Subsidy wins for biomass and AD
25 Jul 2014
Biomass and anaerobic digestion (AD) plants will be able to compete for £155 million annually under the government’s new contract for difference (CfD) price support scheme.
AD and new dedicated biomass projects with combined heat and power (CHP) capability are the two process-intensive renewable technologies categorised by the government as “less established technologies”.
Yesterday the Department of Energy and Climate Change (DECC) confirmed that this category, which also includes offshore wind and geothermal technologies, will be allocated the lion’s share of the available £205 million annual government price support.
We’re making sure that decarbonising the power sector will come at the lowest possible cost to consumers
Energy secretary Ed Davey
Renewable energy projects using technologies such as onshore wind, solar and landfill gas that have been categorised as “established” will only have an annual pot of £50 million from which to draw price support.
“By radically reforming the electricity markets, we’re making sure that decarbonising the power sector will come at the lowest possible cost to consumers,” said Energy and Climate Change Secretary Ed Davey.
“[Renewable energy] projects will create green jobs and green growth, reduce our reliance on foreign-controlled volatile energy markets and make sure billpayers get the best possible deal.”
Under CfD, which is being phased in this October to replace the existing Renewables Obligation Certificates (ROCs) scheme in 2017, 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.
As revealed by DECC in May, projects using technologies classed as established will have to bid for support via auction, allowing the market to effectively set the strike price. Less established technologies such as AD and biomass with CHP will be competing for guaranteed strike prices (the strike price for new biomass projects with CHP has been set at £125 per MWh) and, as revealed today, will do so within a bigger pot of money.
In addition to yesterday’s announcement being bad news for those technologies classed as established, there was also little comfort for firms such as Drax that are converting existing coal plants into biomass-fuelled electricity generators.
DECC in May proposed that biomass conversions would only be able to bid for CfD support via auction if there was enough money left in government budgets after the established technology auctions had been held.
Yesterday’s announcement made no further allocation of funds to biomass conversions.
Biomass carbon calculator
While Drax avoided making comment on the CfD allocations, it did welcome DECC’s publishing yesterday of a “biomass carbon calculator”.
In August last year DECC announced biomass generators whose feedstock came from unsustainable sources would be stripped of financial support.
The “calculator” launched yesterday is an academic study of the lifecycle impacts of using biomass to generate electricity.
There is a right way to source biomass and a wrong way
Drax chief executive Dorothy Thompson
“The calculator looks at the changes in the amount of carbon stored in forests in North America when assessing the benefits and impacts of various bioenergy scenarios,” said DECC chief scientific advisor David MacKay.
“It gives new information about which biomass resources are likely to have higher or lower carbon intensities, and so provides insight into a complex topic.”
Drax chief executive Dorothy Thompson said the study was a welcome addition to a growing body of evidence on the sustainability of biomass.
“The academic study by DECC confirms what Drax has always argued, that there is a right way to source biomass and a wrong way,” said Thompson.
“We welcome that it confirms the fact that where biomass is sourced sustainably major carbon savings can be delivered.”
However, Friends of the Earth argued that the study in fact showed that “burning trees from overseas forests in our power stations can have a bigger impact on our climate than burning fossil fuels”.
“The Government must urgently rethink its bioenergy strategy,” said Friends of the Earth bioenergy campaigner Kenneth Richter.
“Rather than writing blank cheques for firms like Drax the Government must introduce full carbon accounting for bioenergy in the UK, and ensure that cutting emissions is at the heart of all our energy policies.”
