Do dedicated biomass electricity generating plants make financial sense?
E.ON UK has recently announced a plan to build a second power station using 100% energy crops as fuel. The first investment – a £90m power plant at Lockerbie in Scotland – will open within the next few months. The second plant, still only in the planning stage, will be in Sheffield on the site of a previous generating station. Both power plants will use wood from forestry and specially planted willow but Sheffield will also burn waste wood from other sources, such as industrial pallets. These are the first two large-scale plants in the UK if we exclude the ill-fated Arbre plant of several years ago. (Arbre was an extremely advanced wood chip gasification plant built in Yorkshire. It was never fully commissioned.)
By the standards of the electricity industry, the E.ON investments are tiny. The proposed Sheffield plant has a price tag of £44m compared to £1bn for E.ON's intended investment in the new super-critical low(ish) emissions coal power plant at Kingsnorth in Kent. Nevertheless, Lockerbie and Sheffield do appear to make good financial sense, at least in part because of the revisions to the renewable energy subsidy scheme announced in the government's June 2007 Energy White Paper.
This article looks at the prospective financial return from operating a power plant burning wood and other energy crops.
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