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Eon gets permit but does not commit

Eon Climate & Renewables has received a permit to build a 150 MW biomass plant in the Port of Bristol, but it seems that the company may pull out of the deal altogether because the government is threatening to reduce its support for biomass in the next few years. The confusion is indicative of the general investment environment for biomass in the UK at present.

 - The UK is already a strong market for industrial wood pellets cofired in coal plants – and could become even stronger. Source: Verdo
The UK is already a strong market for industrial wood pellets cofired in coal plants – and could become even stronger. Source: Verdo

The UK's Department of Energy and Climate Change (DECC) has reportedly given Eon permission to build the 150 MW plant, which apparently comes as a surprise since the government has announced it will be scaling back its support for biomass by cutting back on Renewable Obligation Certificates (ROCs) starting in 2016. While that date is several years away, it would also take time for such plants to be built – and other similar plans have already been canceled. It is now up to Eon to decide whether to go ahead with construction, and it is anything but clear that the firm will do so.

The most notable exit came last month, when British power giant Drax decided it would be abandoning plans to set up to biomass plants in light of the uncertain future business environment. German technological firm Siemens was involved in both of those projects, which would have been fired with wood chips, agricultural waste, and pellets.

Nonetheless, the cofiring of biomass in coal plants remains strong, and Drax plans to switch 50 percent of its feedstock over to biomass for its coal plants. But these plans also partly depend on what the government decides. Last fall, the Committee on Climate Change recommended in its Biomass Review that the "focus and power generation should be on co-firing and conversion of existing coal plant," not "new large-scale biomass power generation" – a proposal supported by the Renewable Energy Association (REA), which also took the opportunity to criticize the general focus on offshore wind: "Biomass performs extremely well against the Government's ‘marginal technology,’ offshore wind, providing increased cost competitiveness and jobs, at the same time as being able to deliver predictable, controllable baseload power."

In October, the DECC proposed that the current level of 1.5 ROCs per megawatt-hour from biomass be maintained for the next few years but drop to 1.4 ROCs starting at the beginning of fiscal 2016 in April. Shortly thereafter, To make matters more uncertain, a minimum price for carbon is to be implemented in 2013, and it is not certain how that price will pan out. (Craig Morris)

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