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Publications / Consultation responses

Energy UK response to the consultation on a transitional support mechanism for large-scale biomass generators

Publications Headers Consultation response2

Dear Marc Sherratt

RE: Consultation on a transitional support mechanism for large-scale biomass generators

We welcome the opportunity to respond to this consultation on transitional support mechanisms for biomass generators in the interim period leading up to the implementation of Bioenergy with Carbon Capture and Storage (BECCS). Energy UK supports the need for a transitional mechanism, recognising its importance in preserving low-carbon energy generation within the UK’s energy mix and safeguarding energy security as biomass transitions to BECCS.

The current role of biomass

Biomass has played a pivotal role in decarbonising the power, heat, and transport sectors, serving as a reliable and renewable alternative to traditional fossil fuels. The transition away from coal towards biomass has been instrumental not only in reducing carbon emissions across various sectors in the UK but also in providing skilled jobs and boosting the economy.

Biomass is currently a key component of the UK’s energy supply, generating 11% of the total electricity supply in 2022.[1] Biomass is not an intermittent energy source and can be used at critical times to support the electricity grid to complement wind and solar. By leveraging biomass as a sustainable energy source, the UK has successfully diversified its energy mix, decreasing reliance on coal and moving towards a cleaner decarbonised power sector.

Why transitional arrangements are needed

Government support for biomass to date has enabled significant capital investment by providing long-term certainty to investors, supporting low-carbon electricity, enhancing the UK’s energy security, and protecting consumers from price shocks. The use of biomass in the power, heat, and transport sectors has largely been supported by policies aimed at achieving renewable energy targets since the 2000’s. However, the current policy landscape is undergoing changes considering the Net Zero target, and biomass is expected to continue to make a significant contribution.

The next decade presents serious challenges to ensuring security of supply. This is driven by a variety of factors, including the decommissioning of existing generation such as nuclear and gas, increased dependence on intermittent renewable generation, delays to the delivery of new nuclear projects, and other barriers including grid and planning. This would be exacerbated without the contribution from biomass. The transitional arrangements also supports unlocking the array of benefits associated with BECCS deployment, including the production of negative emissions critical to supporting decarbonisation targets, the production of reliable renewable power and associated ancillary services, and well as skills and jobs.

A transitional arrangement will therefore serve as a crucial bridge during this transition period by providing the necessary support to biomass units and enabling them to continue operations while they undergo the upgrades to integrate BECCS technology. Biomass fuel contracts are typically agreed on long-term contracts for biomass fuel agreed several years ahead of delivery. This need to secure fuel contracts is a near term-issue otherwise there is a risk that biomass supply chains will be broken, biomass fibre will be diverted to other economies, and BECCS operators will find it very difficult and/or expensive to re-engage the biomass fuel supply chain. This could increase the cost of biomass and risk the deployment of BECCS.

Without this transitional support, the few remaining large-scale biomass power plants will face challenges, including operating at low load factors or plant closure that would jeopardise the transition to BECCS. By implementing a transitional arrangement, the UK can ensure the continuity of reliable renewable energy generation and continue efforts to achieve a decarbonised power sector by 2035, subject to security of supply.

Options in the consultation

Energy UK believes the ‘CfD – unconstrained’, the ‘CfD – generation collar’ and the ‘availability payment’ could in principle be taken forward for further development. However, we believe the CfD – generation collar option is likely to deliver reduced costs to consumers and provide incentives to operate biomass generation when required. This option would also better recognise, as the consultation acknowledges, that biomass generation should not run ahead of lower marginal cost low-carbon alternatives. A mechanism which incentivises biomass generators to switch off (without receiving curtailment payments) when there is sufficient output from other low carbon sources of generation to meet demand is most appropriate and better for consumers. When considering these options, the following criteria should be noted:

  • The role biomass plays in supporting security of supply providing reliable renewable electricity that complements intermittent renewables.
  • Incentivising biomass generators to generate power when it is most valuable to the consumer, and recognising the benefits of biomass generation when compared to unabated gas.
  • The importance of securing long-term fuel contracts consistent with fuel requirements for BECCS, as well as maintaining the associated supply chains and logistics.

The Government must select a mechanism that incentivises efficiency and optimisation, so that biomass continues to deliver electricity when the system needs it, in a way that complements renewable generation intermittency. The collared CfD has the advantage allowing some flexibility whilst also allowing the Government to set a cap on supported generation volumes, which could be easily aligned with fuel requirements under BECSS and would limit costs to consumers.  

Sustainability

Energy UK strongly supports that biomass should adhere to strict sustainability criteria and supports the development of a cross-sectoral sustainability framework as set out in the Biomass Strategy published in 2023. We believe this should be updated in a single comprehensive program of reform, rather than in separate stages, as this will ensure consistency and coherence in regulatory standards, and avoid confusion and potential supply chain disruptions. This will also allow investors to effectively align their investments with long-term sustainability objectives, promoting greater certainty and confidence in the biomass sector.

Eligibility and assessment criteria

We broadly support the proposed eligibility and assessment criteria and would encourage these to be robustly applied so that any supported biomass generators can demonstrate credible transition plans for BECCS and ensure the transitional support is not allowed to prolong unabated operations.

In summary, by providing a smooth transition pathway these arrangements facilitate the scaling up of renewable energy capacity and BECCS and progress toward the UK’s decarbonisation targets while enhancing energy security and resilience.

Yours sincerely

Kisha Couchman

Deputy Director


[1] Biomass Strategy

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