Anger at lack of consultation for UK biomass CHP cut

Companies involved in biomass combined heat and power projects in the UK have reacted with surprise and dismay to an amendment laid by the new department for business, energy and industrial strategy (BEIS).

The industry says neither it, nor the public, were consulted or given any prior warning that the government wished to change the support scheme for renewable biomass combined heat and power, which the Renewable Energy Association says will put over à‚£140m of low-carbon energy investment at risk.
Westminster UK parliament
The amendment was laid in the UK Parliament to alter the Renewable Heat Incentive on 7th July 2016 and reduce the support for Biomass Combined Heat & 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 1st August 2016, giving industry only 21 days’ notice.

The REA surveyed 36 companies in the space following news of the amendment.

After compiling the data gleaned from the survey, James Court, Head of Policy and External Affairs at the association, 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 à‚£140m worth of investment is affected by this change, with a planned renewable energy capacity totalling 203 MW heat and 20 MW power.”

The industry was preparing for a new tariff structure from spring 2017, as outlined in the recent RHI consultation, but no one was warned about this change. The industry has invested in good faith in these projects, some which have been in preparation and construction for up to 2 years. Over à‚£22m has been paid in non-refundable deposits.”

This unexpected cut will prove damaging to investor confidence. Of the companies surveyed, 92% stated that the changes will a negative or very negative impact on their projects. This 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.”

Twenty-five companies have reported that the changes laid before parliament will have a “very negative” impact on their project, and additional eight reporting “negative” impact.

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