Is Shale being backed at expense of developing biomass?
Posted on Feb 2, 2016
The UK is continuing to keep renewable energy investors at arms length by backing shale gas at the expense of developing biomass.
That is the verdict of analysts at consultancy Ernst & Young (EY), who warn that the British government “is now playing catch-up with investors who are not short of opportunities in other countries.”
EY also highlights that dedicated biomass power plants were conspicuously absent from the strike price package and notes that the government’s “controversial move toward shale gas appears to be at the expense of biomass power, which arguably still has a critical role to play in expanding the UK’s low carbon base-load power.”
And EY also concludes that the government’s failure to set a 2030 decarbonisation target has “undermined confidence in its commitment to renewable energy.”
“The government must come up with a credible and consistent energy plan that offers in a timely manner the clarity and information required to make long-term investment decisions.”
He warned that “the government is now playing catch-up with investors who are not short of opportunities in other countries. This is no time for complacency, as important pieces of the jigsaw are still missing if we want to produce an attractive framework.”
Warren was speaking as EY today released its Renewable Energy Country Attractiveness Indices (RECAI), which does what it says on the tin – ranks countries on how attractive they are to investors in terms of their political and regulatory landscape.
The US and China retain the number one and two slots respectively, and Germany remains in third place, despite a bleak outlook for the renewables market.
EY states that despite strong public support for a green economy, rising political tensions ahead of next month’s election “are paralysing investment in the sector.”
“Calls to reform the feed-in tariff scheme ignore the relatively small impact of new renewable plants on the consumer surcharge, while rhetoric about the ‘affordability’ of Germany’s energy supply has not translated into policy statements.”
Australia drops from fourth place to sixth – replaced by the UK – because of Prime Minister Kevin Rudd’s plans to scrap the country’s fixed carbon price a year ahead of previous proposals – a move EY states “would cost A$3.8 billion (€2.5 billion) and take the price of carbon from A$25 (€17) to just A$6 (€4), potentially delaying investments.”
The RECAI also states that last year, €9.6 billion of renewable energy assets were sold by major utilities, representing a third of total merger and acquisition activity globally in 2012, with European utilities accounting for 87 percent – or €8.2 billion – of this divestment value.
Over £10bn could be paid in incentives for non-domestic biomass boilers despite a government study showing they are less efficient than thought and won’t help the UK meet clean energy targets.
The UK has pushed biomass boilers as a technology to help meet an EU target of getting at least 15% of its energy from renewable sources by 2020, incentivising businesses and individuals to switch to them in return for payments under the RHI.
But “under-performance appears widespread in the UK biomass heat sector,” the paper admits, adding that the efficiency shortfall “also means emissions will be higher than laboratory test results suggest”.
Just £128.9m had been paid through the RHI as of November 2014, but the final cost in public money could be over £10bn because those installing biomass boilers under the scheme receive annual payments for several years, Decc’s own impact assessment shows. So far, most RHI payments appear to have been banked by wealthy landowners.
To be promoted as a renewable source of energy, the biomass boilers need to have a 85% efficiency rate for converting fuel to energy – but the Decc study reveals the average efficiency rate of installed boilers was 66.5%.
The target rate may be unreachable, as the report found that the biomass heating systems surveyed “can only achieve levels around 76% (on average)”.
Yet no field studies of biomass boiler efficiency were carried out before the RHI’s introduction because Decc viewed biomass as an established and internationally successful technology.
US electric carmaker Tesla Motors aims to move into the energy sector as it launches batteries that can power homes and businesses as it attempts to expand beyond its vehicle business. D-ENERGi director Zico Ahmed said “This is really an exciting innovation within the energy sector, the battery device would allow consumers to get off the power grid or bring energy to remote areas that are not on a grid.” Tesla plans to start shipping the units to installers in the US by this summer, and plans are underway for a launch in the UK early next year. In a highly anticipated event near Los Angeles, Mr Musk said the move could help change the “entire energy infrastructure of the world”. “Tesla Energy is a critical step in this mission to enable zero emission power generation,” the company said in a statement. The rechargeable lithium-ion battery unit would be built using the same batteries Tesla produces for its electric vehicles, analysts said. The system is called Powerwall, and Tesla will sell the 7kWh unit for $3,000 (£1,954), while the 10kWh unit will retail for $3,500 (£2,275) to installers. Energy comparison firm USwitch estimates that one kWh can power two days of work on a laptop, a full washing machine cycle or be used to boil a kettle 10 times.