A new report from analysts Deloitte suggests that biomass generation, in particular by converting existing fossil fuel plants, could exceed government estimations and provide cheap, sustainable, reliable energy for the UK. But for that to be achieved, government energy reforms must deliver suitable conditions.
The UK government has estimated that biomass could contribute up to 21 per cent of the UK’s 2020 renewable energy generation targets. The Deloitte report, Knock on wood: Is biomass the answer to 2020? says that converting certain old fossil fuel power plants to run on biomass could provide reliable, affordable, low carbon energy for the UK. However, much will depend on the government’s Energy Bill, expected this month, as the industry wants to see a policy framework and regulatory environment that will give investors confidence they will see a reasonable return on investment.
Several of the UK’s fossil fuel power stations are scheduled to close soon under the EU’s Industrial Emissions Directive (IED). Most of the UK’s ageing nuclear power stations will be decommissioned in the next decade, but events like the Fukushima disaster in Japan and the continuing impact of the global financial crisis have put at risk the government’s plans for the private sector to replace them. This is against a backdrop of a growing reliance on imported natural gas. Biomass plants could provide reliable generation that would supply low carbon electricity, and therefore help meet the UK government's agreed target, in line with the EU’s Renewable Energy Directive, to generate 15 per cent of the country's energy from renewable energy sources by 2020. If implemented correctly biomass could contribute major carbon savings, says Deloitte.
The UK's Department of Energy and Climate Change (DECC) estimates that around £110 billion will need to be invested in low carbon generation and network infrastructure by 2020. The major part of this funding must be committed up front and it will take years before investments can be recovered from customers. With government spending constrained and household energy bills at an all time high, the private sector is expected to bear the brunt of this funding in the medium term. Deloitte’s modelling indicates that converting existing power plants to run on biomass can provide attractive returns for investors, and that it can be competitive with other renewable technologies.
Dean Cook, UK sector leader for renewable energy at Deloitte, said: “In a sector where government subsidies are an integral part of the revenue stream, the clarity of the regulatory regime is crucial. Government support will therefore shape the future of biomass and its potential to contribute to the UK’s 2020 targets and reduce carbon emissions in a cost effective manner.
“As the amount of intermittent generation technologies in the UK’s energy mix increases, flexible fuel sources that can provide stable and predictable electricity will become increasingly more valuable. Sustainably-sourced biomass could provide this stability.
“There are hurdles that need to be overcome, but Deloitte believes biomass has the potential to help answer the UK’s energy challenges. The question is whether the UK would be missing an opportunity if it did not give biomass more consideration.”
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