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NNFCC market review bioenergy issue seven october 2012

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Welcome to the October issue of our bioenergy market review. This month has seen heightened scrutiny of energy bills, in the wake of rising bills and the forthcoming launch of the UK Governments …

Welcome to the October issue of our bioenergy market review. This month has seen heightened scrutiny of energy bills, in the wake of rising bills and the forthcoming launch of the UK Governments Energy Bill.

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  • 1. NNFCC Market Review Bioenergy Issue Seven, October 2012E when Anglo-Swiss company INEOS Bio ach month we review the latest opened their first-of-a-kind waste-to- announcements and news from ethanol gasification plant in Florida instead across the bioenergy market. This of Teesside, earlier this year.service is exclusively for our businessmembers. But there is positive news from the UK – particularly following the outcomes of theForeword Renewables Obligation review – with a number of investors and power companies,Welcome to the October issue of our such as gasification specialists Nexterrabioenergy market review. This month has Energy and infrastructure providers Theseen heightened scrutiny of energy bills, in Spencer Group, looking to invest in the UK.the wake of rising bills and the forthcominglaunch of the UK Governments Energy Bill. The key for the Government will be to find the correct balance between keepingThis month utility companies, like British Gas down costs for taxpayers during anand Npower, increased their standard economic recession and encouraging theenergy tariffs by more than £80 for the investment which could bring us out ofaverage household, leaving some recession.consumers asking can we afford tocontinue supporting emerging technologies Read on for the latest market news.like biomass.However, the Government also recognise Highlightsthat the UK renewable energy sector Page 2 Policy Newsemploys close to 1 million people and isone of the few areas in the economy Page 2 Dedicated Biomass Newsshowing significant growth. Page 4 Gasification NewsThere is a real danger that without Page 6 Biogas Newsgovernment support, companies will taketheir investment elsewhere, as was the case Page 8 Events NNFCC Market Review, October 2012, Page 1 of 8
  • 2. Policy that can be charged to energy customers bills, via an existing power called the levyEnergy policy negotiated as coalition control framework (LCF), with a fresh cap currently being negotiated to begin in 2015.leaders meet to discuss greenagenda In return, Davey would get a new carbon target – to virtually eliminate emissions fromSenior coalition figures met on the 17th electricity generation by 2030 – written intoOctober for talks about the UKs stalling the energy bill due to be published in earlyenergy investment program, amid growing November. That target has had the backingpolitical concern about the rising cost of of some major energy companies and thecustomer bills and threats by power renewable energy industry. However, there iscompanies to pull out of the UK because of growing political pressure over the rising costdelays. of consumer fuel bills.Sources on both sides of the coalition said Click here for more information.that both the Prime Minister David Cameronand his deputy, the Lib Dem leader NickClegg, were frustrated and worried by thecontinuing dispute, particularly following aseries of warnings by major investment Dedicated Biomasscompanies that they might quit the UK.In early October seven global electricity andnuclear giants, including Alstom andMitsubishi, threatened to reassess theirinvestment plans because lack of decision-making and threats to axe key green targetshad raised the "political risk" of the UK.A senior Conservative told the Guardian thatDavid Cameron is now personally re-engaging with the green agenda,recognising it as one of the few growing partsof the economy. Furthermore, Clegg has Drax to invest £700 million upgradingacknowledged top level concern about the its boilers to use biomasscontinuing delays, telling MPs in response to aquestion about how uncertainty was Drax plans to spend as much as 700 milliondamaging for investment that: "This is not just pounds through 2017 upgrading its boilers atabout whether we think it is right for the Selby, according to Chief Exective Dorothyenvironment, but about what is right for our Thompson. The move would make Drax theeconomy. The green sector employs close to largest cleam-energy generator in Western1 million people, was growing at about 4 per Europe.cent or 5 per cent last year and is one of thefew sectors that runs a trade surplus." The utility plans to convert one of the site’s six units to burn wood pellets by June 2013. It alsoSources familiar with the negotiations said a intends to switch two more units to wood at alikely deal would give the chancellor more later date. Each unit will burn about 2.3 millionleeway on the decision to limit the subsidies tons of biomass annually, meaning the NNFCC Market Review, October 2012, Page 2 of 8
