Anaerobic digestion (AD) experts are divided on the impact of changes to the renewables obligation (RO) banding.

The Renewable Energy Association (REA) said excluding small-scale AD from the RO subsidy scheme would make the government target “impossible” to achieve.

Water companies, on the other hand, said energy-from-sewage schemes would still be viable.

REA head of biogas David Collins said: “Recognising that anaerobic digestion can meet both energy and environmental objectives, the Coalition Agreement committed to ‘produce a huge increase in energy from waste through anaerobic digestion’. This ambition has now been all but dismantled.”

AD schemes generating less than 5MW are to be excluded from the RO from April 2013, subject to consultation, the Department of Energy and Climate Change (Decc) announced last week. Collins said the REA would be fighting hard against that decision.

It followed news that the feed-in tariff (Fit), which supports microgeneration, for AD would be stepped down sooner rather than later.

Martin Dent, renewable energy manager at Severn Trent Water, said the company’s planned schemes would still be viable, despite not meeting the 5MW threshold.

“We were expecting that there would be some kind of rationalisation,” he said. “It has come as no surprise that at micro scale, the government’s plan is to include those in the Fit and allow the RO to deal with the larger scale.”

Dent was “grateful” for government clarity on the levels of subsidy, in contrast with the recent solar PV Fits debacle.

Scottish Water said the change had been factored into its development partners’ proposals. “While it will reduce returns, we are confident that our schemes remain viable and are committed to playing our part in helping to develop a low carbon economy,” a spokesman said.

The Scottish Government is introducing an obligation on Scottish Water to maximise its renewable energy capacity, under its Hydro Nation vision.