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Support levels for biomass set

07/02/2013

Energy Minister Fergus Ewing today announced future support levels for biomass, as well as confirming levels of support for solar power.

In October the Scottish Government launched a consultation on the levels of the renewables obligation – the support mechanism for renewable energy - for biomass and solar energy.

Today Mr Ewing announced the Scottish Government response to that consultation. Wood fuelled biomass stations with an installed capacity greater than 15MW will only receive support under the renewables obligation if they operate as combined heat and power (CHP) stations.

Where stations lose their combined heat and power status – for example, if a contract to supply heat to a local area or business ends – then those stations will remain eligible for reduced support under the renewables obligation for no more than five years, providing some time to regain their CHP status .

Support in other areas, including solar PV, will mirror those applying across the rest of the UK.

Energy Minister Fergus Ewing said:

“We have consulted widely before making the decisions I have announced today, and we have listened to what industry and stakeholders have told us.

“We have made clear our concerns over competition for a finite supply of wood, and our belief that there should be a greater focus on biomass in smaller scale energy projects wherever possible, and the responses to our consultation reflected that.

“We are taking action to address these points now – whereas the UK Government has ruled out placing any limits on biomass until installed capacity exceeds 400MW.

“We are removing support for those biomass stations over 15 MW that do not provide good quality combined heat and power. This is a slightly higher ceiling than we had proposed, but our forecasts for additional supplies of wood in the market place mean that new capacity which might be built will not affect existing users – and indeed will create opportunities for businesses in the forest supply sector.

“Sustainable biomass provides huge opportunities for the people of Scotland – jobs in construction, jobs in the plants and in the forest supply sector, reduced emissions and reduced energy bills. Providing the forest supply sector with new markets will also allow them to plant more trees.

“We have also proposed limited transition arrangements which will allow combined heat and power stations who lose heat clients have time to replace them before losing their support.

“Over the last decade the Renewables Obligation has helped to almost triple renewable output in Scotland, while the sector has attracted around  £2.8 billion of investment since 2009, according to industry figures. Estimates from the industry meanwhile have suggested that there are presently around 11,000 jobs in the renewables sector in Scotland, a figure which the successful development of our resources will increase massively.

“The RO is paid for by consumers, of course, but we believe that those costs are proportionate, and that in the long term they will protect consumers from higher bills. Estimates suggest that the RO currently costs domestic consumers between £15-£20 a year, and that this could rise to £53 per year by 2017 – but that bills in 2020 will be £94 cheaper with renewables and energy efficiency policies than without.

“Scotland has astounding green energy potential and vast natural resources, and we have a responsibility to make sure our nation seizes this opportunity to create tens of thousands of new jobs and secure billions of pounds of investment in our economy. Today’s announcement will allow us to continue along that path.”

Andrew Howard, Managing Director of Moray Estates Development Company Ltd welcomed the announcement.

Mr Howard said: "Moray Estates welcomes Ministers' decision on the Renewable Obligation biomass banding which will provide further support to the developing biomass sector and additional markets for our forest resource."

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