Axe falls on biomass power subsidies
23 Jul 2015
UK government ministers have revealed a range of cuts to subsidies for renewable energy, targeting the biomass power industries.
The Department for Energy and Climate Change announced the plans on Wednesday, bringing to an end its guaranteed level of subsidy for biomass conversions and co-firing projects.
Conversion of coal power or biomass co-firing stations has been pursued as a cost effective way to rapidly decarbonise electricity generation in a short time frame, while extending the lifetime of current assets.
The Government has stripped away without warning incentives for projects on which many companies have made major investment decisions in renewable technologies.
Veolia’s Richard Kirkman
The Drax power station announced plans in 2012 to transform itself into a predominantly biomass-fuelled generator, and has since converted two coal units to burn wood pellets.
The government’s moves are part of a wider set of revisions aimed at trimming its overall spending on renewables such as wind and solar, and within Wednesday’s announcement were cuts in support for small-scale solar projects.
It explains the changes as necessary to protect consumers, who support renewable energy through their energy bills.
The total amount of subsidies is capped via a mechanism called the Levy Control Framework (LCF), and according to the government, official projections show that costs of subsidies have risen higher than expected when the schemes under the LCF were set up.
It says this was caused by a number of factors, including lower wholesale electricity prices, higher than expected uptake of some schemes, and more efficient technologies that meant renewables would be able to generate more electricity than previously projected.
“Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies,” said Amber Rudd, energy and climate change secretary.
The measures announced on Wednesday include removing the guaranteed level of subsidy for biomass conversions and co-firing projects, known as grandfathering.
This could reduce the risk of more allocations under the LCF by around £500m per year by 2021, the government said.
Richard Kirkman, the UK technical director of water and waste company Veolia, described the announcement as “a significant U-Turn”.
“The Government has stripped away without warning incentives for projects on which many companies have made major investment decisions in renewable technologies,” he said.
“We appear to be entering another Dark Age where we will return to total fossil fuel reliance, power cuts, low confidence in UK investment, opening the door for fracking activities to maintain energy security.”
