The U.K. Department for Energy Security and Net Zero in early 2024 announced it would consider extending subsidies for biomass power producers that plan to develop bioenergy with carbon capture and storage (BECCS) capacity. A public consultation was open through Feb. 29, 2024.
Current biomass power subsidies are set to end in 2027. The extended subsidies aim to both support the move to BECCS and support the U.K.’s energy security. Biomass currently supplies approximately 5% of U.K. electricity generation.
In its response to the public consultation, the government stressed that maintaining the existence of large-scale biomass generators will increase the resilience of the electricity system and support security of supply. “The alternatives to large-scale biomass generators are limited given their scale and low carbon dispatchability in the timescale required to replace it,” the government wrote in its response. “Continued support in the late 2020s to early 2030s would significantly reduce the pressures on other security of supply mechanisms such as the Capacity Market.”
The government has indicated that transitional support for biomass power will be for lower volumes of generation that under current subsidies and will be designed to maximize energy security benefits. The transitional support will be offered as a contract for difference (CfD) with a generation collar. The new subsidies will be limited to biomass generators that have a minimum electricity export of 100 megawatts (MW). Eligible generators will also have to meet biomass sustainability criteria. In addition, the government has set a greenhouse gas (GHG) threshold at t 36.6 gCO2e/MJ, which aligns with the EU Renewable Energy Directive (RED III).
Drax has spoken out in support of the government’s announcement. "The government's low-carbon dispatchable CfD framework for biomass, announced today, is an investment in U.K. energy security, which will result in a net saving for consumers and support the delivery of Clean Power 2030,” said Will Gardiner, CEO of Drax.
According to Drax, the transitional subsidies will be available for all four biomass units at Drax Power Station with an aggregate collar of c.6TWh pa (and a minimum of c.5TWh pa). The subsidies will be available from April 2027 through March 2031.
Under the proposed agreement Drax Power Station will sell c.6TWh of power annually against a season ahead reference price (as per the current CfD scheme) and then seek to maximize generation from its four units at times of high demand and reduce generation at times of low demand, using the station's flexibility to support U.K. energy security.
The U.K. Association for Renewable Energy and Clean Technology (U.K. REA) is also applauding the government’s decision to offer transitional support to large-scale biomass generators.
“Today’s decision to agree a new support mechanism for Drax and other eligible large-scale biomass generators from 2027 is the right one,” said Samantha Smith, head of heat and biomass U.K. at the REA. “The role of sustainable biomass is recognized within all credible scenarios for getting to net zero, whether produced by the Climate Change Committee, the International Energy Agency, or the UN IPCC. It’s encouraging to see the Government recognize the important role that this technology plays in delivering a secure, value for money power system.”
