Biomass firms face subsidy fight
31 Jul 2013
Developers of new biomass projects across England and Wales are bracing themselves for a race to secure financial support under the Renewable Obligation (RO) scheme.
The government last month closed a consultation on its proposal that only 400MW of new dedicated electricity biomass plants will be eligible to receive RO certificates (ROCs).
This was followed by an announcement in July that only converted coal or new combined heat and power (CHP) biomass plants will be eligible to receive support under the contract for difference (CfD) feed-in tariff (FIT) subsidy that is set to replace the RO in 2017.
Firms contacted by Process Engineering said they expected the Department of Energy and Climate Change (DECC) to issue its response to the 400MW cap consultation in the coming weeks, setting out its conditions for developers to secure support for their projects.
We are waiting for government to let us know this week or next
RES project manager Chris Lawson
DECC is expected to require projects to reach financial close before they can secure RO support guaranteed beyond the scheme’s end in 2017.
The Renewable Energy Association (REA) estimates that there are 1GW of biomass projects at advanced stages of development, with the government’s policy placing 600MW of schemes at risk.
Projects competing for a slice of the 400MW cap include:
- RES Port of Blyth - 100MW
- Helius Avonmouth -100MW
- E.ON Blackburn Meadows -30MW
- E.ON Portbury Dock - 150MW
- RWE npower Stallingborough - 65MW
- MGT Power Teesport - 300MW
RES’ Port of Blyth development in Northumberland was only granted planning permission by Energy secretary Ed Davey last week, days after he had excluded new dedicated electricity biomass plants from the CfD scheme.
RES project manager for the Port of Blyth Chris Lawson told Process Engineering that the project was being developed and financed on the basis that it will receive support under the RO. Elligibility under the CfD, he added, had not been considered due to investigations ruling out the potential of the plant to operate on a CHP basis.
The plant is scheduled to reach financial close and begin construction next year.
“We are waiting for government to let us know this week or next [on the rules for securing the RO under the 400MW cap],” said Lawson.
“Our understanding is that [the main requirement] will be financial close.”
A DECC spokesman told Process Engineering: “We will be issuing the Government Response [to the 400MW cap consultation] shortly. This will set out the process and requirements for all applications who wish to be considered for a place under the cap.”
