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UK Government Incentives for Biofuel Projects and Enhanced Capital Allowances (ECAs)
At Anaerobic Digestion.Com we are often asked about the UK Government incentives which are emerging for biowaste projects and for which high quality AD Plants should qualify. Here we tackle the incentives and the provision of enhanced capital allowances (ECAs), as non-experts, so bear with us if some of this information is incorrect, and do check what we say with an expert, before making any decision at all.
The best known incentives are:
- The ROCs scheme; whereby qualifying projects are provided with an additional payment for their power. The ROCs scheme is wholly intended to encourage the development of renewable energy sources, and much ROCs money has hitherto been paid for landfill gas energy from waste projects, and biogas from sewage digestion etc. The subsidy is likely to be doubled for Anaerobic Digestion Plants in 2008, with subsidy for, for example, wind farms being reduced, as this technology is now seen as mature and viable without the present level of subsidy from the ROCs scheme.
Update: January 2008 has seen the publication by government agency BERR of details of the proposal now being progressed as UK government policy on increasing the Renewable Obligation Certificates for certain renewable fuels. Anaerobic digestion is to be just one such recipient of additional ROCs subsidy. Information on latest developments can be obtained here.
- Green Power for Consumers; This was brought in under OfGen and as part of the UK Power Industry privatisation, all providers are required to offer a renewable (green) power tariff option to their users. In the UK there is a growing demand from the public for green power from people who are willing to pay a little extra for renewable electricity, this being the case the suppliers must provide it. This has meant that the power companies have, since about 2004, been seeking as much green renewable energy as they can purchase in order to resource the demand on them for green energy, and they pay for renewable power at a premium, for the privilege.
- For Large Companies there is the fossil fuel levy, which acts positively toward the introduction of renewable power sources generally.
At Anaerobic Digestion.Com we are not financiers or even accountants so some other incentives now being provided and applied for by the UK Government go beyond our knowledge.
Richard Parker and Renewables East have published a document on the DEFRA web site which is well worth looking at, as it lists other UK government renewables incentives and how they may be applied to Anaerobic Digestion.
I have copied part of it below, but for the full document including a chart showing the projected payment value for AD (£/MWh) energy including ROCs at double, and further information on other financial assistance available for bio-energy plants such as enhanced capital allowances you need to click here.
BIOFUELS
Since 2001, the Government has provided an incentive for business investment in energy-saving and environmentally beneficial technologies through enhanced capital allowances (ECAs).
ECAs give a 100 per cent first-year capital allowance for the purchase of qualifying plant and machinery.
The Government is also presently engaged with the European Commission over a State aid application to extend the ECA scheme to the most carbon-efficient biofuels plant.
The Government’s intention is to extend payable credits to investments of this type, although this will be subject to the same state aid application procedure. As with the SME R&D tax credit, the arrangements for payable ECAs would allow companies to surrender the element of their trading losses attributable to ECAs in return for a cash payment from Government. The unrelieved trading loss would then be reduced by the amount surrendered.
check out the Energy from Waste swicki at eurekster.com
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