Revision of RHI tariffs incentivise farmers to invest in heat-only AD, renewable energy developer claims

Spain-headquartered renewable energy developer Norvento has claimed that heat-only anaerobic digestion (AD) technology may present a more viable opportunity for some UK landowners and rural industries than designs incorporating combined heat and power (CHP) systems to produce electricity.

Amid the revision of Renewable Heat Incentive (RHI) tariffs, would-be independent power producers will need to reconsider their options as the market has seen heat-based tariffs rise and feed-in tariffs (FiTs) for farm-scale electricity generation become increasingly limited.

In this climate, Norvento forecasts that ‘heat-only’ AD plants will now start to find their niche in the farm-scale biogas sector. 

As new medium-scale wind energy users in the UK are shifting their focus away from exporting power for profit and towards on-site consumption, biogas users will find that using energy on-site provides the strongest business case for installing a renewable energy system.  

In numerous cases, heat, rather than electricity, is central to supporting intensive on-site production processes. Dairy and pig farmers stand out as ideal users of heat-only AD plants; not only do they generate substantial ‘digestate’, or fuel, but they also rely on heat-intensive processes such as the manufacture of dairy products or the refrigeration needed to operate an abattoir.

‘Swift return on investment’

Norvento said that in the short term, the emphasis for these potential users must be on analysing how energy produced by an on-site system can be best used on-site to guarantee a swift return on investment.

The energy specialist estimates that a 600kW thermal (heat-only) plant that costs around £600,000 (€708, 543) to install can have an annual gross income of ~£200,000 and a payback period as short as 3.5 years – providing all heat is used on site. 

This compares to the installation of a CHP engine at the same plant, where, with 50% of the power produced consumed on site and 50% exported to the grid, capital costs would increase by £250,000 and the payback time would increase to nearly five years. The overall economics of a heat-only scheme are simply better.

Currently, heat needs to be consumed on-site as there is no means of ‘exporting’ excess heat to a district heating grid, unlike the electricity produced by a wind turbine or CHP plant. However, with substantial funding announced by the UK government for ‘heat networks’ across England and Wales, a number of pilot projects are underway that are projected to further incentivise the installation of heat generation plants.

‘On-site energy needs’

“Having operated in the UK farm-scale energy sector for the past five years, we are increasingly helping landowners and small industries to reconsider their on-site energy needs, diversify their revenue streams and maximise opportunities in a rapidly evolving market,” said Ivo Arnús, Director of UK business development, Norvento.

“Heat-only AD systems, optimised to match energy demand, are already proving their worth for rural industries throughout Europe. By way of an example, Norvento has installed one of its BioPlant AD systems at a cheese factory in Spain, where there is no financial incentive scheme in place, but returns are highly attractive.”

Norvento reinforces that this does not mean heat-intensive users should ignore the potential to generate electricity on-site to meet their other energy requirements, or for export at a profit to the grid.

Arnús added: “It all comes down to the resources available at a site. If a landowner has organic residues and heating needs, an AD installation is something of a ‘no-brainer’. But if there is also a strong local wind resource, why not also deploy a wind turbine to produce electricity?”

Norvento has a strong track record in the UK farm-scale energy space, as the manufacturer of the market-leading nED100 medium wind turbine, and the BioPlant AD system, a turnkey biogas system, tailored to meet on-site energy demand.

This story was written by Liz Gyekye ,editor of Bioenergy Insight.