An investigation into the support scheme for renewable electricity in NI has found that financial incentives for anaerobic digestion (AD) plants could be higher than necessary.

According to the NI Audit Office, there is a “significant risk” that returns are above those originally forecast by the government department which designed the scheme.

“Financial returns for small-scale AD based generating stations appear excessive, possibly due to the limited data available to government at the time levels of support were decided,” the report states.

The audit office report states that there are approximately 3.5 times more AD plants per square kilometre in NI compared to Britain

The audit office has recommended that the Department for Economy conducts a review to see if current levels of support and financial returns are compatible with original projections.

A department spokesperson confirmed to the Irish Farmers Journal that this recommendation has been accepted, and a review will be carried out.

The audit office report states that there are approximately 3.5 times more AD plants per square kilometre in NI compared to Britain.

It puts this down to “higher levels of financial support and good access to energy crops and waste” in NI.

Uptake

The NI Renewable Obligation (NIRO) scheme was launched in 2005 to incentivise renewable energy generation in NI, but initial uptake of AD technology under the 20-year scheme was low.

However, a review of NIRO in 2011 changed the level of support that AD plants receive, and the number of stations constructed in NI increased, peaking in 2017 ahead of the scheme closing for new entrants.

The audit office report states that there were 110 accredited AD generating stations in NI last year.

The NIRO is ultimately paid for by consumers through electricity bills

The NIRO is a market-based scheme, where renewable electricity generators receive payments for Renewable Obligation Certificates (ROCs) from electricity suppliers who use fossil fuels.

The NIRO is ultimately paid for by consumers through electricity bills, so it is different to the botched Renewable Heat Incentive scheme in that it is not funded directly from government budgets and is therefore less prone to overspend.

Waste management

The audit office report also raised concerns that the requirement to comply with the likes of waste management regulations and planning permission rules is not a precondition of NIRO.

It gives the example of a NI Environment Agency review in 2019 which found that 30 out of 68 AD plants which required a waste management licence did not have one in place but were still in receipt of ROCs.

Quick payback from wind turbines

The report by the NI Audit Office also focused on the financial incentive to generate renewable electricity from small-scale wind turbines.

Similar to AD plants, the investigation found that a higher level of support was available for wind turbines in NI than in Britain before NIRO closed for wind energy applications in mid-2016.

“The potential rate of return could be in excess of 20%, with a payback period on the original investment of less than four years,” the report states.

In March 2020, 46.8% of electricity used in NI was from renewables

While the audit office highlights “strategic shortcomings” in the design of NIRO, it acknowledges that the scheme was fundamental for NI to exceed its target of 40% electricity consumption from renewable sources by 2020.

In March 2020, 46.8% of electricity used in NI was from renewables, with 85.4% of this coming from onshore wind, 10.6% from renewable fuel (including AD biogas) and 3.3% was solar.