Regulation is holding back green power, says Drax

Europe's biggest coal-fired power station is calling for changes to the Government's renewable energy regulations to enable Drax to convert one of its six coal generators to run on biomass.

Engineers are set to start work converting the facilities immediately and the green generator could be up and running within 18 months. But under the current Renewable Obligation (RO) regulatory regime the plan – which would be the first of its type in the world – is simply not economic, says Drax.

"Biomass is the earth's fourth-most-plentiful energy resource," Dorothy Thompson, the company's chief executive, said yesterday. "For years it has provided more electricity in the UK than any other renewable resource, but electricity generation from biomass has not increased in recent years due to certain limitations in the policy framework."

Drax can already produce up to 500 megawatts (MW), or an eighth of its output, from biomass burnt alongside coal in "co-firing" facilities. But it is only using around half of the capacity because most of the 1.5 million tonnes of annual input comes from agricultural residue such as peanut husks (rather than specially-grown energy crops, such as elephant grass), which are up to three times more expensive than coal, on an energy output basis.

Not only is the RO regime – which assigns RO certificates to different renewable generation technologies on a "banded" basis – tilted against co-firing. It also needs to set a banding for electricity produced from a biomass-converted coal generator to help the capital investment pay for itself.

"Electricity generation from biomass has the potential to grow significantly and make a vital contribution to meeting the UK's challenging renewables and climate change targets at the least cost to UK consumers," Ms Thompson said. "This will only happen with the right policy framework."

Drax is also working on plans to build three dedicated biomass plants. Two sites have already been chosen – one at Drax itself, the other at nearby Immingham – and the Government is expected to rule on the planning applications by September. Although not willing to put a figure on the plans, the company says that the conversion of existing coal facilities to burn biomass is an order of magnitude cheaper than building new infrastructure.

The call for greater recognition of the potential for biomass comes as the independent Committee for Climate Change has warned that the UK is set to fall far short of the target to cut greenhouse gas emissions by 34 per cent by 2020.

The Government's light-touch regulatory approach is not working and plans for renewable energy generation, electric cars and home insulation must be massively speeded up, said Lord Turner, the committee chairman. Last year's 8.6 per cent decline in carbon emissions was an "illusion" of progress created by the recession, he said.

To get back on track, the UK must triple the amount of energy generated from renewable sources to 15 per cent by 2020, requiring a doubling of the number of wind turbines built each year. The committee also called for a carbon tax to hike fossil fuel-generated electricity more expensive and push investment into greener alternatives.

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