EWB Insight: January 2017

This month: Northern Ireland's government collapses over biomass subsidies, a stronger circular economy, plus new deals in the biomass and energy-from-waste sector.

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Northern Ireland’s warning for the bioenergy industry

The collapse of Northern Ireland’s power-sharing government due largely to a poorly designed biomass energy subsidy scheme highlights how far official support carries risks for bioenergy and other renewables sectors as well as rewards.

Northern Ireland’s renewable heat incentive (RHI) was introduced in 2012 after gaining EU state aid approval from the European Commission. It was modelled on a similar biomass energy feed-in tariff scheme already operating in England.

However, unnoticed at the time the scheme had a crucial flaw: it lacked a cap on the total subsidy available or mechanism for degression of subsidy rates in response to take up.

Canny householders and land-based businesses did notice that under the scheme they could receive on average £1.60 in subsidies for every £1 spent on biomass equipment and feedstock. As stories of biomass boilers being installed in empty barns spread it emerged that the scheme will go over budget by nearly £500m (€576).

As recriminations started to fly the province’s first minister Arlene Foster of the Democratic Unionist Party (DUP) rejected repeated calls to step down. Finally, Deputy First Minister Martin McGuinness of the Republican Sinn Féin party forced her hand by resigning himself, triggering an election that will take place on 2 March.

The scandal and its dramatic political fall-out shows that as the scale of renewable energy subsidies rises, so does the chance of backlash should things go wrong.

Government support for bioenergy remains a crucial factor for growth across Europe, but a disaster such as has happened in Northern Ireland risks setting back the whole sector.

The sight of operators cashing in unfairly will certainly have damaged the sector’s reputation, at least in Northern Ireland and potentially more widely. It will be politically harder for the next executive to continue biomass energy support, however tightly drafted.

There are probably many lessons for the bioenergy industry out of all this, but one would certainly be to lobby governments for the right support mechanisms that can command public confidence and be maintained over time. If a support scheme looks too good to be true then it almost certainly is.

A second must be to continue innovating to bring down costs, enabling the sector to compete in the market with lower or no public subsidies. Northern Ireland’s misadventure only makes this goal more important.

Datawatch

The German energy and wood pellet association (DEPV) said wood pellet prices are slightly up this year compared to the start of 2016 due to the colder weather. The DEPV said the nationwide average of €242.11 per tonne was 3% up on December and 0.2% more than in January 2016.

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Many biomass users in Germany, which is Europe’s largest consumer of pellets, have been "caught off guard" by the very cold snap after several years of milder temperatures leading to a spike in biomass demand, according to the association.

Policy Update

The European Parliament’s environment committee strengthened waste recycling and landfill targets in the EU circular economy package. MEPs backed increasing the 2030 recycling targets from 65% to 70% for municipal waste and from 75% to 80% for packaging waste. They also supported a more stringent landfill target of just 5% of municipal waste by 2030 instead of the 10% proposed by the European Commission. EfW trade association CEWEP and private waste sector association FEAD both broadly welcomed the vote.

The Danish government closed two schemes providing subsidies to biomass-fired electricity plants after realising at the start of the year that they were illegal. The Danish Energy Agency said, under the country’s VE Act, two policies supporting the use of biomass as an energy source alone or with other fuels had not been notified to the EU.

Swedish bioenergy trade association Svebio launched a scathing attack on the country’s Energy Commission, which set out the future development of renewables in the country. Association president, Gustav Melin, said the commission’s final energy report failed to take "advantage of the great potential for expansion of bioenergy".

German farmers would be in a perilous financial situation if policies supporting biofuels were scrapped, concluded a study backed by the union for the promotion of oil and protein plants (UFOP). It claimed that EU proposals under the Renewable Energy Sources Directive to halve sales of biofuels from agricultural raw materials by 2030 would be a "catastrophe for German agriculture".

A federal German law classifying expanded polystyrene waste as hazardous and needing to be treated in specialist incineration facilities was dropped. Under the law, the waste which generally contains the pollutant HBCD, ended up stockpiled as it cannot be sent to standard EfW plants. However, the law is to be reviewed again after one year.

The UK’s Department for Transport (DfT) began testing emissions from paraffinic diesel, a cleaner burning alternative to standard road diesel that can be synthesised from biomass,vegetable oil and other sources. Evidence suggests its use can cut nitrogen dioxide (NO2) emissions from older, heavier vehicles by 5-37%.

The Czech Republic’s environment ministry poured cold water on speculation it could use new powers to crack down on waste being burnt in boilers not legally allowed to do so. According to the ministry any action such as inspections of a boiler and its feedstock would be a "last resort".

The European Commission cleared state aid to complete the upgrade of a third unit at Drax power station in the UK to run on wood pellets. The project, which was begun in June, 2015, is supported by the UK government under its contracts for difference (CfD) scheme.

