Biomethane, the saving grace for government energy targets?

Marc Graham, Programme Manager, Privilege Finance

Time is rapidly disappearing for the government to hit its target of 15% of energy being sourced from renewables by 2020. However, there is no doubt anaerobic digestion (AD), and specifically biomethane production, is a key technology that gives the government the best chance of meeting this goal.

There is a real buzz in the industry about the potential growth of AD, but what is biomethane, and what are the real opportunities for the sector?

Biomethane and its uses

All AD plants produce biogas, which usually constitutes around 50-60% methane. However, in order to inject this into the National Grid, the biogas needs to be ‘upgraded’ to remove the CO2 and increase the methane level to around 95%, so that it meets the quality of natural gas already in the grid. This is known as biomethane.

Biomethane has a number of benefits for the national grid. It is one of the most viable and stable renewable gases, ensuring the grid can be supplied with a continuous, predictable level of ‘green energy’ that isn’t reliant on weather conditions, as with solar or wind technology.

Another major advantage of biomethane is the existing national gas infrastructure. This can be used to transport the gas from the point of production, on-farm for example, to homes, creating a significant cost saving when considering the viability of large-scale production.

Developments in the industry

The development of biomethane plants has remained stagnant over the past few years, with ADBA reporting that just seven projects were built in 2017, compared to 31 in 2016. This substantial drop in numbers is no doubt due to the Government’s delay in announcing a replacement Domestic Renewable Heat Incentive (RHI) tariff scheme.

With the first round of applications for the recently announced RHI tariffs now in review, we hope that these numbers will increase significantly over the next two years and have plans to invest over £90m into the AD industry this year alone. Although the tariffs are only a short-term fix, they are a step in the right direction.

In order to ensure the future viability of the AD industry, more collaboration and uptake of innovative technologies is needed. We are already seeing significant technological developments enabling methane to be upgraded, whilst also capturing and utilising the CO2, which will inevitably make the system more viable.

As a specialist finance provider to this sector, we are passionate about exploring new technologies and will support the industry to develop a commercially viable network, that underpins the government’s renewable energy ambitions.