Pending Policy

The U.K. biomass industry is waiting for regulatory clarity
By Luke Geiver | May 23, 2012

The good news about the U.K. Department of Energy and Climate Change’s pending decision for Renewables Obligation support levels from 2013 to 2017 is that it is coming this fall. The bad news, according to Gaynor Hartnell, chief executive of the Renewable Energy Association, is that the decision should have already been made.

“We should have had the legislation by the end of April this year,” she says. The delay is affecting investment in projects and feedstock purchases as producers wait to find out what level of support they will receive. “Biomass has been the story of waiting,” Hartnell says.

The Renewables Obligation awards renewables obligation certificates (ROCs) for every megawatt hour produced by a renewable source. The number of ROCs is determined by technology type. By 2017, the entire Renewables Obligation scheme will end, which is already creating confusion about biomass investments beyond that year. Fortunately, the Electricity Market Reform program will replace it and is expected to clear up any doubt in the renewable energy sector by starting a number of different programs to solidify investment, showing investors that prices for renewable energy electricity generation will be fixed. “Investors should be comfortable with this because the total income they will get is totally predictable,” she says.

Although government decisions on renewable energy can be unpredictable, there are a few reasons for the biomass industry to remain optimistic in the U.K. “We are facing a time when a lot of our generation capacity is going to be shut down over the coming years,” she says. “Renewables look good.” And several of the large energy providers that were previously interested in nuclear power have dropped all aspirations for developing those projects. In addition, any uncertainty, decision delay or other floundering by the DECC will only move nuclear energy further from the picture.

Regardless of nuclear’s role in the U.K.’s energy future, there is one more thing Hartnell says will please biomass backers. A recent report completed by the REA shows the growth in the industry from 2009 to 2011. The report, “Renewable Energy: Made in Britain,” shows that the overall increase in biomass market value in that time frame was 11 percent, outstripping general economic growth over the same period (1.4 percent) by a factor of 8. The EMR program should spur even further growth.

—Luke Geiver