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Lynemouth Biomass Gets EU Go Ahead For £1.1bn Subsidy

December 1, 2015
tags:

By Paul Homewood  

 

h/t AC Osborn 

 

image

http://www.telegraph.co.uk/finance/newsbysector/energy/12027606/Coal-plant-gets-green-light-to-burn-American-wood-pellets.html

 

I sometimes if I have followed Alice down into Wonderland!

The Telegraph reports:

 

One of Britain’s dozen remaining coal-fired power plants is to be converted to burn wood pellets shipped in from North America, after the European Commission approved a £1bn subsidy contract for the project.

RWE’s Lynemouth power station in Northumberland is due to close by the end of this year under environmental rules, but will now be resurrected as a biomass plant following EU state aid approval for the consumer-funded subsidies.

The 420 megawatt plant, which produces enough electricity to power 450,000 homes, could be up and running again within 18 months, subject to a final investment decision early next year, RWE said.

The decision also boosted Drax, the Yorkshire coal plant that is awaiting state aid approval of a similar subsidy contract for the conversion of one of its units to burn biomass.

 

A cat crosses the road on a housing development in the shadow of Drax Power station, near Selby in north Yorkshire

Drax power plant, and a cat.  Photo: Bloomberg

 

Drax shares rose almost 13pc on the back of the decision, although the company issued a statement cautioning against assuming it too would be approved.

Under the terms of the subsidy contract, awarded in April 2014, Lynemouth will be paid a fixed price of £105 for every megawatt-hour of biomass-fired power it generates until 2027 – well over double the current market price of power.

The plant is due to burn 1.5 million tonnes of wood pellets each year, mainly shipped in from the US and Canada as well as Europe.

The National Audit Office last year warned that the subsidies could be higher than needed because of the way ministers awarded them. It estimated that the subsidies for Lynemouth would be worth £1.1bn in total, although that assumed conversion by the end of this year.

However the EC concluded that in the case of Lynemouth there was “no risk of overcompensation”.

Drax is in the process of converting from coal to biomass and was awarded a similar subsidy contract for the third of its six units, which it went on to convert earlier this year.

If the contract wins state aid approval it would be more lucrative than the current ‘renewables obligation’ subsidy that the unit currently qualifies for.

John Musk, analyst at RBC Capital Markets, said it was “difficult not to see a direct read-across to Drax” from the Lynemouth decision but said Drax still expected its contract to be subject to a full state aid investigation which could take six to nine months.

A Drax spokesman said the EC decision was “encouraging” but that the projects had “different underlying technical and economic assumptions”.

The company’s hopes of converting a fourth unit remain in doubt with uncertainty over whether ministers will award any more subsidies for biomass.

Any units that keep burning coal will be forced to shut by 2025, under Government plans.

A DECC spokesman said: “Our priority is providing clean, secure and affordable energy for hardworking families and businesses.

“We are the first country to give an end date to using unabated coal and this decision is another step in the right direction – helping us increase the diversity of our energy mix as we move towards a low carbon future.”

 

 

Just look at DECC’s priorities again:

Providing clean, secure and affordable energy

 

Well, biomass certainly is not “clean”, under any definition of the word. Demand for wood pellets is creating huge environmental problems in America, and their burning here is just as polluting as coal.

As for CO2, biomass will not do anything to reduce actual (as opposed to EU defined ones) of CO2 in the short or even medium term.

And affordable? Lynemouth will receive a guaranteed, and index linked, price of £105/MWh (at 2012 prices) till 2027, more than double the market price.

Secure? Depends on how long the US is willing to see its forests being destroyed.

 

£1.1bn? And for what?

12 Comments leave one →
  1. December 1, 2015 7:35 pm

    There is only one word for this – madness. Well, perhaps more than one – insanity.

    Who in DECC is responsible for this madness?

  2. michael hart permalink
    December 1, 2015 7:43 pm

    “Drax power plant, and a cat.”
    Nice one. Made me laugh for no good reason.

    • 1saveenergy permalink
      December 1, 2015 10:12 pm

      You can’t beat pussy power

  3. December 1, 2015 8:02 pm

    Why the photoshopped image of black steam?

  4. J Martin permalink
    December 1, 2015 8:52 pm

    Meanwhile in the USA concern is growing at the destruction of irreplaceable flora and fauna habitat caused by the European demand for wood pellets. I’m going to get a bottle of champers in for when the US conservationists manage to stop wood pellet shipments to Drax etc.

    • CheshireRed permalink
      December 2, 2015 9:56 am

      You’re onto something there. What happens when / if there’s a change of US policy towards the UK stripping bare their ancient forests? A change of government, a legal challenge, whatever. If the renewables scam is entirely dependent on government policy (and it is) then so too can the biofuels scam.

      Donald Trump gets in, pulls the plug on our wood pellets and leaves Drax and maybe Lynemouth without fuel, which leaves the UK short on electricity and has a devastating knock on effect for UK energy supply.

  5. Retired Dave permalink
    December 1, 2015 10:00 pm

    Absolute and utter madness. There is nothing else to say.

    • December 1, 2015 10:51 pm

      Likewise I’m lost for words at this insanity, Paris, governments, the lot of them!

  6. December 1, 2015 11:08 pm

    The world is awash with slightly older biomass that we call coal – a fact lost on most environ’mentalists’!!
    Instead, we rip out unseasoned timber, cart it thousand of miles on diesel trucks and ships burning bunker-oil, leaving a huge mess every step of the way!
    Hopefully it won’t self combust somewhere in the supply chain…
    A more pertinent point might be, as these forests become endangered or protected with the supply constraining – prices will rise!
    I can witness this as a mate got talked into a biomass boiler, pointless bag of crap, the price of pellets has doubled, yes doubled, in the last year!!
    As a consolation, at least the station is not destroyed, a few days after closing and can be converted back to more efficient, abundant, energy dense coal (biomass) sometime in future…

  7. Green Sand permalink
    December 1, 2015 11:37 pm

    The EU in action!

    Angela builds and commits to coal power for decades, whilst DECC celebrates being allowed to burn wood!

    I trust you are all suitably impressed and extremely grateful?

  8. John F. Hultquist permalink
    December 2, 2015 12:54 am

    Two questions:
    1. Has AGW made it too warm now in the UK to grow your own trees?
    [Some can produce on a 7 year cycle.]
    2. Looking at the cat photo with the cooling towers – what are the black smudges on the towers – Rorschach inkblots? [Must be a vent for soot (black carbon) somewhere.]

  9. December 2, 2015 10:00 am

    An idea cut down the US trees store them, meanwhile Drax burns local coal.
    At the Drax end you’d be ouputting less CO2 than with wood.
    At the US end you’d stick the wood in a man-made peatland so that it wouldn’t emit its CO2 into the atmos, and the new trees planted would be sucking the CO2 out of the atmosphere.
    Anything wrong with my maths ?

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