Is there still a future in AD plants for UK farmers?

Despite challenges due to the Covid-19 pandemic, the UK anaerobic digester (AD) sector grew by 11% in the year to April 2021, according to National Non-Food Crops Centre (NNFCC) figures.

The organisation collects data on UK AD facilities, which showed 63 new plants became operational over the 12-month period. The additional units brought the total number of operational plants to 642.

Of these, 446 were fuelled by farm feedstocks, including manure, slurry, crops and crop waste.

Food waste was the main feedstock, with usage up by 20.4% from 4.08m tonnes a year in the 12 months to April 2020 compared with 4.92m tonnes to April 2021.

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After food waste, crops were the second most widely used feedstock at 4.28m tonnes a year, up 2.6% from to 4.16m tonnes in the previous year.

The cropping area required also increased by 2.2% to 95,000ha over the 12 months.

Lucy Hopwood, lead consultant and director at NNFCC, says the increase was achieved in spite of bad weather and Covid-19 constraints during 2020.

In April 2020, there were 47 plants under construction, with many commissioned before long-term government support schemes closed to applicants.

Most had either Renewable Heat Incentive (RHI) tariff guarantees or Feed-In Tariffs (FiTs) pre-accreditations.

These schemes had been due to expire by March 2020 so construction deadlines were short, says Ms Hopwood.

However, heavy rain in the early part of 2020 caused a backlog in construction and delays in commissioning.

The situation worsened as the Covid-19 pandemic hit, causing labour and supply difficulties for both plants under construction and those already operating, Ms Hopwood says.

The government stepped in and granted a 12-month grace period for FiTs projects that failed to reach commissioning ahead of deadlines.

A further extension to 31 March 2022 was then offered for RHI projects that had secured a tariff guarantee.

Growth forecast

The number of AD projects under development has dropped from 331 in April 2020 to 269 this year. Of these, 49 have progressed to construction with commissioning dates in 2021.

About three-quarters will be combined heat and power (CHP), while seven will be both CHP and biomethane-to-grid (BtG) and four solely BtG.

There are a further 220 projects in the planning stage, but without the incentive schemes, only a fraction of these are now expected to go ahead, Ms Hopwood says.

The policy change also means only a modest number of plants is expected to enter the development pipeline between now and April 2022.

Why numbers are expected to dwindle

Put simply, the government no longer wants to incentivise small-scale, private power generation because it has enough renewable energy from solar, wind and existing AD plants, says Ms Hopwood.

Incentive schemes that paid farmers a rate for each unit of power entering the national grid have gradually reduced in value and now closed altogether.

It means that small- and medium-scale digesters are no longer money-making propositions and the business models are harder to justify unless there is a high demand on site for the power produced.

Outlook

This autumn will see the introduction of the government’s Green Gas Support Scheme (GGSS), designed to accelerate the decarbonisation of the gas grid.

The scheme will financially support BtG production. Biomethane is as pure as natural gas and can be injected straight into the grid or used for transport.

Because it offers a direct replacement of a fossil fuel without additional refining, the government is keen to encourage its production.

This means the GGSS is eagerly anticipated and this has led to an upturn in development of larger plants capable of producing biomethane for the grid.

The NNFCC expects that most of the plants commissioned between now and April 2022 will be BtG units.

However, the high cost of the technology and equipment needed for grid connection has to be offset by economies of scale.

High output levels are needed to generate a profit, so plants are large and come with multimillion-pound price tags, typically between £2m-£5m. That will put them out of reach for most single farm businesses, suggests Ms Hopwood.

At the opposite end of the scale, smaller plants costing in the hundreds of thousands of pounds could still be viable in production systems with high heat and power requirements, such as dairy units.

These slurry-fed systems could potentially offset the cost of traditional power sources over a number of years and, in some cases, offer a way of managing an element of slurry production where there may not be enough land on which to spread it.

AD plant potential overlooked

Jonathan Scurlock, NFU chief adviser on renewable energy, suggests the wider benefits of AD plants have been overlooked by policymakers.

AD plants could be a key part of farming systems but without incentives it is difficult to justify the economics, Dr Scurlock says.

About 100m tonnes of slurry and manure are produced in the UK annually but less than 3% is used to fuel AD plants. This is a waste of a key resource, he says.

All an AD plant does is extract the energy – the resulting digestate still contains all of the nutrients, making it a cheap but valuable source of fertiliser, he says.

Analysis to provide values for nitrogen, phosphorus and potassium means digestate could provide the basis for a precision-farming approach to applying organic manure, especially when coupled with low-emission spreading techniques.

AD plants could also fit neatly with extended rotations that reduce the dependence on pesticides and improve soil health, Dr Scurlock suggests. Arable rotations could include rye, maize, beet or herbal leys as feedstocks, creating longer, more diverse rotations.

Opportunities also exist in carbon dioxide capture, directly helping the government to achieve its decarbonisation targets, Dr Scurlock says.

The AD process can remove high-quality carbon dioxide, which can then be used to generate income for the farm business, and some biodigesters are already supplying the fizz for the drink sector and other uses. 

It can also be captured for long-term storage, he suggests. One company, Future Biogas, has ambitious plans to build 25 large-scale, on-farm plants before 2028.

These will capture and tanker carbon dioxide to ports, where it will be sent for undersea storage in voids left by natural gas extraction.

This would create another income stream for farms in the form of credits and certificates sold to companies looking to offset their carbon footprints.

There is scope then for AD plants to play a key role in achieving the government’s aims of reducing carbon and helping farming generate additional income.

But we need the government to recognise these benefits and adopt policies that promote its expansion, Dr Scurlock says.

This could be done within the remit of the forthcoming Environment and Land Management scheme or via capital grants to help cover the cost of installation, he suggests.

How farmers could get involved

Ashley Lilley, Savills food and farming director, suggests the AD sector is at a crossroads, diverging into large BtG plants and small-scale plants for on-farm heat and power.

The forthcoming GGSS has encouraged development of large-scale biomethane plants that cost many millions to build.

Although the cost is beyond individual farm budgets, there are still opportunities for farm businesses to get involved. At a low level of commitment, they can supply biofuel feedstock crops for AD plants.

Further up the scale, they could co-operate to supply slurry to one of the large BtG units being developed.

Greater collaboration still could see groups of farms develop digesters on their own accounts, but this would require long-term commitments and high investment, says Mr Lilley.

Alternatively, farm sites are still being sought to host digesters owned by others. Companies will look for sites where feedstocks are readily available and where planning is conducive to development.

While larger developments look to be the way ahead, some firms are still offering small-scale digesters that will offset heat and power costs rather than generate income.

These may work on sites with high energy usage, such as dairies, he suggests. Whichever option is considered, the business must carry out due diligence, Mr Lilley warns.

AD plants are expensive, long-term commitments and any cost analysis and contracts must be absolutely watertight. Other pitfalls include equipment and output guarantees. AD plants are technical and sensitive pieces of equipment.

Peak outputs can take time to achieve so potential delays in returns must be factored in before embarking on an investment, he advises.