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Is CHP Economically Viable?

March 3, 2017

By Paul Homewood




I mentioned the new Biomass CHP project at Teeside in my previous post.

Costing £650m to build, this will burn wood pellets to provide 300MW, as well as supplying heating to local companies on the Teesport site.


Teeside was awarded a CfD in 2014, which gives a guaranteed, index linked price of £132.25/MWh (at current prices). However, at the same time Drax’s 3rd conversion biomass unit only received a rate of £105.87.

While there may be other intrinsic differences, this would seem to imply that it costs Teeside £26.38/MWh for Teeside to distribute its waste heat, over and above what it might receive from selling it.

If this is true, it makes the whole concept of Teeside CHP economically insane.




  1. A C Osborn permalink
    March 3, 2017 6:36 pm

    Paul, I am not sure you are corect when you say “While there may be other intrinsic differences, this would seem to imply that it costs Teeside £26.38/MWh”, because that pre-supposes that the Government and DECC actually have a rationale with their cfd decisions.
    I think it is more a case of them pulling numbers out of a hat.

  2. John permalink
    March 3, 2017 10:09 pm

    After virtually losing its chemical industry and all of its steel industry this project may be karma
    To try & help re invigorate Teesside by such investment
    The cost & return may be incidental

  3. dangeroosdave permalink
    March 3, 2017 11:16 pm

    Economically insane. That’s the word I was looking for…biomass offers the least amount of British Thermal Units to extract from fuel, followed by firewood, followed by coal, followed by oil, followed by natural gas. That’s why technology has advanced with such blinding speed since we killed all the horses. With Fukushima sliding into the sea, it’s hard to discuss nuclear fuel, especially when fully considering the fully accounted mining and manufacturing energy required.

  4. mikewaite permalink
    March 4, 2017 8:45 am

    Following the link to the LowerCarbonContracts Co , one of 2 set up by the Govt to expedite the transformation to solar, wind and biomass, reveals the juggernaut that faces anyone trying to stop or limit this change in the UK power business.
    This is a company of very powerful men and women . The director’s salary is more than £200000pa and the median is £65000 2.5 times the average working wage in Britain.
    Whilst the antics of media celebrities, journalists and some dubious science on the subject of climate change may dominate in the media and on the blogsites , these people are quietly and irresistibly changing the industrial structure and the very face of Britain.
    One feels as did surely the commoners of England and the crofters of Scotland when faced with the power of the wealthy landowners during the Enclosures and Clearances of the 18th and 19th Century. The argument then is the same as we hear today , the pain to the common people is more than compensated by the greater good for the country as a whole. The fact that a few individuals profit vastly and disproportionately is just a side issue, of no great relevance in the long term.

  5. March 5, 2017 1:12 pm

    Being ‘economically insane’ has never stopped the greenblob before, as long as the government keeps backing their schemes.

  6. ANdrew Tull permalink
    March 5, 2017 7:35 pm

    WAKO’s guide to very important and serious stuff that you probably won’t understand.
    What is coal? it’s vegetable matter isn’t it? Trees that died ‘naturally’ several 1000’s years ago and have been dug up to be burnt to create energy. Boooo!
    What are wood pellets? Well they are cool for cats. They are trees that were cut down a few months ago and burnt in renewable energy boilers. Burning wood pellets is green and good for the environment isn’t it? Hoorahh! And burning coal is bad for the environment isn’t it booooo! Wood pellets are a by-product of the construction and furniture industries so it’s ok the burn them isn’t it?. Hoorahh!
    ……errr no! NO? Why NO? Well, we don’t really have a wood industry in this country because we don’t really have any spare trees to speak of. So what? SO, we import our wood from all over the world and as modern technology means there is very little wasted wood left over to make wood pellets, we cut down extra trees instead to create the wood pellets to burn. Hoorah!!!!
    That’s good isn’t it? Because these are ‘managed’ woodlands aren’t they? Hoorah?
    Who says they are managed? Well the man that’s cutting them down says they are managed. He has a Rolex. OK that’s fine then. Hoorah! Who checks they are managed? Thats a man from the Eu of course. He drives a Porsche.
    Well, the EU says burning wood pellets creates less co2 than burning coal, so it’s ok. Hoorah?
    Well, who told them? The man that’s cutting the trees down told them.
    (That’s the man with Rolex) Well, actually he paid a man with a PhD to produce lots and lots of figures to say that it if you take everything into account and he means EVERYTHING! it creates less Co2.
    HE’s now got a villa in Spain and travels business class to give lectures everywhere on Climate Change, so he must be right.
    But hang on, coal is made from old trees and wood pellets are made from new trees so how can they create different amounts of CO2?
    That’s easy! First you write a computer program that says wood pellets create less co2 and then you just press print and publish the results?
    Wow cool! Or warm I suppose. What if anyone gets a bit suspicious? Oh well, if they didn’t go to a posh school, you just call them names like climate deniers and all those other scientists that are up to their own tricks to get funding, will back you up anyway. So it’s a win win.
    So, what’s the real difference between burning coal and wood pellets? Well, if you just concentrate on the chemistry and ignoring the fact that valuable ancient woodland is being cut down all over with world, for wood pellets, boooo! and are then being shipped across the world at huge cost and wasting of fuel. boooo! burning wood pellets actually creates about 12% more CO2 than burning coal.
    HOLLY SHIT! really? Yep, but keep it to yourself otherwise you’ll get told you are a crank.
    So anyways, this Northern Ireland pm the lady that just got voted back in, even though she has just cost N.I. about £480million by creating a totally bollocks incentive scheme that she took a back hander on to set up, what’s going to happen to her?
    What do you think? Well ! absolutely nothing because they are going to blame the companies that took up the scheme instead. Booo….why? Because, if you read the Guardian, you will realise you can blame everything on industry. And because all the journalists and The MPs went to school together and it’s all about ‘Climate Change’, and you wouldn’t understand that technical stuff, and of course they are all getting free trips to conventions all round the world travelling business class, paid for by the man that cuts the trees down. Remember him? Oh yes, isn’t he the one driving the Porche ? No, he’s the one with the Rolex, but dont worry, if you keep quiet and accept the free trip you’ll meet the guy with the Rolex at the symposium where the man with the Spanish villa will be speaking.
    Ok, I’m in.

    • Stuart Brown permalink
      March 6, 2017 9:19 am

      Brilliant! You should write a Ladybird book 🙂

  7. March 6, 2017 9:27 pm

    @Paul : Little Emily in Today’s Times mentions corps rushing for subsidies.
    – Mygen under water sea turbines are to get £200/MWh “in addition to the £45 wholesale price”
    – Also Dounrey Tri floating wind turbines also looking for one.

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