The group said investors in the 463 plants under development and due to be commissioned after 1 April 2016 will be “waiting to hear” from government what form the Renewable Heat Incentive (RHI) funding will take after that date before making investment decisions, placing the futures of these schemes at risk.
The current RHI budget only runs up to April 2016 and a government review of the scheme is scheduled for the autumn.
ADBA chief executive Charlotte Morton said that, despite the demand for biomethane, there is a “high degree of uncertainty” about the future for gas-to-grid developers.
“The RHI remains crucial to new project development, and the industry cannot expect any certainty about future budgets until the Chancellor’s spending review in the autumn. This could cause a real hiatus in gas-to-grid project development,” she said.
In ABDA’s market report, it said: “Government decisions will be made late this year or even early 2016. So even if policy decisions are supportive, developers will only have 10 or 15 months to respond in order to turn decisions into new plants.
The report added the sector “faces real challenges from 2016”, but with “reasonable policy changes”, it could still deliver at least 500 more plants by 2020, with “up to six” biomethane plants set to commission before 1 April 2016.
The report pointed out that 2014 was the year biomethane-to-grid plants were first built and commissioned in the UK in significant numbers. The “key driver” for this has been the introduction of the RHI in 2011.
In December 2013, National Grid began delivering renewable gas through its network after connecting up its first biomethane plant in October that year. At the time, National Grid said it aims to connect 80 similar projects over the next eight years.
In November last year, Wessex Water subsidiary GENeco became the first company to start injecting gas generated from sewage and food waste into the national gas grid.