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Key role for EfW as DECC sets out renewables goals

By Nick Mann

The government has set out how it plans to encourage development of energy-from-waste, anaerobic digestion and waste wood-to-energy so they can play their part in ensuring the UK meets its 2020 renewables targets.

Potential funding for innovation in energy from waste projects and the publication of a UK Bioenergy Strategy later this year are among the key actions outlined in the UKs first Renewable Energy Roadmap.

The Electricity Market Reform white paper and Renewable Energy Roadmap were unveiled by energy secretary Chris Huhne
The Electricity Market Reform white paper and Renewable Energy Roadmap were unveiled by energy secretary Chris Huhne

The document was published yesterday (July 12) alongside a white paper on Electricity Market Reform (EMR) which includes proposals for a new subsidy to encourage investment in low carbon electricity generation. This would replace the existing Renewables Obligation (RO).

This subsidy, the Feed-in-Tariff with Contracts for Difference, is a long-term contract between a low-carbon electricity generator and a contractor buying energy off them. It involves a set price the strike price being set at the start of the contract to stabilise the generators revenues.

If the market price drops below this level, they are paid the difference by the contractor, but if it goes above the strike price, they pay the generator the difference. As such, the Department for Energy and Climate Change claims the system will provide long-term certainty for investors in renewables, therefore lowering the cost of capital and, as a result, reducing costs to consumers.

The new subsidy system is one a number of key reforms outlined in the white paper, alongside:
the announcement in Budget 2011 that the Government would put in place a Carbon Price Floor to reduce investor uncertainty, putting a fair price on carbon and providing a stronger incentive to invest in low carbon generation now;
a Capacity Mechanism, including demand response as well as generation, is needed to ensure future security of electricity supply. DECC is seeking further views on the type of mechanism required and will report on this around the turn of the year.
an Emissions Performance Standard (EPS) set at 450g CO2/kWh to reinforce the requirement that no new coal-fired power stations are built without CCS, but also ensure that necessary investment in gas can take place.

Energy secretary Chris Huhne said there was a Herculean task ahead. He continued: We have consulted widely and we believe our reforms represent the best deal for Britain. They will get us off the hook of relying so heavily on imported fossil fuels by creating a greener, cleaner and potentially cheaper mix of electricity sources right here in the UK.

A new generation of power sources including renewables, new nuclear, and carbon capture and storage, along with new gas plants to provide flexibility and back-up capacity, will secure our electricity supply as well as bringing new jobs and new expertise to the UK economy.

Renewable Energy Roadmap

The documents envisage a major role for energy from waste technologies such as incineration
The documents envisage a major role for energy from waste technologies such as incineration

The EMR reforms are set to have a key role to play among the actions in the Renewable Energy Roadmap, which outlines how the UK will meet its target of generating 15% of all energy from renewable sources by 2020.

The Roadmap envisages a key role for biomass technologies such as energy-from-waste, anaerobic digestion to waste wood biomass in generating both renewable electricity and heat.

And, it outlines a range of key priority actions for both. For biomass for electricity, these include:
Publishing a UK Bioenergy Strategy later this year to provide a clear vision for the growth of biomass energy;
Reviewing RO support banding earlier than planned;
Working with Defra, the Welsh Government and the regulatory agencies to ensure environmental legislation doesnt have an unintended impact on developing new facilities, such as EfW plants;
Addressing issues over being able to accurately measure the renewable content of waste;
Expanding supply chains for waste wood and solid recovered fuel the 2012 consultation on restricting waste wood from landfill promised in last months Waste Review is cited here;
Providing access to finance, both through the Green Investment Bank and also potential support for innovation in areas such as advanced conversion of waste.

Biomass for heat

For biomass for heat, the key actions include:
Implementing the Renewable Heat Incentive so renewable heat from biomass is competitive with fossil fuel generation;
Introducing sustainability criteria for biomass;
Varying the Standard Rules for permitting this year so AD plants can benefit from this type of permit which is usually easier, quicker and cheaper to obtain than a bespoke permit;
Providing investor confidence by supporting AD demonstration project and making the RHI available for biomethane injection into the gas grid and heat generated by biogas produced under AD;
Ensuring the RHI includes support for biomethane injection, and potentially reducing compliance requirements for this approach, if appropriate.

ESA

Both the Electricity Market Reform White Paper and the Renewables Roadmap drew a positive response from the waste industrys trade body, the Environmental Services Association (ESA), which described them as a vote of confidence in energy from waste.

Matthew Farrow, director of policy at the ESA, said: As ESA has long argued, energy from waste can play a vital role in helping Britain meet its tough EU targets on renewable energy, while also helping to reduce gas imports.

The measures flagged in the White Paper, such as feed in tariffs and a capacity mechanism, should make energy from waste projects more bankable by reducing investors uncertainty over the energy revenue generated by plants. But the detail will be important and ESA will be monitoring this closely.

Referring to the roadmap, he commented: The Renewables Roadmap is also important in the emphasis it places on Government working to address barriers to deployment of energy from waste, in terms of planning and a reliable supply of feedstock.

DECC are guilty of overplaying the benefits of the wood waste ban in providing feedstock, but nonetheless the Government is focusing on the right issues.

REA

The emphasis placed on energy from waste and biomass was also welcomed by Gaynor Hartnell, chief executive of the Renewable Energy Association, who said: The White Paper sets out the governments planned replacement of the Renewables Obligation, which continues to be the main driver towards meeting this electricity component of the UKs 2020 renewables target.

We are encouraged that the transition measures set out in the White Paper, demonstrate intent that the Obligation should remain robust and bankable. We are also delighted to see the ambition for biomass and energy from waste substantially increased. These cost-effective, baseload technologies are an essential part of the mix and bring wide benefits.

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