Report: High potential for power plant conversion, cofiring in UK

By Erin Voegele | November 06, 2012

U.K.-based business advisory firm Deloitte LLP has published an analysis that determines the biomass industry could contribute more than the 21 percent renewable energy by 2020 projected by the U.K. government. The report, titled “Knock on wood: Is Biomass the answer to 2020?” determined that converting certain old fossil fuel power plants to biomass could provide a reliable, affordable source of low-carbon energy for the U.K.

The report points out that the U.K. is facing several sets of challenges, including energy security, decarbonization and affordability. Regarding energy security, Deloitte said that the U.K. is currently relying too much on imported natural gas, and that several fossil fuel and nuclear plants are slated for shutdown and retirement. At the same time, the U.K. has committed to generate 15 percent of its energy from renewable resources by 2020. Finally, due to current financial circumstances, these changes must be implemented in an affordable manner, as household incomes are already tightly squeezed.

While the government’s 2011 Renewables Obligation Banding Review consultation document suggested biomass energy could contribute up to 21 percent of the renewable energy goals by 2020, Deloitte suggests the industry could make a larger impact, so long as certain obstacles are overcome. These obstacles include regulation, availability of fuel, sustainability credentials, supply chain and financing.

The development of a clear, strong regulatory regime is particularly important. “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,” said Dean Cook, U.K. sector leader for renewable energy at Deloitte. “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.”

According to Deloitte, it has modeled the attractiveness of biomass projects to potential investors, finding that full conversion of fossil fuel plants and conventional and enhanced cofiring offer the best return on capital invested.

 “There are hurdles that need to be overcome, but Deloitte believes biomass has the potential to help answer the UK’s energy challenges,” Cook said. “With many of its power stations being forced to shut down under the [EU’s Industrial Emissions Directive], the question is whether the UK would be missing an opportunity if it did not give biomass more consideration.”