exported. Heat aids the process but can be sold if there is a local market. Biogas can be cleaned – remove CO2 to produce bio methane (natural gas).

Value of AD: 

  • Electricity – generation tariff FIT

– export tariff under FIT or the market value of electricity

  • Heat – need local market to take advantage of this
  • Gate fees – for waste coming in
  • Digestate – fertiliser value

The sector is still in its infancy so data available on returns is low while potential system costs are £3,000 to £3,500 per KW power output.

  • Typical 400-500 KW plant capital cost can be £1.5 – £2m
  • Depreciation normally over 15 years
  • Bank typically give 10 year loans

There are specialist companies who build and provide access to finance e.g. Qila Energy. A 450 KW plant may need 2 acres of land and planning approval requires it to be a suitable distance from residential dwellings. A high capacity electricity connection should ideally be close as a distance of over 700m can impact on economics of a scheme.

  • A heat consumer needs to be 500-600 metres away;
  • There are significant planning issues and;
  • Good economies of scale potentially exist

Contacts in the sector are:

  • Renewable Energy Association: 020 7925 3570 or
  • Anaerobic Digestion & Biogas Association: 0845 292 0874 or
  • Qila Energy:

Changes to renewable energy

On 14th December 2016, the Government published its renewable heat incentive consultation response, with changes coming into force in Spring 2017. Tariff for biomethane and biogas will be increased by 38% and 33%. New sustainability criteria will be introduced, requiring that 50% of all biogas must be generated by waste or residue sources. Hence the use of maize or grass silage will be limited.

Tariff bandings for biomass installations will be removed – all capacities will receive the same rate. Offgen say there is a 12 month queue of projects waiting for full or pre-accreditation. The secretary of State retains the power to close schemes under the Budget cap mechanism at short notice. The risk of digression remains (automatic cuts to tariffs when uptake exceeds certain limits).

Feed in tariff support mechanism scheduled to end in 2019.

Martin Wilmott is a partner at Hawsons

Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on or 01302 367 262.