Co-fire alarm

Darren Williams argues that it would be a profound mistake to jeopardise dedicated biomass by increasing co-firing subsidies.

If we were designing UK bioenergy infrastructure from scratch, we would probably take the purist approach. Sustainable biomass feedstock would be sourced locally. It would be abundant and have no other use – it would find utility in waste. It would be burned alone in state-of-the-art power plants that are big enough to serve their community with clean heat and power but small enough to remain unobtrusive and local.

This is fantasy, but a good starting point for the government as it designs bioenergy policy. The decision from the Department of Energy and Climate Change (Decc) on the future subsidy regime will be fundamental in establishing infrastructure design. The industry eagerly awaits its response to the Renewables Obligation banding consultation. However, the signs are that the authorities are some way off this perfect world.

The central role of dedicated biomass, as envisaged above, is under review. Initial proposals point to a shift of focus towards “enhanced” co-firing generation. While not presented as an either/or scenario, there are fears that the two will prove unhappy bedfellows. The government’s recent Bioenergy Strategy made the point. It pledged a “limited” focus on new dedicated biomass development, suggesting large coal conversions and co-firing projects are likely to dominate the biomass landscape in years to come.

In fact, the trend surfaced in Decc’s long-awaited consultation on the Renewables Obligation banding review, published last October. To the relief of many mainstream developers, Renewables Obligation Certificates (Rocs) for dedicated biomass are to remain at their current level of 1.5Roc/MWh until April 2016, a move that has helped free the previously stagnant UK development pipeline.

However, the consultation proposes an additional “enhanced” band for co-firing, launching a call for evidence on this crucial point. Currently, all co-firing installations receive 0.5 Roc/MWh, but the proposals suggest an increase to 1Roc/MWh for installations that generate more than the current cap of 15 per cent of their power from biomass. This step would have significant implications for the indigenous industry, both in terms of feedstock availability and cost.

Because installation changes for plants co-firing up to the current cap of 15 per cent typically allow for 30-40 per cent co-firing capacity, many of these generators will have no additional capital costs but will still be able to reach higher thresholds. As a result, further subsidy to these projects would mean windfall gains, while at the same time smaller plants would be placed at a competitive disadvantage. The fact that the original introduction of a co-firing band stimulated a significant number of installations in the UK suggests the existing level is already commercially attractive.

Furthermore, co-firing generators are typically large, established operators, with a number of options in terms of access to investment and finance. They can also already afford to pay premium prices for fuel in a highly competitive and relatively constrained market. An increase in subsidies offered to co-firing technologies risks engendering a disproportionate hold on domestic feedstock and upsetting the industry mix.

Why does this matter? Small-scale (sub-100MW) dedicated biomass projects that call upon locally-sourced, sustainable feedstock remain a part of the UK’s vision for bioenergy. For example, Eco2 and project owner BNP Paribas Clean Energy Fund are building a 38MW straw-fired biomass plant in Sleaford, Lincolnshire. The UK could accommodate more indigenous fuelled projects such as this. It could benefit from a range of embedded benefits that only smaller-scale projects can bring, from the provision of district heat to synergies with the local grid.

Some of these will be put at risk if large co-firing projects are given an unfair advantage in the market. Even if feedstock availability is not significantly diluted by a proliferation of co-firing, its price will rocket. If an “enhanced” band of co-firing is to be introduced, the threshold should be set much higher, at a minimum of a 40 per cent biomass fuel mix. Such a step would maintain a more balanced bioenergy market and maintain a role for smaller, dedicated biomass.

Although it is encouraging to see the government take the bull by the horns and commit to the development of bioenergy in the UK, the role of smaller, dedicated biomass projects should not be overlooked. As well as creating imbalance in generation, failure to expand the nation’s portfolio of smaller-scale dedicated biomass facilities is likely to escalate concerns over sustainability. The volume of feedstock involved for larger projects introduces new risks associated with the import of fuels. Having cornered domestic sources of feedstock, much of the additional biomass required will have to be sourced abroad. Stringent checks will have to be put in place to ensure the sustainability criteria are met on a national, European and global level, not to mention the mitigation needed to balance transportation carbon costs.

Furthermore, rural communities will suffer. Smaller biomass projects inject over half of their income into the rural economy, sourcing much of their feedstock locally. Through Section 106 agreements, local authorities are able to ensure that the entire community benefits from new infrastructure. Increasingly we will also find that they will be able to take advantage of other features that large-scale projects cannot deliver. Heat from the Sleaford project, for instance, will be used by the local council and swimming pool through the creation of a dedicated district heating network.

In the world of fantasy, we do not face a legacy of coal-fired energy architecture, or the need to slash emissions. We need not worry ourselves with scarcity of resource, availability of feedstock or austerity in approach. Back in reality, we should not ignore the utopian vision entirely. Local-scale dedicated biomass is both deliverable and commercial. It is not a panacea, but its contribution to the UK’s future energy mix is some way off saturation point. Even bearing in mind the pressing need to pull down national carbon emissions and conduct wholesale surgery on ailing energy infrastructure, it would be nonsensical to obstruct the growth of an ideal with the delivery of a compromise.

Legislating short-term windfalls for co-firing of biomass would be an irrevocable mistake.

Darren Williams is commercial director at Eco2

This article first appeared in Utility Week’s print edition of 6 July 2012.

Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx