Government sets rules for biomass race

The Department of Energy and Climate Change (DECC) has published its rules for developers hoping to secure financial support for their projects under the Renewable Obligation (RO) scheme.

Earlier this year the government confirmed that only 400MW of new electricity-only biomass projects would be eligible to receive support under the RO, with these projects then excluded from support under the contract for difference (CfD) feed-in tariff (FIT) subsidy that is set to replace the RO in 2017.

This has meant that there are an estimated 1GW of electricity-only biomass projects in development battling it out to secure RO support limited to just 400MW of schemes.

The rules for this race for RO support, as set out by DECC today, create a two-stage application process. Firstly, there is a priority application window open between now and September 10^th for projects that have already reached financial close and have begun or expect to begin construction shortly.

The new criteria will provide the necessary investor certainty

DECC minister Greg Barker

After this, from September 11^th, there is a standard application window. Within this window projects may apply for RO support within six weeks of their estimated date of financial close. If their application is accepted by DECC, the developers then have an eight week window from the date that the DECC confirmation letter  is issued within which they must achieve financial close on their project to secure the subsidy.

Today’s confirmation of the rules for the RO race came as DECC also announced that all existing and future biomass projects receiving the RO and above 1MW capacity must, from 2015, demonstrate that their feedstock is taken from sustainable sources.

As part of this generators of 1MW capacity and above will be required to provide an independent sustainability audit with their annual sustainability report.

Failure to prove the sustainability of a biomass project’s fuel supply could see RO support for the project withdrawn.

DECC minister Greg Barker said: “The Coalition is committed to delivering clean, affordable and secure energy for consumers. This includes an important role for biomass power as part of the UK’s energy mix. The new criteria will provide the necessary investor certainty and, crucially, ensure that the biomass is delivered in a transparent and sustainable way.”