£8m ‘green gas’ operation unveiled

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The region’s first commercial green gas operation will be officially unveiled today as the furore surrounding energy prices continues to dominate the political agenda with a Government pledge to cut bills

A new £8m plant near Doncaster will pump biomethane into the National Grid and be capable of heating 2,500 homes a day during peak demand in winter and up to 40,000 homes during the summer.

Meanwhile, the Government has unveiled plans to reduce planned rises in annual average fuel bills by £50 through a shake-up of green levies currently paid by energy suppliers.

Energy Secretary Ed Davey said all the major energy companies had signed up to the Government’s proposals but also acknowledged that changes to wholesale and network costs could yet lead to more price rises.

The new green gas facility at Hatfield Woodhouse involves the use of maize and other crops grown during “break years” at 15 local farms. National Grid, the gas network company, has teamed up with Future Biogas on the project and hopes to develop 80 such facilities across the country over the next eight years to increase the use of green gas and ease the reliance on traditional suppliers.

National Grid’s director of network strategy, Jeremy Bending, said: “Biogas will play an important part in providing safe, sustainable gas supplies for our homes and businesses for decades to come and help to reduce the country’s greenhouse gas emissions. We are committed to supporting biogas and this is the first step in our goal to connect 80 such projects across the country over the next eight years.”

The biomethane plant will process 35,000 tonnes of feedstock every year.

Crops are fermented in a digester capable of producing up to 12,000 cubic metres of gas per day which is then injected into the gas network. As a by-product, the process also produces an organic fertiliser that will be used by local farmers.

The Government said it will reduce energy bills by cutting the cost of the energy company obligation (ECO), an insulation scheme delivered by major energy suppliers, in a move that should shave an average of £30-£35 off bills next year.

There will also be a rebate on the warm homes discount, which helps those in fuel poverty. This will save the average customer £12 on their bill for the next two years, although the subsidy will instead be met by the taxpayer.

In addition, electricity companies will take voluntary action to reduce network costs in 2014-15, funding a one-off reduction of around £5 on electricity bills.

Delivering a statement in the Commons, Mr Davey said wholesale prices made up two-thirds of energy companies total costs, while green and social levies came to just under a tenth of the average bill.

He said the levies helped savings for the most vulnerable by enabling householders to make their homes more energy efficient.

Mr Davey said: “It is right that Government keeps these social and environmental obligations, paid for by energy bill-payers, under continuous review. Where we can act to reduce their impact on bills, while maintaining the integrity of our policy, we will.

“But as we do this, we must act responsibly. We must ensure that the changes we make maintain the support provided to the most vulnerable, maintain the investment in clean energy and do not have a negative impact on our carbon reduction ambitions.

“In this spirit, the Government has reviewed the cost profile of its social and environmental policies and I can today announce proposals that will reduce average household bills next year by £50 on average.”

But shadow energy secretary Caroline Flint said the only way to ensure bills did not rise was to enforce a price freeze.

Ms Flint said there was nothing in the announcement which would stop energy companies increasing household fuel bills.

She said that with prices set to rise by £120, the average household bill will still increase by £70 despite the decision to shake-up the green levies.

The shadow Minister said there could also be job losses in the insulation industry as a result of the changes. She said the only thing he had done was move the costs from people’s fuel bills to their taxes.