The government’s legal victory over Drax has rendered future conversions of coal plants to biomass virtually impossible.
Back in August 2013, the UK’s first ever coal-fired power plant to make the switch to generating electricity from biomass also became the country’s first such plant to be shut down.
At the time, the closure of RWE’s 750MW Tilbury plant in Essex was presented an isolated case: the plant was forced to close due to hitting its allotted number of generating hours under the EU’s Large Combustion Plant Directive (LCPD), with RWE unwilling to invest in the emissions technology that would enable it to keep running without an increase in the subsidy support offered by government.
However, the unwillingness of the government to make any concessions with regards to subsidy support for this one biomass plant now looks to have been a signpost for the bulk of its future dealing with biomass conversion plants.
Most significantly, the government hasn’t allotted a single penny to supporting biomass conversion plants under its new contract for difference (CfD) regime, while new biomass plants with combined heat and power (CHP) capability will be able to compete for a share of £155 million in price support annually.
Until two weeks ago, the one coal-fired plant that seemed to be bucking the trend when it came to biomass conversions was Drax: the North Yorkshire plant has already converted two 645MW units to run from biomass, one fully and one co-firing with coal. However, this second unit became the source of a legal dispute with the government when the Department of Energy and Climate Change (DECC) excluded it from the CfD scheme while at the same time approving support for a subsequent third project.
Drax in court
Before I headed off for my summer holiday, Drax’s legal challenge looked to have paid off, with the High Court at the end of July finding in Drax’s favour that both its second and third conversion units should be awarded the Investment Contracts that guarantee price support under the CfD.
However, I have come back to not only miserable weather, but also miserable news for Drax, with DECC’s appeal against the High Court ruling being upheld.
This has left Drax with the only option of applying for support for the second unit under the existing Renewable Obligation (RO) scheme, a scheme that Drax production manager Peter Emery had previously told Process Engineering was too unpredictable to help support investment in a long term biomass supply chain. In contrast, he deemed support under CfD - which guarantees a minimum price level – as “critical” for investments such as new biomass pellets plants in North America to be made.
So just what exactly is it that the government has against coal-fired power plants converting to biomass? It clearly seems intent on making life as difficult as possible for such plants at every turn.
Some might argue against such plants from an environmental point of view, and this is clearly a concern for the government: in July DECC introduced a “carbon calculator” for biomass and earlier this month published its response to a consultation on the sustainability of biomass supplies.
The politicians have chosen to strangle this fledgling industry to the point of death
The other issue is that the government seems to regard biomass conversions as an “established technology” like wind turbines and solar panels, which should be subjected to ever-decreasing levels of support as supply chains strengthen and technology becomes cheaper. At the same time it regards biomass CHP plants as a new technology that should be afforded steady and substantial price support (currently the minimum level of support they will receive is £125 per MWh).
All biomass facilities are dealing with new technology, be they coal conversions or new plants and, as Emery says, this requires investment in the supply chain at a far greater level than an established global industry such as the wind sector.
However, when it comes down to it, I suspect the government’s objection to conversions has a lot less to do with the environment and technology supply chains, and much more to do with money. Plants like Drax have generating capacity that far outstrips the capacity of most windfarms and new biomass CHP plants. With a subsidy that is paid out per MWh, is it any wonder that DECC has chosen to effectively exclude conversions from CfD and fought Drax so keenly in court? Just a couple of units at Drax could gobble up a sizeable chunk of the government’s budget for renewable energy price support.
Rather than run the risk of such a scenario, the politicians have chosen to strangle this fledgling industry to the point of death.