Sgcp12 lloyd-poyry

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  • 1. THE OUTLOOK FOR BIOMASSELECTRICITY IN THE UK 4th Annual Smart Grids & Cleanpower 2012 Conference 14 June 2012 Cambridge Ali Lloyd, Principal Consultant
  • 2. THE PÖYRY GROUP: A UNIQUE PROPOSITION FOR THEBIOMASS INDUSTRYPöyry offers clients unique expertise across the biomass value chain Analysis of energy & Power station planning Forestry & biomass carbon markets & engineering services market expertise • Leading provider of • Biomass engineering • Global network of energy price projections expertise located forestry experts in UK & Europe throughout the world • Advising most of the • Experts on UK • Worked on over 160 leading biomass renewables regulation bioenergy plants projects in the UK COPYRIGHT@PÖYRY 2
  • 3. %age of final energy consumption 0 20 40 60 Austria Belgium Bulgaria Cyprus 2006 share Czech Republic EU-27 target Germany RED 2020 target Denmark Estonia Greece Spain Finland FranceCOPYRIGHT@PÖYRY Hungary EU-27 Ireland Italy Lithuania Luxembourg Latvia Malta Netherlands ... sets challenging targets for renewable energy growth by 2020. THE EU RENEWABLE ENERGY DIRECTIVE 2009 … Poland Portugal Romania Sweden Slovenia Slovakia UK3
  • 4. NATIONAL RENEWABLE ENERGY ACTION PLANSThe NREAPs show that bioenergy will play a significant role in meeting the 2020targets, contributing around 60% of the total renewable energy. 40 Total renewable target Transport from biomass Bioenergy contribution to RED target (Mtoe) Electricity from biomass Heating and cooling from biomass 30 20 10 Luxemb… Netherla… Czech… 0 Denmark Hungary France Greece Germany Italy UK Belgium Cyprus Austria Portugal Bulgaria Estonia Slovakia Ireland Lithuania Malta Romania Slovenia Spain Sweden Poland Finland Latvia Source: Pöyry analysis of NREAPs. Pöyry analysis suggests that significant volumes of biomass imports will be needed to meet the NREAP ambitions. COPYRIGHT@PÖYRY 4
  • 5. BIOMASS ELECTRICITY IS A KEY COMPONENT OF THEGOVERNMENT’S PLAN FOR MEETING THE 2020 RED TARGETRequired capacity assuming 75% load factor 70 Onshore wind 60 7.6GW Offshore wind 50 Biomass 4.9GW 40 TWh 4.0GW 30 2010 out-turn: 12TWh 2.0GW 20 10 0 NREAP (2010) Roadmap (2011) Low Roadmap (2011) High COPYRIGHT@PÖYRY 5
  • 6. BIOMASS ELECTRICITY REQUIRES FINANCIAL SUPPORT … Contract-for-Difference Renewable Obligation Certificates (ROCs) Feed-in Tariffs (CfD FiTs) Current support mechanism for most biomass electricity Part of Electricity Market technologies Reform programme Number of ROCs/MWh (‘banding factor’) depends on technology Replaces ROCs from 2017 (see below). One ROC is worth approximately £40-45/MWh. Generator receives difference ROCs are additional to revnue from sale of electricity into the between tariff level and wholesale market market priceTechnology Current Proposed from Small-scale FiTs banding factor Apr-13 Applies to AD below 5MWDedicated biomass 1.5 1.5 Fixed generation tariff per MWh generated, plusDedicated biomass with CHP 2 2 optional export tariff.Standard co-firing 0.5 0.5 Current rates for new registrations:Enhanced co-firing or biomass na 1 Generation tariff:conversion < 250kW £147/MWhEnergy-from-waste with CHP 1 0.5 250-500kW £136/MWh > 500kW £99/MWhAdvanced conversion / AD 2 2 Export tariff £32/MWh COPYRIGHT@PÖYRY 6
  • 7. THERE IS A HEALTHY PROJECT PIPELINE, BUT FEW PROJECTSHAVE REACHED FINANCIAL CLOSEProposed dedicated biomass power stations in the UK (10MW+). Excludes co-firing, coal-to-biomass conversions, and energy-from-waste 10-50 MW 5000 50-150 MW 4500 > 150MW Operational/In construction 4000 Consented 3500 In planning/proposed 3000 MW 2500 2000 1500 1000 500 0 COPYRIGHT@PÖYRY 7
  • 8. ENHANCED CO-FIRING AND CONVERSIONS COULD DELIVERLARGE VOLUMES OF BIOMASS ELECTRICITY QUICKLY Announced ROC support available until 2027 candidates for enhanced co-firing Under the Industrial Emissions or biomass Directive, coal stations effectively conversion have a choice of investing in Other coal abatement or closing by 2023. stations Biomass conversion or enhanced co- opted into LCPD firing could help to justify investment in abatement. Tilbury and Ironbridge are opted-outRoosecote of LCPD so likely to close by end Drax 2015?Ironbridge Tilbury COPYRIGHT@PÖYRY 8
  • 9. SOME REGULATORY RISK CENTRES AROUND SUSTAINABILITYAND ‘BEST USE OF BIOMASS’ CONCERNSCommittee on Climate Change: Bioenergy Review (December 2011)“Forest biomass sustainability. The minimum emissions threshold under the sustainabilityframework for the Renewables Obligation (RO) should be tightened from the current level of 285gCO2/kWh to 200 gCO2/kWh. Serious consideration should also be given to introducing asustainability standard for all wood used in the UK (e.g. pulp and paper, construction) which wouldprovide more confidence that RO support for biomass in power does not result in indirectdeforestation.”“Biomass power generation. Support for biomass power generation under the RO should be focusedon cofiring and conversion of existing coal power plants. Any support for new dedicated biomassgeneration should be limited to small-scale only or, at a minimum, any support for new large-scalededicated biomass should be limited to a very small number of projects.” DECC: UK Bioenergy Strategy (April 2012)“Electricity: use of sustainable biomass as a transitional fuel to reduce carbon emissions from currentcoal power generation is an important decarbonisation pathway. In addition, combined heat and powergeneration offers more efficient use of the biomass resources and should be promoted wherepossible.““New dedicated plants. The carbon cost effectiveness and lock-in risks associated with newdedicated non-waste biomass will therefore need to be balanced against the overall costs of meetingour renewable targets.” COPYRIGHT@PÖYRY 9
  • 10. WHAT ARE THE KEY ISSUES FOR BIOMASS ELECTRICITYPROJECTS? Regulatory risk - Various issues with the Renewables Obligation have slowed project development - Confirmation of proposed banding factors should enable some projects to proceed - There will be a limited window of certainty since awaiting details of EMR Fuel supply - There is a limited UK biomass resource but certain global regions have surpluses (e.g. South East USA) - Supply chains into Europe need to be developed - What will the price be, and how can price risk be managed? Sustainability - Bio-mass will be required to meet strict sustainability criteria to qualify for ROCs, relating to land use and greenhouse gas savings - For most likely supply baskets compliance should be achievable - Risk of public opposition? Conclusion: Biomass electricity can make a significant contribution towards the UK’s renewable targets if Government is committed to this COPYRIGHT@PÖYRY 10
  • 11. Contact:Name: Ali LloydMail: ali.lloyd@poyry.comPhone: +44 1865 812227 COPYRIGHT@PÖYRY 11