How the UK’s first un-subsidised gas to grid plant could be a template for the future
Ahead of The World Biogas Expo, Dr Gareth Mottram, Market and Policy Lead Analyst at ADBA, deep-dives into the state-of-play for biomethane-to-grid plants in the UK
The biggest news in the last 6 months of the UK anaerobic digestion industry has to be the first un-subsidised gas to grid plant being commissioned. Moor Bioenergy from Future Biogas has come on stream with an impressive 100GWh plant built for AstraZeneca’s industrial heat demand. This is an exciting development for the industry, with the potential to provide a template to future expansion without direct government intervention. This plant makes the most of its surroundings and material flow, taking in rotational crops and producing a valorised stream of biomethane as well as CO2, and using the digestate stream to support the local farming environment. This would be a far more common occurrence if there was a mechanism for companies to reduce their Emissions Trading Scheme (ETS) charging based on the use of mass balanced biomethane, which can make the difference between a gas purchase agreement making sense and being unjustifiable.
Gas prices have risen steadily throughout the winter, as expected during a period of higher demand. Since 2023, peak winter prices have fluctuated between £150 and the high £70s, still significantly above pre-2022 levels. The global demand for gas is expected to continue growing in the foreseeable future. However, the outlook for 2025 is uncertain, with potential contraction due to Chinese economic troubles and recent American tariff-driven disruptions. The expansion of US LNG export capacity and the reduction suggest possible drops in wholesale gas prices, but their inefficiency in distribution may mitigate this potential over-supply. The ongoing Russian war in Ukraine has separated the world into two distinct gas supply hemispheres. Electricity prices follow a similar pattern, with the UK maintaining a marginal pricing mechanism.
Fertiliser prices have risen by 5% in the last 5 months, affecting all product types. Since all fertiliser is imported, international trade plays a significant role. Ammoniacal fertilisers depend on natural gas prices, so also increase in line. Diammonium phosphate (DAP), a phosphorus-rich fertiliser, has reached its highest price in 2 years. This could boost digestate value for some operators who can separate digestate and sell to areas with phosphate demand. Economic uncertainty and competition for key nutrients make now a good time to focus on digestate’s nutrient potential, though the upfront costs will make this a long game. Concentration and separation techniques can ensure the long-term value of these products before any UK policy change on
digestate/fertiliser.
The spread between UK and EU ETS prices have pulled back from €20/tonne to closer to €10/tonne, with EU prices also slightly higher than this time last year (~€69/tonne). This is an improvement, but the spread continues to underline the need for the UK government to reduce free allowances for domestic sectors and include mass-balanced biomethane in the ETS to drive decarbonisation of industrial heat and energy demand.
Meet Gareth in-person at the World Biogas Expo, 9-10 July at the NEC Birmingham. He will be guest speaking at the Engine Room theatre, manning the ADBA exhibition stand and roaming the trade show floor. Register free!
