Dedicated new-build biomass facilities will not be eligible to claim subsidies under Contracts for Difference (CfDs), which will take over the Renewables Obligation (RO) in 2017.
The Department of Energy and Climate Change (DECC) has confirmed this by publishing the Government’s draft Electricity Market Reform (EMR) delivery plan.
“In the medium to long-term, new-build electricity-only biomass plants do not offer as cost effective a means of decarbonising the electricity grid as other renewable technologies,” DECC stated in the EMR consultation document.
The Renewable Energy Association said it was disappointed in what it called a “misguided” U-turn on support for new-build biomass and urged the Government to reconsider.
Biomass projects are already under pressure after the Government proposed capping incentives at 400MW under the RO in May. The REA estimates that there were already one gigawatt of projects at an advanced stage of development. After the cap, only 40% could then go ahead. As a result, an estimated 600MW of projects are likely to be cancelled.
REA chief executive Gaynor Hartnell said that combined with the RO cap and the lack of a strike price for new build biomass, the absence of subsidies for new-build biomass under CfD “means support for this important technology has effectively come to an end.”
She said: “Whilst it was wrong to cap the amount of new build biomass under the existing policy, until today project developers had the alternative option of a contract under the new policy. Today that option has been closed off. This is a U-turn.
“It is misguided and it will halt the kind of bioenergy industry that environmental NGOs had previously wanted to see, for example one based on domestic forests, woody energy crops, agricultural residues and waste. This decision sends a terrible message to investors.”
Instead of electricity-only new-build biomass power stations, options preferred by the Government are: coal-to-biomass converted power stations; co-firing with sustainable biomass; or dedicated biomass combined heat and power (CHP).
A spokesperson for the REA told MRW: “This doesn’t work, especially as CHP plants need a user for the heat, and power plants tend to be located a distance from communities and businesses, so there is often no user for the heat.”
Choosing between converting coal fired power stations to biomass and building new projects should not be an issue, because the two operate at different scales and both can play an important role, added Hartnell.
- Last week cost-effective renewable heat projects such as direct air heating from biomass were also put in danger by the Government’s decision to delay a critical announcement about subsidies from the Renewable Heat Incentive (RHI) until the autumn.