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Government abandons biomass subsidies

The ‘grandfathering’ policy by which biomass plants in England and Wales receive subsidies under the Renewables Obligation (RO) framework is being scrapped.

Under grandfathering, once a generating station is accredited and receiving RO support at a certain level, this will not change for the lifetime of its support under that scheme.

Now Department of Energy and Climate Change (DECC) minister Lord Bourne of Aberystwyth has announced: “The support rate under the RO for future biomass co-firing and conversion projects in England and Wales will no longer be covered by grandfathering. Exceptions will be provided to protect those who have already made significant financial commitments.”

In response to a consultation, the minister said that, unless grandfathering was withdrawn, there was a “strong likelihood” that additional biomass conversion units not previously accounted for in RO budgets would convert under the RO, resulting in a potential additional cost of around £500m a year in 2020-21.

The changes to grandfathering policy will take effect retroactively from the publication of the consultation document on 12 December 2014.

Additional exceptions include:

  • any station or combustion unit that is the subject of an investment contract awarded through the Final Investment Decision Enabling for Renewables process and is awaiting state aid clearance
  • any station or combustion unit which has moved into the mid- or high range co-firing bands and generated electricity eligible for Renewables Obligation Certificates under these bands in any month before 12 December 2014

The anaerobic digestion industry has voiced concerns over a consultation on the possible removal of pre-accreditation for feed-in-tariffs that could impact the level of investment in the sector.

Veolia UK and Ireland’s senior executive vice-president, Estelle Brachlianoff wrote in the Guardian that the cuts were a “massive surprise” and could shake investor confidence.

She said: “What I don’t understand is why the government would apply the climate change levy on renewable energy plants which are carbon-positive. It’s illogical. Even worse, it removes the business case for existing renewable energy plants that were predicated on the investment avoiding carbon tax until 2023.”

 

 

 

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