Biomass Barriers

U.K. biomass development slows due to market uncertainty.
By Lisa Gibson | November 23, 2010

While it may seem the U.K. is poised to push to the front of the pack in biomass development, problems with policies and the government’s Renewables Obligation seem to be hindering meaningful growth in the industry. 

The Renewables Obligation provides incentives in the form of Renewables Obligation Certificates (ROCs), banded by technology used. The bands are reviewed every five years, the next scheduled in 2013. Biomass currently receives between 1.5 and 2 ROCs and was finally grandfathered at current levels in July, having been the only renewable resource not given the privilege. It was a necessary change, but now different concerns loom. “This was a much welcome development, however construction periods for biomass developments will almost always span the banding review, and it is not certain that there will be a sufficient ‘grace period’ to enable the project to commission at least at the support level in place when financial close was achieved,” says Tricia Wiley with the Renewable Energy Association, adding that some uncertainty has plagued the market because of it.

In July, the Department of Energy and Climate Change implemented a split solution: grandfather support at current levels for anaerobic digestion and energy-from-waste generators; and grandfather a minimum level of support on accreditation for dedicated biomass. The level of support is subject to change in the 2013 banding review.

“We’ve got a whole host of projects stalled at the moment because they won’t reach commission by 2013, which means they don’t know what support they could get,” she says. Development is even more difficult in Scotland, which is proposing that waste-to-energy technologies are grandfathered, but not dedicated biomass. “We’re working as an industry to try to influence the Scottish position at the moment,” Wiley says.

“From my experience, it is more difficult to develop biomass plants in the U.K. than in other parts of the European Union and it is more difficult to develop biomass plants in Scotland than it is in other parts of the U.K.,” says Donald MacBrayne, head of Horizons Environment, a Scottish Water subsidiary that runs the company’s Deerdykes, Scotland, 1-megawatt combined-heat-and-power anaerobic digestion (AD)  facility. The plant digests 30,000 metric tons per year of waste from local authorities, supermarkets, hotels, restaurants and food producers. The facility is a merchant plant—built speculatively without contracts for inbound materials—and therefore was not funded by any banks, MacBrayne says, adding that securing funding is one of the most difficult aspects of AD development.
Currently, grant programs assist some developers in the U.K., but will expire in about two years and likely will not be renewed, Wiley says, making grandfathering of biomass technologies all the more important to development.