Drax, 2 others make UK renewable support list, Eggborough omitted

By Erin Voegele | December 19, 2013

The U.K. Energy Act became law Dec. 18, when it received royal assent. According to information released by the U.K. government, the act puts into place measures to attract the £110 billion ($180.19 billion) investment needed to replace current generating capacity and upgrade the grid by 2020.

The measure includes provisions for contracts for difference (CFD), which are long-term contracts to provide stable and predictable incentives for companies to invest in low-carbon generation. It also includes provision to enable long-term contracts to enable early investment in advanced or the CFD regime coming into full force in 2014, provisions for access to markets, including power purchase agreements, provisions related to transition arrangements for investments under the Renewable Obligation scheme, and several others.

“We have driven the Energy Bill through Parliament on time to send out a clear signal to investors and industry. We have delivered the certainty they need and confirmed Britain’s position as one of the most attractive countries in the world to invest in energy generation,” said Secretary of State for Energy and Climate Change Edward Davey. “We are now able to build on the measures already in place to deliver cleaner energy, affordable bills, energy security and the creation of thousands of skilled green jobs across the U.K.”

In addition to publishing the Electricity Market Reform Delivery Plan, the U.K. Department of Energy and Climate Change specified that several other accompanying announcements are being made. One is a revised version of the Contracts for Difference (CfD), which includes improvements made to the contract terms to further support the ability of developers to bring forward investment at lower costs to consumers.

The DECC also announced the government has sent out draft investment contracts to the 16 renewables projects that have progressed to next stage of the Final Investment Decision Enabling for Renewables process. While only 10 projects have been told they are provisionally affordable under the budget caps announced on Dec. 4, the DECC said all are able to remain in the process until it is completed and contracts are awarded in the spring. 

A total of four biomass projects were included in the list of 10 projects found to be provisionally affordable. They include Drax 2nd Conversion Unit (Unit #3), Drax 3rd Conversion Unit (Unit #1), the Lynemouth Power Station conversion and the Teesside Renewable Energy dedicated biomass project with combined-heat-and-power (CHP).

The Eggborough Power Ltd. biomass conversion was not among the 10 projects named as being provisionally affordable. However, conversion of each of its three units were among the original 16 projects that were sent draft investment contracts earlier this month.   

Earlier this week, an Eggborough spokeswoman was quoted in a press release issued by a Nigel Adams, member of parliament for Selby & Ainsty, as confirming that the plant’s biomass conversion is unlikely to move forward without the subsidies. Rather, the facility will likely be unable to operate past 2015.