Foster announces enhanced support for landfill gas generation projects

Energy Minister, Arlene Foster, today announced that electricity generated from landfill gas will be provided with a higher level of financial assistance.

The announcement follows approval from the European Commission under its State Aid rules, that electricity generated from landfill gas in Northern Ireland can receive four times the support currently offered in the rest of the UK under the Renewables Obligation.

Welcoming the Commission’s approval, the Minister said “This is good news for Northern Ireland. It will help to fully achieve our potential to generate electricity from landfill gas, providing us with an alternative and reliable source of electricity.

“Landfill gas generation in Northern Ireland is currently less advanced and more costly than in Great Britain, so it is important that we put in place a level of support that will allow us realise its benefits as a renewable energy source.”

Support for renewables development in Northern Ireland is provided by way of Renewables Obligation Certificates (ROCs) issued under the Northern Ireland Renewables Obligation (NIRO). These ROCs currently trade at around £50 and are awarded to generators for each unit of output according to type of generation or renewable source used.

The NIRO operates alongside two similar Obligations in Great Britain, one for Scotland and one for England and Wales. Generally there is a high degree of consistency between the three Obligations and the ROCs from all three trade on a UK-wide basis.

When differing levels of support were introduced in April this year to take account of the costs of the renewable source or technology involved, GB decided to reduce the support for landfill gas generation to one-quarter (0.25) of a ROC for each megawatt-hour of output. This applied across the UK, however the Commission has now granted State Aid clearance to permit the one ROC level of support for Northern Ireland projects.

Commenting on the importance of this support under the NIRO, Arlene Foster said: “Since its introduction in 2005, the NIRO has proved successful in bringing forward new renewables developments, primarily wind, to the extent that over 8% of our electricity consumption now comes from indigenous renewable sources.

“This enhanced support for landfill gas in Northern Ireland will help add to that success. It is also an example of how we can tailor our energy policy to provide solutions that are right for Northern Ireland. I will be bringing forward an amendment to the NIRO legislation to provide for this change as soon as possible.”

Notes to editors:

1. The Northern Ireland Renewables Obligation (NIRO) is the main support mechanism for increasing the level of electricity consumption that is generated from renewable energy sources. The NIRO places an obligation on electricity suppliers to account each year for a specified and increasing amount of their sales as having been from renewable sources or to pay a buy-out fee that is proportionate to any shortfall. Suppliers comply with the NIRO by presenting Renewables Obligation Certificates (ROCs) which are issued to renewable generators according to the level of output. The NIRO operates in tandem with similar Obligations in GB and there is a UK-wide market for the ROCs which currently trade at around £50 each and hence provide financial support to the generators.
2. Until April 2009 generators were awarded 1 ROC for each megawatt-hour (MWh) of output but a system of banding that was introduced from then across all three Obligations saw emerging or more costly generating technologies (e.g. tidal, anaerobic digestion) being awarded more than 1 ROC while others received less. In GB, where the Landfill Gas generation capacity has already been extensively exploited and costs reduced, the support was reduced to 0.25ROCs per MWh generation,whereas in Northern Ireland, application of the one ROC level was deemed a more appropriate support level for the industry. The banding changes were the subject of approval by the European Commission under State Aid rules and this approval was initially given on the basis of the GB banding decision with any variation requiring follow-up agreement by the Commission.
3. The higher level of support agreed for Landfill Gas in Northern Ireland will be effected by way of an amendment to The Renewables Obligation Order (Northern Ireland) 2009.
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