New support levels for large-scale renewable electricity generation put forward by the government could help boost demand for wood fuels and energy crops grown on UK farms.
The long-awaited “banding review” of the Renewables Obligation payment rates announced last Thursday (20 October) sets out proposed incentives for a wide range of technologies, from biomass co-firing and onshore wind power to large-scale solar photovoltaics and biogas.
The new payment rates will apply from 2013 to 2017 (2014-17 for offshore wind) and it is predicted the proposals will result in 70-75 TWh of renewable electricity in the UK by 2017, enough to meet around 70% of the government’s 2020 target.
It is expected the proposed payments will cost between £0.4bn and £1.3bn less than retaining current banding rates and also drive a higher level of deployment.
Many renewable energy companies have been waiting on the outcome of this banding review before making investment decisions and it is hoped the announcement will give them the certainty to progress with plans.
“We have studied how much subsidy different technologies need,” Chris Huhne, secretary of state for energy and climate change said. “Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.”
The NFU said the proposals could lead to a “comeback for bioenergy”. “The government’s renewed commitment to the Renewables Obligation is of great relief, following recent confusing signals over the Renewable Heat Incentive and Feed-in Tariffs,” chief renewable energy adviser Jonathan Scurlock said.
“Farmers and growers look forward to developing and fuelling renewable power projects of all kinds, but particularly the new opportunities and rural jobs supported by biomass power stations.”
Drax recently unveiled plans to build two large biomass power stations at sites in Yorkshire and Lincolnshire, each with capacity to produce 299MW of electricity. The company’s chief executive, Dorothy Thompson, welcomed the government’s recognition of the important role that sustainably-sourced biomass could play in meeting UK energy targets, but said some of the proposed support levels did not go far enough.
“The proposed level of 1.0 ROC/MWh for enhanced co-firing will enable us to increase our co-firing, but we would need a moderate uplift to maximise our potential for producing this low cost renewable electricity.
“If support were to be increased from the proposed level, we believe it would further the opportunity for burning biomass in place of coal in the UK’s coal-fired generation plant. This will lead to lower electricity prices for the UK consumer, who will otherwise bear the cost of the more expensive alternatives required to meet the UK’s 2020 climate change targets.”
In addition to its biomass co-firing plans at the Yorkshire power station, she said Drax had also been working with Siemens Project Ventures on dedicated biomass developments. “We are disappointed with the proposed level of support for this technology, which makes the investment case for the developments highly challenging.
“We note that this is the start of a consultation period and we will play our full part in the consultation process.”
Rural property consultants Fisher German also welcomed the proposed support for onshore wind, which could ultimately benefit farmers and landowners interested in developing a wind farm on their land.
Although the government had proposed to reduce support from 1.0 ROC/MWh to 0.9 ROCs, this was better than the original suggestion of 0.8 ROCs. “This would have made a lot of proposed wind farms south of the Scottish border unviable,” the firm’s Mark Newton said.
“Wind farm companies receive the wholesale price of electricity, plus the ROC payment, worth in total about £100 per MW/hour, so the total reduction is only about 5%. This reduction should not stop the development of wind farms, which is also good news for landowners who want wind farms on their land.”
The proposed new ROC payment rates can be found at http://www.decc.gov.uk/en/content/cms/news/pn11_85/pn11_85.aspx