  • 3. company will need to source 7.5 million tons next month after Peel Energy appealedof biomass by 2017. against the councils decision.The utility has hired farmers and foresters, The Environment Agency has concluded in adesigned special railway carriages and is report that experts are satisfied the facilityinvestigating building wood pellet plants in would not put people at risk. It has grantedNorth America. Drax is also building four silos the developers an environmental permit,out of plastics, foam, steel and concrete, with which would allow them to go ahead withconveyor floors, capable of holding 700,000 the plant if planning approval is granted.metric tons of biomass. Click here for more information.Click here for more information.Spencer Group win contact to convertRugeley coal-fired power station tobiomassThe Spencer Group has won a contract todevelop a concept for converting theRugeley coal-fired power station into abiomass plant and will now carry out a Front Source: MITIEEnd Engineering Design study.The work, which is being carried out in New energy centre at Waitroseconjunction with Morgan Sindall, aims to Bracknell opened by Minister of Statedevelop concept engineering and design for for Energy and Climate Changethe planned conversion of the coal firedpower station to biomass, before Rugeley The Minister of State for Energy and Climatechoses a company to carry out the work. Change, Greg Barker, opened the advanced new energy centre at Waitrose Bracknell onCurrently, Rugeley burns coal to produce Monday 24th September.approximately 1GW of electricity. The poweroutput is enough to meet the needs of The low carbon energy centre – developedapproximately 500,000 homes. by MITIE – uses sustainable local woodchip to power, heat and cool the store. This will helpClick here for more information. replace 69 per cent of the stores electricity and 84 per cent of its gas demands.Peel Energy Trafford plant plansbacked by experts The energy centre will contribute £150,000 a year to the local economy in the form of jobsThe Environment Agency has backed the and purchasing of local supplies. Thebuilding of an energy plant in Greater woodchip supplier to Bracknell will be able toManchester after councillors rejected the create five additional jobs as a result of theplans amid health fears. process from the forest to delivery.Trafford Council rejected plans for a biomass It is the second energy centre developed asincinerator in Davyhulme due to "significant a partnership between MITIE and Waitrosepublic concern". A public inquiry will be held which will help the John Lewis Partnership – of which Waitrose is a trading division – deliver a NNFCC Market Review, October 2012, Page 3 of 8
  • 4. 15 per cent absolute reduction in operational £2 million bioenergy innovationcarbon dioxide equivalent emissions from a scheme open to applications2010/11 baseline by 2020/21. The first energycentre at Waitrose East Cowes came online in Sustainably sourced bioenergy couldMarch this year. contribute around 8-11 per cent to the UK’s total primary energy demand by 2020.Click here for more information. However, more investment is needed in research, development and demonstrationDECC introduce voluntary pre- projects to drive forward innovation andregistration scheme for bioenergy improve efficiency, from methods used togenerators harvest plants for energy production to the systems used to generate power from theseThe UK Department of Energy and Climate sources.Change (DECC) has announced a newvoluntary scheme, encouraging enhanced Many British wetland areas are currentlyco-firing and biomass conversion facilities to maintained to provide an environment forpre-register under the Renewables wildlife but the harvested material from theseObligation. sites could also be used to produce energy. Now the Government has launched a £2mIn announcing the voluntary scheme the scheme aimed at encouraging innovation inGovernment have opted not to enforce a bioenergy production on wetlands.mandatory requirement to pre-register co-fired or converted biomass facilities, which Click here for more information.was proposed in the recent RenewablesObligation (RO) banding review.The Government had proposed mandatory Gasificationpre-registration of units as a way offorewarning regulators over the amount of Veolia calls for UK government tobiomass power generation that could be “actively discourage” gasificationexpected from enhanced co-firing andbiomass conversion. In a new “waste manifesto” the firm said ATT, which includes gasification and pyrolysis,The news is a welcome boost to the biomass should be “actively discouraged” byco-firing and conversion industry, as Government because it is unable to achievemandatory pre-registration could have the same energy efficiencies as traditionaldelayed deployment of new biomass power incineration.by eroding investor confidence. The manifesto said Veolia’s energy recoveryDECC say the scheme is not explicitly linked facility incinerators could achieve 25-30 perto triggered reviews of support and is entirely cent efficiency as well as having the ability tovoluntary. DECC will now write to generators export heat. It called for Government actionasking them to provide information on their as soon as possible to consider introducing aintentions over the forthcoming Obligation tax on this disposal.period, which will then inform the level ofsupport in the Obligation. The manifesto, called “Making sustainable cities a reality”, was the company said, “anClick here for more information. NNFCC Market Review, October 2012, Page 4 of 8
