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Five waste projects awarded CfDs

Competitive auctions have resulted in 27 renewable energy projects winning subsidies under Contracts for Difference (CfDs), of which five are waste-related.

In the first allocation round there were three awards to advanced conversion technologies (ACT) or gasification and two for energy-from-waste (EfW) projects with combined heat and power (CHP):

  • BHEG Walsall – ACT 26MW
  • Energy Works (Hull) – ACT 25MW
  • Enviroparks Hirwaun Generation Site – ACT 11MW
  • Wren Power and Pulp – EfW with CHP 49.75MW
  • K3 CHP Facility – EfW with CHP 45MW (pictured above)

Combined the waste-related projects will power 171,000 homes.

However, the Department for Energy and Climate Change (Decc) said: “All technologies apart from EfW cleared significantly below the maximum prices per megawatt hour (MWh), known as strike prices, showing that competition has delivered better value for consumers.”

Wheelabrator UK’s 550,000 tonne capacity K3 CHP facility, one of the successful projects, will not only provide power to the grid, but will also “supply large volumes of steam” to the DS Smith paper mill at Kemsley in Kent, according to business development director Paul Green.

The Renewable Energy Association (REA) welcomed the auctions being delivered on time, but said they needed to be more frequent.

REA chief executive Nina Skorupska said: “We have longstanding concerns regarding the CfD policy and are engaging with the Government on these in the lead-up to future allocation rounds.

“Today’s results show many of these concerns are still valid, for example regarding emerging technologies. That said, it is positive that a wider spread of technologies than anticipated was awarded contracts.”

Skorupska was also concerned that more budget was allocated to higher cost renewables than to the cheapest.

Meanwhile there were no biomass CHP projects in the auction.

According to the Association for Decentralised Energy (ADE), under CfDs, all support for both renewable electricity and heat falls to zero if a heat customer closes, moves away or reduces demand.

Tim Rotheray, ADE director, said: “Unfortunately, the design of the scheme currently makes biomass CHP near-uninvestable.

“Today’s auction shows that the Government needs to support industrial competitiveness by improving certainty for biomass CHP schemes in future allocation rounds.”

CfDs take over fully from Renewable Obligation Certificates (ROCs) in 2017.

The budget for the next allocation round will be confirmed later this year.

Paul Green, Wheelabrator technologies’ director, business development, said: “This allocation, along with the planning consent and environmental permit, make the K3 CHP Energy Recovery Facility a very real and deliverable project. We expect construction work to begin later this year which will create hundreds of jobs and supply chain opportunities.”

K3 CHP:

  • Size of facility: The plant will be able to process 550,000 tonnes per year of waste derived fuel. 
  • Planning and permitting: The Environment Agency awarded an Environmental Permit in 2011 and the facility was granted planning permission by Kent County Council in March 2012.                               
  • Jobs and employment: K3 CHP will help safeguard 800 jobs at the paper mill by diversifying DS Smith’s long-term energy requirements. Construction of the facility will also create hundreds of additional jobs and dozens of operational roles at the plant.
  • Construction and operational dates: Wheelabrator expects construction of the facility to start in 2015 and plant operations to begin during 2018.

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