Updated: 28/05/12 : 08:21:06
Britain is placing Europe's biggest bet on biomass as an alternative to polluting oil and coal and expensive gas, but reliance on imports could challenge the plan's low-carbon credentials and Britain's energy security. Burning wood, sunflower husks or animal faeces offers steady so-called "baseload" power, giving biomass an advantage over intermittent renewable rivals solar and wind. It also offers an alternative to Europe's gas-fired power plants, where profits have been eroded by rising natural gas prices. One way biomass is finding a way into the UK's energy mix is through the conversion of coal-burning power plants, which saves up to 75 percent of the cost of building a new station.
"Biomass is perfect for baseload generation capacity because it's always available, it's not like wind power or solar," said Hannes Lechner, head of bioenergy at consultancy Poyry. Britain's biomass plans are Europe's biggest, with 3 gigawatts in planning representing 20 percent of Europe's growth through 2035, according to IHR Emerging Energy Research. It is part of the UK's aim to get 15 percent of its energy from green sources by 2020.
One catch to the UK's biomass plans is its scant domestic supply, which will mean most of the UK's supply will have to be shipped from far-away places such as Canada or Australia, raising questions about just how "green" the plans will prove. With the UK's biomass consumption expected to rise tenfold in the next 25 years, there are also concerns it could be vulnerable to supply disruptions from a handful of overseas exporters in the forest industry, where analysts say long-term supply deals are relatively rare.
"The availability of a viable, long-term, bankable wood fibre supply contract for non-utility takers is by no means certain," said James Barrett-Miles, renewable energy corporate finance director at Ernst & Young, but added there were signs that growing demand from utilities and independent producers was helping to expand the biomass supply chain. For its part, the government is helping back Britain's biomass boom, paying around 84 euros per megawatt-hour produced from dedicated biomass plants through so-called Renewable Obligation Certificates (ROCs), a level it proposes to keep largely unchanged from 2013.
Major utilities have also started to take action, identifying the conversion of coal plants to biomass as a quick and cheap way to reduce carbon emissions. Some have also begun burning biomass alongside coal, or "co-firing". "The economics would favour retrofitting coal to biomass (because) in addition to the power price, you get ROCs. And you make extra savings by not having to buy CO2 permits," one European power market analyst at a bank said.
Britain's most polluting power plant owner, Drax, has started mixing biomass with coal and has said it could increase co-firing to 20 percent this year. The UK subsidiary of German utility RWE in January fully converted its Tilbury coal-fired power plant to biomass in order to improve the site's profitability. Its German peer E.ON is also converting a unit at its Ironbridge coal plant to run on biomass from next year. One key uncertainty for the sector, however, is EU clean air legislation which would see such plants forced to close by the end of 2015 unless UK authorities agree to re-licence them for biomass. (C ) Reuters