Biomass plant owners want guarantees
Not only is Heron renewable energy plant awaiting consent, but Britain's biggest electricity generator also wants a commitment of support for biomass – akin to that given to offshore wind power – before it stumps up the cash to build.
Speaking to the Grimsby Telegraph, Peter Emery, production director of Drax Power, said he wanted to see parity across the renewables sector so that investment could be made securely.
As reported, the Selby company which operates the largest coal-fired power plant in the UK has turned to biomass as it looks to secure a greener future.
The issue centres on Renewable Obligation Certificates (ROCs), issued by the Government for every megawatt of energy produced from a sustainable source. These can then be traded, and forms the basis of a carbon economy that would see financial benefits of taking steps to reduce harmful C02 emissions.
Drax is currently the undisputed leader when it comes to carbon emission, and together with Scunthorpe steelworks and the Humber refineries it ensures the region is the carbon capital of the UK.
The Government has committed to issuing two ROCs per MW for wind, with a guarantee of receiving them for 20 years. For dedicated biomass plants it is one-and-a-half ROCs per MW, but that does not carry such a guarantee.
Mr Emery said: "The next time this is reviewed is 2013, and there are no guarantees beyond that. These plants cost £600-million to £700-million each and we are not able to justify a project on a four year bases. We need a 10 to 15 year basis. We want the guarantee and if that is the case we will be in a better position."
Drax is not only talking to the Government, but also the opposition, acutely aware of a general election.
"It is quite likely this issue will straddle the election, which is quite an irritation for us. We are talking to them both, and we are hoping to make a decision by the end of this year. If we can get some clarity by the end of the fourth quarter that would sit well. We are cautiously optimistic."
As reported, Heron, located on the western gateway to the Port of Immingham, is expected to power more than 500,000 homes and create 1,000 jobs – 850 in construction and 150 permanent posts.
It has already been backed by both North Lincolnshire and North East Lincolnshire Council planners, as it sits on the boundary.
Material to be burned will include wood from forestry or timber processing, crops grown specifically for energy generation, straw or grain husks and clean recovered wood and paper.
Final consents lay with the secretary of state for energy and climate change.
An interested observer on the South Bank is John Fitzgerald, port director for ABP at Grimsby and Immingham. He said: "It is a question of parity. Significant investments are being made in biomass and offshore, and if it does threaten schemes it certainly isn't good for achieving renewable targets.
"From our perspective we support Drax in what they are trying to do. We are in a situation where we are riding a number of horses, with offshore wind power generation here as well. If Government is to meet the targets they have committed to, companies are going to need the support."
Mr Emery spoke to the Telegraph following the publication of annual results, which showed profits fall from £386-million to £288-million. Shares were down 0.31 per cent with a dividend of 9.6p a share paid for the year.
He added: "We are very pleased with the results. Profits are down against a background of very low commodity prices, historically low in fact. The profits before tax exceeded analysts' expectations in difficult trading conditions."
An artist's impression of the proposed Drax biomass power station for Immingham.
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