Biomass projects handed price support

The conversion of two coal-fired power plants to biomass and a new dedicated biomass combined heat and power (CHP) project were included alongside five offshore wind farms for the award of CfD investment contracts, which effectively guarantees a minimum price for electricity generated by the projects up to 2027.

The three biomass projects to win support are MGT Power’s Teeside Renewable Energy 299MW biomass CHP plant, the conversion of coal-fired units totalling 420MW at Lynemouth power station in Northumberland, and the conversion of a 645MW coal-fired unit at Drax to biomass.

However, Drax is launching a legal challenge against the Department of Energy and Climate Change (DECC) for the exclusion of another of its planned unit conversion from the CfD mechanism.

The CfD feed-in tariff system is being phased in this year to replace the existing Renewables Obligation Certificates (ROCs) scheme in 2017. Under CfD, generators will receive a top-up payment when the wholesale electricity price is below a pre-agreed “strike price”, and pay money back when the price rises above it.

Strike prices

For the conversion of older power plants to generating from biomass – effectively burning material such as wood pellets or energy crops – this strike price is set at £105 per MWh.

For new biomass plants with CHP, such as MGT Power’s Teeside plant, the strike price is set at £125 per MWh.

To be eligible for price support under the CfD, a biomass project must either be a conversion scheme like Drax and Lynemouth or, if a new project, must be a biomass CHP plant.

These criteria left an estimated 1GW of planned new biomass projects without CHP seeking to secure ROCs support, which the government capped at 400MW last summer.

Since the capping of ROCs for biomass just two new projects totalling 73.5MW have been approved.