UK considers bioliquid subsidies

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11 March 2013, Nuclear, Solar, Wind

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The idea of generating electricity and producing heat from bioliquids as well as other forms of biomass is a sound one, and the technology exists to merit bioliquid generation alongside biofuels used in transport. The UK government is currently considering support for bioliquid generation in the Renewables Obligation Certificate Banding Review, due to be announced in April 2013, but there are many factors to consider that are not obvious at first glance.

The feedstock of bioliquids is a critical issue, and sustainability criteria have to be met if real benefits are to be felt through its use in heat and power generation facilities. The challenge comes from the fact that land used for biomass production that could otherwise be used for food production is now capped in the EU to a point that is close to the current level of production, leaving very little room for growth. The impact of land use changes and emissions from supplying bioliquids can be considerably higher than is realized, especially with high levels of imports from distant regions, which do nothing to improve national energy security.

This leaves the UK with two options. There are domestic biomass resources that can be used more efficiently such as agricultural waste, and production can be increased in this way. However, farmers who have found that the perennial crop miscanthus is easy to grow have been struggling to find buyers for their produce, while imports can undercut domestic production prices.

Alternatively, cheap imports of biomass and bioliquids can supply a growing generation industry; however, while imports are often more economical, land use changes in the production of bioliquids such as palm oil and emissions of shipping biomass across the Atlantic from the US will erode the perceived benefits of bioliquid generation and heat production.

It is therefore likely that support will be provided but within a tight set of sustainability criteria that dictate specific sources of biomass and bioliquids to be eligible for the subsidies. There are resources within the UK and Europe that can be better utilized for energy production, and it is no surprise that generation is most efficient when combined with the provision of heat in a combined heat and power (CHP) plant.

CHP plants are likely to receive around twice the support of electricity only plants, in line with other biomass heat and power support, but the Department of Energy & Climate Change's (DECC's) intention to incentivize the most economical forms of renewable energy will continue to back co-firing of biomass in coal-fired power station conversions, while a growing number of dedicated biomass plants such as the 50MW Nevis Power project in Newport are pending final deployment decisions based on the level of likely support.

The DECC has recently placed a limit of 400MW on the installed capacity of biomass co-firing plants in the UK, and the indication is that small-scale biomass and bioliquid plants have a place in the UK generation mix, but only when operated in the correct manner. The DECC views biomass co-firing as a transitional technology with a limited lifespan, while dedicated biomass, biogas, and bioliquid heat and power generation have the potential to be sustainable energy sources in the UK grid mix.

For more information see Datamonitor's report Bioliquid Heat and Power Generation in Europe (February 2013, EN00037-061). / / @DatamonitorEN

Source: MarketLine

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