PRESS RELEASE
25th October 2017
Grangemouth biomass plant may not be financially viable
The new Grangemouth Renewable Energy plant, a biomass CHP (combined heat-and-power) plant, may not be able to be built due to a shortfall in funding, according to a new report.
Plans for an 85MW plant won a “Contract for Difference” in the last round of the Government’s renewable energy auctions, with a guaranteed “strike price” of £74.75 per MWh of electricity generated. However, given the wholesale price of electricity is hovering around the £48 mark, this strike price represents a subsidy of just £27.08 per MWh.
This is less than a third of the level of subsidy a new purpose-built biomass CHP plant in Teesside will receive, which is guaranteed a strike price of £134.87/MWh. It’s also around three times less than the subisidy awarded to biomass-CHP plants in the old Renewable Obligation Certificates (ROCs) scheme.
The levelised cost of new dedicated biomass power is £96/MWh, according to a 2016 study by Arup, indicating the Grangemouth plant will run at a loss.
The report also casts doubts over the track record of the two directors of Silva Renewable Energy, A.D Barnard and P. Heasman, who are developing the plant. Neither have a background in power plant development and, according to CompanyCheck, both directors currently own companies’ with a combined negative net worth around -£90,000.
Planning permission for a biomass plant was controversially granted to Forth Energy in 2013, amid opposition from three community councils. Forth Energy then pulled out of the project in 2014.
Local opposition is still high. Locals fear the impact on air quality in an area with much heavy industry already. Wood burning power stations emit high volumes of particulates, especially in the more dangerous ultrafine range (PM2.5). New Scottish Government PM2.5 legislation, set to come into force in 2021, will limit ambient levels to10μg/m3 – a level broken in Grangemouth the past 4 years out of 5.
There’s also opposition to the import of wood pellets, which many fear will be sourced from forests in the South-East USA. This region has experienced a boom in wood pellet exports in recent years, mostly driven by increased demand from the UK. NGO investigations have shown pellet companies clear-cutting old growth hardwood forests to provide feedstock for pellets. Pellets from this source have been shown to have as bad or worse climate impacts than coal.
Contacts
Claire Robertson, UK Bioenergy Campaigner, Biofuelwatch (07856715542)
Notes:
1. The report was produced by NGO Biofuelwatch. The full, fully referenced report can be accessed at http://www.biofuelwatch.org.uk/wp-content/uploads/grangemouth-investors-briefing-final.pdf
2. For evidence of coastal forest clear-cutting for wood pellets in the SE USA, please see dogwoodalliance.org/wp-content/uploads/2017/05/NRDC_2014-2017Booklet_DigitalVersion-resize.pdf and reports.climatecentral.org/pulp-fiction/1/ for more detail
3. For recent evidence of the climate impacts of wood-burning, please see this summary http://www.biofuelwatch.org.uk/2017/summary-of-recent-biomass-research/ and particularly “Life-Cycle Impacts of Biomass Electricity in 2020” (this UK Government study examined different scenarios for sourcing wood pellets, and found that out of 29 scenarios, 11 result in CO2 emissions higher than natural gas and 6 higher than coal.)