THE COMPANY behind a controversial scheme to ship biomass halfway around the world to be burned in Milford Haven has failed to deny that its business model is threatened by a significant change in UK Government policy on biomass power generation. 

Egnedol, whose head office continues to be a vacant shop in a Carmarthen side-street, was asked to respond to news that the Government is to significantly reduce the amount of money paid as subsidy to companies who generate power from biomass material.

The Department for Business, Energy and Industrial Strategy (BEIS, previously the Department of Energy and Climate Change) laid an amendment in Parliament to the Renewable Heat Incentive on July 7 to reduce support for biomass combined-heat-and-power (CHP) systems.

The changes in support are specifically targeted at biomass CHP plants that use less than 20 % of their fuel for electricity production (with the other 80 % being used for renewable heat). This change will affect all plants applying on or after Aug 1. Neither DECC or the new BEIS had formally consulted with relevant trade associations or directly with industry on this specific change prior to laying the new amendment in Parliament, surprising many in the industry and putting a number of projects at risk.

The REA surveyed 36 companies that are developing biomass CHP projects in the UK. Of those companies, 34 had already made major equipment orders for the construction of their facilities or put down non-refundable deposits; 25 companies have reported that the changes laid before parliament will have a ‘very negative ‘ impact on their project, and additional eight reporting ‘negative ‘ impact.

REA discussions with member companies involved in the biomass CHP industry (unrelated to the survey) indicate many companies are facing up to a 35 % reduction in their anticipated tariff.

James Court, Head of Policy and E xternal Affairs at the REA, said: “Despite the amendment claiming ‘no impact on the private or voluntary sectors is foreseen ‘, the abrupt cut in support significantly impacts the biomass CHP industry. It is the suddenness and the lack of consultation that is the core issue here. Over £140m worth of investment is affected by this change.

“The industry has invested in good faith in these projects, some which have been in preparation and construction for up to two years.

“This unexpected cut will prove damaging to investor confidence and significantly reduces the likelihood that many companies and investors will be keen to invest in this low-carbon technology in the future.

“We are therefore calling on BEIS to withdraw the amendment until a proper consultation has been launched to examine the impact on these projects, or introduce a grace period for those who can demonstrate that they have already made a significant financial commitment.”

Egnedol’s development has been dogged by controversy from the outset. A meeting between the company’s representatives and councillors was described as farcical, after the spokespersons sent were unable to answer even the most basic questions posed to them by councillors. In addition, it is not clear what amount of public money will be handed over to the company, whether directly by way of grant or by long-term ‘green’ subsidy and carbon-trading credits.

Although Egnedol has put some exhibitions on for members of the public in Milford Haven, it has declined to attend public question and answer sessions, leading to continuing suspicion about its bona fides and ability to commence the project, let alone complete it.

While Egnedol has made a public statement that it intends to start operation from the Blackbridge site next year, the South Hook development took three years from the same stage as the Egnedol scheme is at.

A 50MW generating facility would require 50 tonnes of biomass derived from timber each hour. And that assumes that it burns only timber. Once permission is granted, there would be nothing to prevent the plant’s operators burning waste in order to fuel its plant. The company has declined to say precisely what material will be burned at Blackbridge, although it has denied it will be the patented ‘miracle plant’ that features so prominently in the company’s promotional websites as being the source of its ambitious plans for biomass generation.

None of the existing (far smaller) similar facilities in the UK are operating at anywhere near their projected efficiency, while an operation in Carmarthenshire was denied by planners after it emerged insufficient attention had been given to the potential adverse effects of such a development on the environment.