  • 5. opportunity for us to share our thoughts on UK year contract with Derby City Council andwaste and resources management policy”. Derbyshire County Council which is worth an estimated £400 million.In a section on end of waste Veolia saidGovernment should not reclassify waste RRS will invest £130 million in the new facilitiesderived fuel. It said it was imperative solid at Sinfin Lane. These will comprise an MBTrecovered fuels (SRF) must remain classified as plant which will extract additional recyclablewaste because there will always be materials from residual waste and produce auncertainty: “If allowed to pass through the fuel called Solid Recovered Fuel. This fuel willsystem as end of waste, it could lead to then be used by an on-site gasification facilityuncontrolled pollution of the environment.” to generate enough electricity to power 14,000 homes. This electricity is supplied toThe call came as rival firm Shanks is lobbying the national grid, offsetting the cost of theGovernment to reclassify SRF as a product so facility and providing an additional source ofit can be sold to co-fire existing power plants. revenue for the councils.Speaking to MRW last week, Shanks chiefexecutive Peter Dilnot said ministers had been Click here for more information.“receptive” to the idea but that there were“practical, technological and political Canadian biomass gasificationimplications”. company shifts focus to UK in wake of collapse in US gas pricesClick here for more information. Canadian biomass gasification systems supplier Nexterra Energy is targeting the UK market after the collapse in US natural gas prices damaged its cost proposition in North America. Nexterra has been active in North America since 2003, installing systems that use its fixed-bed updraft gasification system to convert waste feedstock into syngas. Since then, the influx of cheap shale gas reserves into the North American market has drastically damaged Nexterra’s business Source: Resource Recovery Solutions model, with natural gas prices falling to $2-3 million per million Btu.Shanks receives planning approval for Nexterra will now seek to expand in regionsDerby waste management plant where natural gas prices remain expensive. The UK will be its first key new market due to itsResource Recovery Solutions (RRS) – a wholly relatively high energy and gas prices and aowned subsidiary of Shanks – has announced readily available supply of waste feedstock.that it has received planning approval for a The gasification projects favoured in the UK190,000 tonne per year Mechanical Biological also fit well with Nexterra’s systems, which areTreatment and gasification facility in Derby. typically in the 2-10 MW range for electricityThe facility will divert up to 97 per cent of and up to 40 MW for thermal energy. Theresidents’ residual waste from landfill. company hopes to sign its first UK project contract in the first quarter of next year.The Planning Inspectors decision enables RRSto move towards the financial close of a 27 Click here for more information. NNFCC Market Review, October 2012, Page 5 of 8
  • 6. Spencer Group expects construction will begin in early 2013, with the first phase – the gasification plant – operational by late 2014. Other elements of the integrated facility will then be added in phase two, up to late 2015. Click here for more information. Source: Spencer Group BiogasEnergy Works gasification plant UK Government confirm anaerobicreceives state aid approval for £20 digestion projects below 5MW willmillion grant remain eligible for ROCs Following a public consultation theThe European Commission has announced Government has decided againstthat if the UK Government provides grant implementing proposed plans to excludeassistance for Energy Works it would be in line anaerobic digestion installations below 5MWwith European Union state aid rules aimed at from the Renewables Obligation from 1 Aprilensuring fair competition, saying the 2013.development would reduce greenhouse gasemissions, contribute to the security and It means that new generators buildingdiversity of energy supply, and pioneer installations at the 50kW to 5MW scale will stillcleaner technologies, with potential for similar be eligible to receive Renewables Obligationfacilities to be rolled out across Europe. Certificates (ROCs), which can then beThe £20 million grant now hinges on approval traded with suppliers. ROCs are seen as a secure and stable funding mechanism forby the European Commission of the “MajorProject Application”, which is required for those investing in new anaerobic digestion installations, and the change of heart hasgrant-supported projects with a capital costof more than 50 million euros. been welcomed by the industry. Click here for more information.The Spencer Group, the company behindEnergy Works, has submitted this applicationand a decision is expected within weeks. The New edition of industry-leading costcomplete development – which will include a calculator helps AD industry work out25MWe advanced gasifier and 3MWt biogas costs and returnsanaerobic digester – will produce enoughelectricity to power 25,000 homes; potentially The latest edition of the UK’s leadingcut waste sent to landfill by local authorities in anaerobic digestion cost calculator has beenHull and the East Riding of Yorkshire by 90 per published by NNFCC; helping businesses tocent; increase recycling; create 200 jobs in assess and understand the potential coststhe construction phase and 60 jobs once and returns of using AD as a way ofoperational; regenerate a brownfield site; generating heat and power from organicand enable other businesses to reduce their waste.carbon footprint. NNFCC Market Review, October 2012, Page 6 of 8