Market Update

Denmark-based biomass supplier Verdo shipped 21,000 tonnes of woodchips under what it said it hoped would be a "long cooperation" with Irish utility company Bord na Mona. The woodchips set off from South Africa and will be used in the Irish firm's three biomass-fired power stations.

UK municipality Sheffield City Council voted to re-tender its waste contract saying its current deal with Veolia "no longer" met its needs. Veolia manages and operates the city’s EfW plant and the district heating network it supplies. The Veolia contract was signed in 2001 and was due to expire in 2036. It will now continue until a new service provider is in place.

EfW technology developer PowerHouse Energy moved closer to commercialising its gasification technology by signing a 24-month contract with consultancy Waste2Tricity. The company said it planned to deliver "multiple EfW plants in the UK using the PHE G3-UHT gasification technology".

UK-based hospitality and food service businesses missed a target to treat up to 70% of their waste by anaerobic digestion or composting by 2015, according to waste charity WRAP. There was an increase of 56% in 2015, against a baseline year of either 2012 or 2013 depending on the business. But the "ambitious target", set as part of its Hospitality and Food Service Agreement HaFSA, suffered due to the "length of time" required to implement food waste collection contracts.  

German Biogas producer KTG Energie won support from two of its main investors, Gustav Zech Stiftung and Zech Gruppe, to continue operating. To prop up the company, which is currently being sold off by parent firm KTG Agrar, investors have lent it €24.95m on favourable terms. Other investors have agreed loans worth €4m.

Dutch firm Unilever revealed a contract to heat offices and manufacturing bases with biomethane. Five buildings in the UK and Ireland will use about 10,000MWh annually of biomethane from producer Geneco’s biogas plant in Bristol.

German biofuel producer Verbio said it was on track for a bumper financial performance when it releases its 2016/2017 details next month. An EBITDA of around €90m for 2016/2017, €35m more than 2015/2016, is on the cards. It cited "high plant utilisation" and "unexpectedly very good operating margins".

Estonia-based wood pellet maker Graanul Invest said the Sustainable Biomass Partnership (SBP) would audit two more of its pellet-making facilities in February. Certification audits at sites in Osula and Helme are scheduled for next month following audits at Imavere and Ebavere last year. The results are expected later this year.

France-based Séché Environnement bought three businesses, including one in the biogas sector, from the family-owned Charier Group. The deal consolidates Séché’s position in Brittany and Pays de Loire, and includes a biogas plant which heats hot water for food manufacturers. The plant is fitted with two 2MWth units and can process up to 57,500 tonnes of industrial food waste annually.

Dutch EfW plant operator AVR revealed a deal with two firms to take RDF from Guernsey. The company, which operates Europe’s largest EfW plant in Rozenburg, has a contract with UK-based RDF exporter Totus Environmental and Guernsey-based Island Waste. Totus will oversee the shipping of RDF produced at Island Waste’s materials recovery facility to the Netherlands.

Facilities Update

ENDS learned that EST-FOR Invest was behind a €1bn biorefinery planned for Estonia. Estonia-based legal practice Raidla Ellex revealed plans for the plant, which would on its own boost the country’s production of electricity from biomass "by 34-45%". The plant is due to begin production in 2022 and produce up to 700,000 tonnes of pulp annually. No location has been confirmed as this is still being considered.

Irish planning body An Bord Pleanála postponed a decision on planning consent for Indaver’s EfW plant application in Ringaskiddy, Cork, until March. It is the third postponement following news the decision would be made by last summer and then in last October. A decision had been due on 24 January for the EfW facility, which would process up to 240,000 tonnes in industrial and municipal waste per year.

UK-based technology developer Advanced Plasma Power (APP) revealed construction was under way on the world’s first "commercially viable" waste-to-bioSNG plant. APP, which is developing the facility with the UK’s National Grid, said the £25m (€28.8m) plant was due to go into operation in 2018. It will process RDF and waste wood and has a planned capacity of 4MWth.

US-based Emerson signed a deal to support the conversion of the Lynemouth Power Station, which is due to fire on biomass instead of coal, later this year. It will be the main automation and electrical contractor converting the facility owned by Lynemouth Power. When the conversion is complete, the plant will process up to 1.4 million tonnes of waste wood per year.

Plans for a 49.75MWe EfW plant and related waste processing facilities in Essex hit a buffer when England’s Environment Agency refused an environmental permit. Planning permission for the Rivenhall integrated waste management facility was granted in 2010, with commissioning due to start in May 2018. But the EA argued the chimney stack height proposed by the developer, Gent Fairhead & Co, was not tall enough to "safeguard human health and the environment". The company can appeal.

Danish utility company Forsyning Helsingør confirmed it had begun construction of a large-scale biomass-fired cogeneration plant. The goal is to replace a ageing natural gas-fired facility via a DKK709m (€95m) investment. The new plant will have a capacity of 58.5MWth and 15.9MWe. It will be fuelled with about 127,300 tonnes of woodchips per year.

