Case Study: Straw Biomass
This week we proudly present another guest blog, written by Chief Executive of Eco2 and Chair of the Welsh Government’s Energy and Environment Advisory Panel, David Williams.
28th March 2013 | David Williams: Chief Executive, Eco2
Peter Rolton worked with him on the UK Government’s Renewables Advisory Board (RAB), and considers David to be one of the most knowledgeable people in the country when it comes to commercial biomass power generation. The following article was previously published in ‘Renewable Energy Focus September/ October 2012’, and is reproduced here with kind permission of the author.
Twelve years ago, as the world entered a new millennium, we commissioned the UK's first and the world's largest straw-fired power station. This was a new dawn for dedicated biomass.
Our team, then operating as Energy Power Resources, hadn't just developed a sustainable and local energy plant for Cambridgeshire, we'd created a blueprint for global development. Over the next decade, many more such facilities were developed around the world.
Ely Power Station continues to generate 38MW of clean energy from locally-sourced straw today. But it stands alone as the UK's only straw-fired power station. As the rest of the world embraced the ‘Ely clone’, one wonders what went wrong here.
It is a good time to be pondering this issue. The Ely team went on to form Eco2 and, together with project owner BNP Paribas Clean Energy Fund, this year began construction of the 38MW Sleaford Renewable Energy Plant, a straw-fired facility in Lincolnshire recognised by Prime Minister David Cameron as a prime example of clean energy investment and job creation.
What's more, we have plans for at least five further developments in the UK, as well as other projects in mainland Europe, all of which will employ this same template. The financial model and contract structures for the Sleaford project, in addition to the deep well of management experience accumulated over the past twenty years, are perfectly transferrable.
But replicating a business model will only go some way to actually getting a project to the construction phase. The industry has found things every bit as challenging now as it did back in the late nineties; projects still typically operate to a two and a half-year build time.
The simple fact is the regulatory environment in the UK has made it an uphill struggle to secure finance for these projects. Uncertainty has bred a perception of risk, not least in security and sustainability of fuel supply. And whilst we continue to prove that these hurdles can be overcome, the Government has made it clear that its priority for biomass is to encourage large- scale coal conversions and short term co-firing generators, rather than a network of local and sustainable, dedicated biomass facilities.
Long term dedicated biomass facilities are also the big employer within the renewable energy family with typically around five jobs per MW installed. A normal 10MW project would therefore create 50 long-term jobs through harvesting, haulage and plant operation. Contrast this with 10MW in other technologies, which in some cases create less than one job.
Policies which are prejudicial to dedicated biomass are therefore prejudicial to green jobs generally. Indeed the government has stated that the 1.5ROCs required for dedicated biomass is not affordable, whilst actively encouraging vast tranches of expenditure in other technology areas which also require 1.5ROCs but which lack the scale of employment potential.
The case for straw
Five and a half million tonnes of straw is ploughed back into UK soil each year. Were we to exploit all the straw produced and not currently serving a useful purpose as animal bedding or renewable energy feedstock, we could generate a further 900MW of clean energy before handing the material back to the farmers, after burning, as ash to be ploughed into the soil as fertiliser. That's enough feedstock capacity for another 23 Sleafords. At heart it's a question of getting more use out of the same natural resource.
Quite simply, generating electricity from local agricultural residues – such as straw – offers the best opportunity for local communities to benefit from the green revolution:
- It provides a reliable and flexible source of energy – biomass projects do not suffer from the intermittency of the wind or the sun.
- It creates jobs – fuel must be gathered, stored and transported to the power station on a daily basis.
- The farming community represents a reliable supply chain – whether producing wheat, milk or straw, farmers understand how to satisfy daily market demand.
- A biomass development has to become part of the community, integrated with the agricultural economy.
The Sleaford plant will burn around 240,000 tonnes of straw a year in an efficient, clean combustion process and could export more than 300,000MWh of electricity to the local grid. Farms within a 50-mile radius of the plant will be able to supply the straw required and, by providing 12-year long, index-linked initial supply contracts, Sleaford will help initiate a new market for the material in the area whilst bringing more income to food production.
Furthermore, there is a range of embedded benefits that only small-scale projects of this kind can bring, from the provision of district heat systems, to synergies with the local grid.
A lack of dedication
As easy as it sounds we will not see another 23 Sleafords developed in the UK. It simply will not happen under a policy regime that has been constructed on the simplistic assumption that all dedicated biomass projects utilise virgin wood or energy crops as their principal feedstock.
The recent Renewables Obligation Banding announcement noted a ‘cautious approach’ towards the development of dedicated biomass projects such as the Sleaford facility: just as the Bioenergy Strategy had done before it, and the Committee on Climate Change before that. The future for dedicated biomass has thus been established as ‘limited’.
It's not hard to see why the Government has come to this conclusion either. Lobbying against the burning of virgin wood for energy has been growing in volume and impact. An increasing number of sources, from traditional wood-using industries keen to protect their raw material supply, to environmentalists rightly concerned about the effects of an unregulated international wood chip market, have all now jumped into the argument. And of course energy crops have long been vilified by those concerned with the ‘food versus fuel’ debate.
That is certainly not to suggest that there is no place for wood-fired or energy crop-fired dedicated biomass plant in the UK's energy mix. There is. But there are arguments against these facilities and as a result we will not see a Government-led proliferation of development.
The decision to maintain Renewables Obligation Certificates for dedicated biomass at their current level of 1.5ROC/MWh until April 2016 was cautiously applauded and has helped to free a small proportion of the previously stagnant development pipeline. But the introduction of a drop to 1.4ROCs for the final year leaves the world post April 2015 looking distinctly challenging.
Exemption as a cure
We viewed the Government's announcement of a new consultation on a supplier cap for dedicated biomass, with something approaching trepidation and disdain. As we saw when the Renewables Obligation was first introduced in 2002, the establishment of a cap creates extra risk that is inevitably priced into contracts, presenting developers with an additional commercial barrier.
A supplier cap will mean that many planned dedicated biomass projects will not happen. As it nears, an increasing number of projects will fall by the wayside. It is inevitable that it proves to be one roadblock too many for much of the industry.
Of course the impartial observer might note that this is precisely what the policy is seeking to achieve; that we will indeed see a ‘limited’ role for dedicated biomass as a result. But is it really necessary to throw the baby out with the bathwater?
Straw-fired biomass presents a unique set of circumstances and deserves to be judged on its own merits rather than prejudiced on account of its cousins. This is why when responding to the consultation Eco2 will be pushing for the exemption of straw-fired biomass projects from the proposed supplier cap for dedicated biomass.
With a constrained future for onshore wind, solar and now biomass, and escalating costs associated with new nuclear and offshore wind, the Government should welcome the small but significant contribution that UK straw-fired power could make in terms of readily-accessible, low carbon energy generation.
Eco2 will continue to develop a series of small-scale, long-life, indigenous and sustainable straw-fired biomass plants across Europe. We are lucky enough to have the necessary experience to push through projects that others would perhaps be forced to walk away from. But policy decisions continue to make our job in the UK harder, not easier.
Given the UK's spare straw capacity, this is a bitter pill to swallow for developers and rural communities alike. We are not making the most of nature's bounty.
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