  • 7. The AD Cost Calculator is an essential tool in with indications that PAS 100 certification isthe arsenal of any developer looking to invest enabling producers to obtain higher pricesin AD, providing detailed annual financials from these markets.over the life of an anaerobic digester. Thenew version of the calculator uses the latest The study shows that 7.2 million tonnes ofincentives available for biogas combustion organic waste was recycled during thisand biomethane injection into the grid, it also period, compared to just over six millionincludes variable retention times, monthly tonnes in 2009 and there are now over 1500cash flow reporting as well as a number of people employed in the sector.other improvements. Click here for more information.Click here for more information. New choice of biogas feedstock cropsPDM granted planning permission for4MW biogas plant Plant breeders, like Syngenta, are developing varieties aimed specifically at the biogasUK food waste recycler PDMs proposed market – these include improved "high4.2MW biogas plant in the UK has been energy" maize as well as new lines of beetapproved, after Halton Borough Council ruled and cereal crops which can be grown onin favour of the project on 8 October. land unsuitable for maize.The £20 million project, to be built in Widnes, The energy value of the feedstock crops is theCheshire will be able to handle 90,000 tonnes key to maximising biogas production, asa year of Merseyside-derived food waste and Syngenta’s Nigel Padbury explains:generate enough biogas to power 8,000 “Concentrated power, in the form of highHalton households. The food waste will also levels of maize metabolisable energy, is thebe used for compost. Forty new jobs will be route to optimising performance.” This meanscreated when PDM breaks ground on the breeding crops that produce more methaneanaerobic digester in November. Completion than typical feed crops when broken down.is expected in late 2013. Click here for more information.Click here for more information. German biogas growth grinds to haltAD driving organics recycling sectorgrowth Rising corn prices and uncertainty about the funding of biogas plants has halted theWRAP’s latest survey of the UK organics growth of the biogas industry in Germanyrecycling industry shows that growth in the according to German Agricultural Society,number of permitted AD sites (48 in 2010) saw Deutsche Landwirtschafts-Gesellschaft (DLG).the total input of organic waste processed viaAD top the one million tonnes mark. At the In 2005 there were 2690 plants in Germanysame time, composting showed some growth with a capacity of 1109MW. By the end ofwith a total input of 5.44 million tonnes in 2010, 2011 this had risen to 7621 plants with 3185up by 3.9 per cent on the 2009 survey. MW capacity. However, DLG warn that by the end of 2013 there will be just 7895 biogasAlthough agriculture remains the largest plants with a capacity of 3312MW; anmarket for compost, increasing volumes are increase of less than 4 per cent in two years.also going to higher value uses such asprofessional horticulture and landscaping, Click here for more information. NNFCC Market Review, October 2012, Page 7 of 8
  • 8. Events Gasification 2012, 21-22 Nov 2012 in London, UK www.wplgroup.com/aci/conferences/eu- ecg2.asp Source: Reuters ACI’s Gasification 2011 will bring together senior executives from the oil refining and power industry as well as technologyBiogas plant responsible for turning providers and regulators to evaluate techno-French honey blue economic progress to expand future deployment of gasification.Bees at a cluster of apiaries in northeasternFrance have been producing honey in The event will look at current and futuremysterious shades of blue and green, market trends and developments across thealarming their keepers. globe as well as discuss key challenges and opportunities in gasification projects focusingMystified, the beekeepers embarked on an on cost & profitability.investigation and discovered that a biogasplant 4 km away has been processing waste NNFCC members receive a 15 per centfrom a Mars plant producing M&Ms, bite- discount off the standard rate. Contactsized candies in bright red, blue, green, enquiries@nnfcc.co.uk for the discount code.yellow and brown shells.Click here for more information. Credits and Disclaimer NNFCC Market Review is edited by Dr Matthew Aylott for NNFCC members. Feedback is welcome. The Review has been compiled in good faith and NNFCC does not accept responsibility for any inaccuracies or the products or services shown.NNFCCThe Bioeconomy Consultants NNFCC, Biocentre, Phone: +44 (0)1904 435182 York Science Park, Fax: +44 (0)1904 435345 Innovation Way, E: enquiries@nnfcc.co.uk Heslington, York, Web: www.nnfcc.co.uk YO10 5DG. NNFCC Market Review, October 2012, Page 8 of 8