Finland-based Valmet will supply DNA automation technology to the under-construction Ferrybridge Multifuel 2 (FM2) EfW plant. The work is due in June with the system set to be handed over in July 2019. FM2, which will have a capacity of 70MWe is going to process up to 570,000 tonnes per annum of RDF.

German EfW plant operator Steag took over the first of two EfW plants it bought from Vattenfall. The company, which had held a 25.1% stake in the plant in Lauta, bought it and another plant in Rüdersdorf near Berlin for an undisclosed fee last year. The Lauta plant has capacities of 20MWe and 87MWth and it processes 225,000 tonnes of waste per year. The deal for the second plant is due to complete in the second quarter of this year.

US-owned engineering firm Babcock & Wilcox Vølund revealed work on a DKK250m (about €34m) overhaul of Fjernvarme Fyn’s 20-year-old EfW facility in Denmark. The facility, known as Fynsværket, currently operates waste-fired boilers running from lines 11 and 12 and line 13. Once the overhaul is completed the facility will annually process 290,000 tonnes of waste and have capacities of 22MWe and 108MWth. The new-look facility is due to return to operation for the next heating season from October.

More meetings were held by Eneris Energia to brief businesses and residents about its plans for an EfW plant in Ruda Slaska, Poland. The Ekologiczne Centrum Odzsku (ECO) facility will process about 180,000 tonnes per year of municipal solid waste and sewage sludge.  The single-line plant, which is in the early stages of development, will be able to supply about 111GWh of electricity and around 750TJ of heat annually.

In the UK, the Planning Inspectorate prepared to make a decision on a 49.9MWe biomass-fired plant proposed for Milford Haven by Cypriot-Welsh company Egnedol. A previous application for the plant, submitted last summer, required more environmental information. An updated application is open for submissions until February.

Veolia’s Battlefield EfW plant, located Shropshire, UK, was given the royal seal of approval at its official opening. HRH the Princess Royal opened the plant, which has a capacity of 8MWe and can process up to 90,000 tonnes of waste. The plant was developed by Veolia under a 27-year contract with Shropshire Council.

Waste from West London began being sent for energy recovery in South Gloucestershire after the opening of a 400,000 tonne per year EfW plant. Suez’s Severnside Energy Recovery Centre (SERC) in South Gloucestershire started operating shortly before Christmas after a three-year construction programme. The plant has a capacity of 34MWe and is the centrepiece of Suez’s 25-year contract with the West London Waste Authority.

Ireland’s Edenderry peat and part-biomass-fired power station gained consent from planning body An Bord Pleanála to continue operating until at least 2030. Permission had been initially refused, but the decision was overturned just before Christmas. The facility is owned by Bord na Móna and is legally required to use 30% biomass, which currently displaces about 300,000 tonnes of peat use annually.

Dutch engineering firm Host revealed construction work was due to begin within two months of 15MWth wood-fired plant in Lelystad, the Netherlands. The plant, which is due to be operational by September, is being built for BeGreen - a private firm that intends to sell the heat to the city’s district heating system. The facility will process up to 30,000 tonnes of domestically sourced woodchips annually, depending on how much demand the plant receives for its heat

Utility company Fortum’s PLN870m (€196.6m) plan to convert its coal-fired Zabrze plant to fire on a up to 50% RDF moved forward with work getting underway to installed the new 40 multifuel boiler. UK-based Amec Foster Wheeler, in 2015, won the contract to design, supply, build and commission the circulating fluidised-bed steam generating cogeneration plant in the southern Polish city. When operational in 2018, the facility will provide district heating to about 70,000 homes in Zabrze and Bytom

Swiss utility company Limeco began work on a CHF100m (€93.2m) expansion of the district heating system served by its Dietikon EfW facility. The commissioning of the extended network will see it supply Fondli, Niderfeld and Spreitenbach East, around the country’s largest city Zurich, in time for next winter. The EfW plant processes municipal solid waste and sewage and can produce about 28,000MWh of district heating and industrial process steam a year.

Danish utility Hofor signed a deal with the municipality of Lolland to develop land to supply biomass to its under-construction BIO4 wood-fired cogeneration plant. The deal will provide locally sourced feedstock for the station when it’s operational in 2018. The plant is due to have capacities of 415MWth and150MWe and will process 1.2 million tonnes of woodchips per year.

And finally...

Trade association Energy Companies Sweden published a list of the country’s "most beautiful" power plants to encourage people to be proud of their energy infrastructure. The winner was Varberg Energis’ half woodchip-fired plant in Varberg, which was opened for winter 2012/13.

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The plant has two 10MWth boilers and also uses solar panels to produce electricity. One boiler is fired on woodchips, while the other uses natural gas. Fortum’s vast Vartan biomass-fired plant, opened last year, came joint second with Borås Energi's waste-fired Miljös Ryaverket facility which has been operating since the 1960s.

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