Biomass action plan for Scotland

6. ELECTRICITY FROM BIOMASS

INTRODUCTION

6.1 Scotland has enormous renewable electricity generation capacity, with biomass one of a number of potential sources alongside wind, wave, tidal and our existing hydro resource. We are currently on course to meet our target for 18% renewable electricity generation by 2010. However, Ministers are also determined to support the development of as wide a range of renewable technologies as possible. Biomass can help increase that diversity with the added value that generation can provide a controllable baseload, enhancing security of supply.

6.2 Electricity generation through co-firing is currently the largest user of biomass in Scotland, although the feedstock is mainly imported material in the form of pellets. Co-firing in Scotland is currently taking place at Cockenzie and Longannet. Consultation on changes to the co-firing rules under the UK Renewables Obligations closed on 5 January 2007.

6.3 Proposals for purpose-built biomass plants are also in development and the first large-scale biomass power station is now under construction by E.ON at Steven's Croft, Lockerbie. As discussed below, the Executive also recognises the benefits of combined heat and power generation where practicable and will work with developers to identify opportunities to promote this form of biomass use.

RENEWABLES OBLIGATION

6.4 The biomass electricity market is driven by the Renewables Obligation (Scotland), or ROS, which is aligned with almost identical instruments in England and Wales and (more recently) in Northern Ireland. A major review of the Obligations is currently underway, following on from the Energy Review conclusions announced in the summer 2006. The key considerations include ROC banding, essentially the ability to award more or less support to different technologies or biomass feedstocks depending on their carbon benefits and costs, plus changes to the rules on co-firing. Any changes ultimately arising from these proposals, coupled with more recent changes to the Obligation rules regarding the eligibility of waste could have a significant effect on the development of biomass generation capacity in Scotland.

6.5 The progress of the debate on banding is being followed closely by the Executive; subject to agreement on the scope and nature of the required changes, we intend that banding will be introduced to the ROS at the same time as to the other UK Obligations.

Co-firing

6.6 As mentioned above, changes to the current co-firing rules are being considered as part of the ongoing consultation on banding. Under the current Obligation rules, the maximum demand for co-firing across the UK is 2.03 TWh, only a small proportion of which is in Scotland.

6.7 The current consultation looks at the possibility of removing the cap on co-fired ROCs while reducing the support available by banding co-fired ROCs at a lower rate. This could have the effect of increasing the demand for biomass material for co-firing without flooding the market with ROCs and thus reducing the value of the Obligation to other technologies. Other changes being considered include a requirement for co-firers to provide an annual report to Ofgem on the biomass they have used, its origins and how they have addressed any relevant sustainability issues.

6.8 The consultation also asks for views on retaining a higher banding for co-firing using energy crops, recognising the benefits to farmers of the opportunities for farm diversification and the development of a biomass resource. The Executive however recognises the potential impact on existing industries and the development of purpose-built biomass plants and will consider the issue in detail to ensure the best approach for Scotland.

COMBINED HEAT AND POWER ( CHP)

6.9 The Executive recognises that combined heat and power ( CHP) generation can make more efficient use of biomass resources and contribute towards the Scottish Share of the UK's carbon emissions. CHP plants can be fired by any fuel, including coal, gas or biomass. Scotland is performing better on introduction of CHP than the UK average with installed capacity in Scotland of around 743 MWe (around 16 per cent of UK CHP capacity).

6.10 CHP is a key component of UK and EU biomass policy. Key support measures include:

Renewables Obligation Scotland (support for good quality mixed biomass and waste CHP systems)

• Scottish Biomass Support Scheme
• Enhanced Capital Allowances

6.11 There are several proposals for biomass CHP in development, and the Executive has awarded funding to support projects by Balcas in Invergordon, UPM Kymmene in Irvine and the Wick District Heating Scheme.

PLANNING

6.12 The Executive works closely with colleagues in Ofgem, National Grid Company and transmission companies to ensure that its renewable policy is taken fully into account in the planning and operation of the electricity network in Scotland.

6.13 Alongside that the Executive wants to see the planning system make a positive provision for renewable energy developments - as stated earlier in the document, biomass is highlighted to ensure a supportive framework is in place to help the sector to grow to its full potential.

SUMMARY

Electricity from biomass is well supported by the Executive through a variety of mechanisms. The main source of financial support is the Renewables Obligation (Scotland) and the current review will seek to increase biomass use through the RO(S). The Executive recognises the benefits of generating heat and power together and is keen to further encourage the development of CHP, where we are currently already performing better than the UK average.

ACTION TABLE