E.ON to examine renewable strategy after UK government decision

According to developers within the industry, UK government plans to reduce subsidies for dedicated biomass plants – which burn wood pellets and farm waste to produce power – by 7 per cent from April 2016 have made investment decisions harder.
Biomass power plant
While the UK has approved a 150 MW biomass power plant to be developed by utility E.ON, the company has now said it is reviewing the project in light of a proposed cut in state subsidies four years from now.

“We will now take some time to review the prospects for the project in light of the UK government’s current banding review and how it fits with our portfolio of renewable energy investments in the UK,” an E.ON spokeswoman said.

Proposals to cut biomass plant subsidies have jeopardized and already derailed some projects. But co-firing plants, burning biomass fuel and coal together, are planned to receive slightly higher incentives from 2013 under the banding review, due to be finalised this spring.

Last month, UK coal-fired power plant operator Drax scrapped plans to build a 290 MW biomass plant on its site in North Yorkshire, saying state support levels for the renewable source were still too low.

The power producer said it was considering options for its two other planned biomass plants in different locations in the UK.

The industry also suffered a setback in public perception this month after a fire ripped through RWE npower‘s new biomass plant in Tilbury, raising safety concerns and forcing the 750 MW plant to shut at least until the end of July.

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