Industry declares 'race is on' for projects to secure backing through Renewables Obligation mechanism

 

The government has today set out plans that could see fresh restrictions placed on the biomass power industry from July, with the launch of a new consultation on controversial measures to cap the level of support the sector will receive.

Ministers announced last year that they intended to place a cap on the number of biomass projects that will be eligible for support through the Renewables Obligation (RO) mechanism between now and the subsidy mechanism being phased out in 2017.

The cap is to be set at 400MW of capacity and the government today launched a consultation on how projects can register to be included in the cap.

The document confirms that "a place within the cap should be allocated only to projects that have reached financial close and have either taken a decision to move to the construction phase of the project or have actually started construction". It also reveals that the Department of Energy and Climate Change (DECC) plans to launch the register for eligible projects from this July.

The Renewable Energy Association (REA) welcomed the swift launch of the register, but reiterated its argument that the cap represents a significant blow to the industry.

"The entire concept of capping new dedicated biomass capacity is wrong," said REA chief executive Gaynor Hartnell in a statement. "There may be as much as 1,000MW of projects still in active development, yet DECC wants to limit the build to only 400MW.

"Whilst the proposal is probably the best means of implementing this deeply flawed concept, it is not without risk. There could be a situation where more than 400MW applies to go on the register on the same day. The irony is that DECC should be welcoming such projects, rather than turning them away. The UK faces an impending capacity crunch in 2015-16 and the steady, baseload green electricity generation from these biomass projects is needed, and can provide significant investment and jobs across the country."

However, a DECC spokesman told BusinessGreen that the government felt there were compelling cost argument for placing limits on new biomass developments.

"Biomass will make a significant contribution to the UK's carbon and renewable energy targets for 2020," he said. "But the analysis we have done shows that offshore wind is a comparatively cheaper means of cutting emissions. We are looking for value for money for the bill-payer."

The biomass industry has disputed the government's cost analysis, arguing that biomass power stations generate electricity at a lower cost than offshore wind, while the cost of carbon savings is on a par with that offered by offshore wind farms.

Significantly, a raft of biomass power technologies are exempted from the cap, including anaerobic digestors, co-firing plants, combined heat and power systems, landfill gas and sewage gas capture projects.

However, the move will still come as a blow to the biomass sector, which is also currently facing protests from some green groups who have questioned whether standards requiring power plants to only source sustainably produced biomass are tight enough.