U.K. DECC proposes RO changes for biomass cofiring, conversions

By Erin Voegele | December 15, 2014

The U.K. Department of Energy and Climate Change is proposing to make changes to its Renewables Obligation for certain biomass facilities. According to the DECC, the proposed changes would mean that generators that carry out new conversions from coal to biomass or increase the levels of cofiring would no longer be covered by its policy to maintain their levels of support under the RO scheme. A consultation on the changes is open through Jan. 26.

Information released by the DECC indicates the proposed changes to the RO are part of the transition to the new Contracts for Difference (CfD) scheme. The CfD scheme would be unaffected by the proposed changes. According to the DECC, biomass conversions will be able to compete for support under the CfD scheme should funding be made available in the future. The DECC also noted the proposed changes have been made to protect consumers from extra costs in the future.

In a statement released announcing the new proposal, the DECC explains that it is essentially proposing to remove a grandfathering provision from the RO that was put in place to protect biomass conversion units and several other technologies accredited under the RO from future changes in support levels. The proposed changes would remove this grandfathering provision for new biomass conversions and any mid-range or high-range cofiring that would accredit under the RO on or after Dec. 12, 2014 or cofiring or conversion plants moving to a higher RO support band on or after that date. In its statement, the DECC said it is proposing a grace period to take into account the position of generators who have already acted on the basis that the current grandfathering policy will continue.

“Biomass is an important part of the U.K.’s energy mix, playing a central, transitional role in decarbonising the electricity grid, and a significant amount of biomass conversion has already taken place. However, market intelligence now suggests deployment of biomass will be higher than originally estimated. As a result, Government needs to take action to reduce the risk of exceeding the Levy Control Framework, which caps the cost of energy policies on bill payers. Biomass conversions can still apply for support through the new Contract for Difference system, should funding be made available for them in the future,” said the DECC in its announcement.

Within the consultation, the DECC stresses the proposed changes do not apply to dedicated biomass, either with or without combined-heat-and-power. In addition, the proposed changes would not impact several other biomass technologies, including energy-from-waste, advanced conversion technologies, anaerobic digestion, sewage gas, or landfill gas. Also unaffected are combustion units which have already received RO support under the biomass conversion bands before Dec. 12 and any combustion units that have already received RO support under the mid-range or high-range bands before Dec. 12. The DECC also specified the proposed changes would not apply to the grandfathering policy on biomass sustainability that is set out in the government response to the consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the RO.

The DECC also describes several proposed exceptions to the proposed changes. The department has proposed a grace period for any combustion unit that is the subject of an investment contract awarded through the final investment decision enabling for renewables process where that contract is terminated under the state aid condition in the contract because a negative or conditional state aid decision or a delay in state aid decision being obtained. For those units, the commitment to convert has already been made and was factored into DECC planning. According to the DECC, a grace period would mean that those combustion units would not lose grandfathering merely because of conversion delays caused by the state aid process. A grace period is also proposed for any combustion unit that has in any month prior to the Dec. 12 publication of the proposal moved into the mid-range or high-range cofiring bands. According to the DECC, the grace period could enable any units that have already received support under these bands to compete their transition to full conversion. According to the DECC, it is proposing that units that meet either of those two criteria would have 12 months to move to full conversion and become covered by the DECC’s grandfathering policy at that band.

Additional information and a full copy of the DECC’s proposal is available on the department’s website.