In this, our latest video, Paul Winter, founder of PWCL, discusses how modern Anaerobic Digestion (AD) plants are transitioning from a subsidy-reliant model to a market-led Merchant AD strategy.
By strategically valuing and trading various output commodities – specifically through the Renewable Transport Fuel Obligation (RTFO) – AD projects can unlock significant commercial value even as traditional support schemes like the Green Gas Support Scheme (GGSS) sunset.
Driving Subsidy-Free Viability
While many existing plants still rely on government tariffs to be viable, Paul argues that a truly resilient AD business model treats the plant like a high-performance industrial refinery and by maximising every “exit” from the facility, a project can move toward long-term self-sustainability:
Biomethane as a Tradable Asset: While the GGSS offers a stable, long-term tariff, the RTFO allows biomethane to be traded as a high-value commodity in the transport sector. Although more volatile than a fixed subsidy, the RTFO can offer significantly higher returns during periods of market strength.
Biogenic CO2 Capture: Often seen as a byproduct, high-purity CO2 captured during the upgrading process is a critical commodity for the food and beverage industry, where establishing a robust CO2 market is key to de-risking the overall project.
High-Value Digestate: By properly valuing the nutrient-rich digestate as a premium bio-fertiliser, plants can create a circular local economy that reduces reliance on carbon-intensive chemical alternatives.
The Commercial Challenge
Currently, the market for CO2 and digestate is still maturing and without established, high-value offtake agreements for these secondary commodities, many projects still require a safety net subsidy like the GGSS to move from feasibility to construction.
However, for forward-thinking investors and developers, the goal is clear: diversify the revenue stack to build an asset that can thrive in a post-subsidy world…
In the current regulatory environment, developers face a critical either/or decision.
Under Ofgem and DfT rules, a plant generally cannot claim both the Green Gas Support Scheme (GGSS) and Renewable Transport Fuel Obligations (RTFO) for the same gas.
Whether you are navigating this high-stakes choice for a new greenfield development or planning the long-term transition of an asset approaching the end of its original subsidy, our team provides the due diligence needed to choose the most resilient path.
We help turn technical potential into commercial confidence by modeling which commodity stack offers the best protection against market volatility.
