The 4 key factors for biomass CHP success
It is a great time for Biomass Combined Heat and Power (CHP) and Ricardo Energy & Environment and international law firm, Bird & Bird are holding a free webinar on 11 September on Industrial Biomass CHP - Enhancing opportunities, overcoming risks and structuring projects. I thought I’d share my thoughts on what I think are the four key opportunities and challenges for biomass CHP.
1. Support for renewable CHP under the Renewable Heat Incentive (RHI)
The United Kingdom has introduced the world’s first incentive to recognise renewable heat developments – the Renewable Heat Incentive (RHI). As part of this a higher tariff has recently been introduced for large scale biomass CHP, making developments more viable. This is a great opportunity for heat users to start considering biomass developments as an affordable and renewable form of heat generation.
However, it is important to consider hidden costs, such as those associated with land use and operational challenges such as heat load and ensuring that your plant is not oversized.
2. Biomass CHP in the Contract for Difference market
We are currently on the cusp of a transition from the Government’s Renewable Obligation policy to a new Contract for Difference (CfD). CfD is aimed at introducing greater stability for renewable plants throughout their operational life and will act as a framework for how renewable electricity is contracted in the future. The Government is already examining the details of CfD and has provided CfD to three plants in the UK (two biomass conversion and one biomass CHP).
Final details for CfD are still emerging but if you are considering investing in or developing biomass CHP you have to decide now if you are going to apply for support through the current Renewables Obligation or wait for the CfD. This is a complex decision that will have significant implications for your development. Make sure you fully understand how CfD is developing to make an informed decision.
3. Fuel-technology interactions
Understanding how your chosen biomass fuel interacts with your CHP infrastructure is vital to a successful CHP development. Some feedstocks are incompatible with certain conversion equipment or can significantly reduce their operational life. If you already have a biomass feedstock supply in place you need to carefully consider which equipment best suits your needs. If you have already decided on a type of boiler and are looking at what feedstocks to use you need to consider issues such as what land you have available to store the feedstock, how will you manage any emissions associated with your chosen feedstock and the operation parameters associated with your equipment.
4. Pricing and availability of fuel supply
In the long term one important factor that will affect the success of your biomass CHP development will be the price and availability of biomass feedstock over the operational lifetime of your development – often over more than two decades. Careful contract negotiation can help you ensure a continuous supply of biomass feedstock at an acceptable cost.