“Fragile” supply of biomass threatens projects
Monday 16 November 2009
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| Analyst James Pinney found that supply chain issues could threaten biomass projects |
Plans to scale up the use of biomass for UK power generation will fail to materialise unless important supply chain challenges are resolved, according to an independent report.
The report, conducted by research firm Verdantix and published last week (November 12), found that investors in biomass equipment risked failing to meet operational targets because UK biomass could only meet 5% to 10% of projected demand by 2014 and large volume imports faced significant supply chain risks.
The Department for Energy and Climate Change (DECC) has set a target for 15% of the UK's renewable energy to be generated by biomass by 2020, but the research found that supply chain issues such as cost would block planned investments.
The paper analysed the role of 14 companies in the supply of biomass to three different UK market segments. Verdantix identified the following companies who are active in the UK's biomass supply chain: AW Jenkinsons, Balcas, Biojoule, Eddie Stobart, EDF Trading, Energy Power Resource Limited (EPRL), The Energy Crop Company, Euroforest, Forestry Commission, Forever Fuels, Land Energy, Lantmannen, Silvigen and UPM Tilhill.
Author of the ‘Smart Vendors: Biomass Supply Chain (UK)' report, analyst James Pinney, said: "The UK government, power generators and city councils have ambitious plans to scale-up the use of biomass for renewable power generation"
"Our research with industry insiders shows that UK biomass supplies will only meet small-scale demand, typically within a 60-mile radius of the biomass facility. The low volume of UK supply means that every year power generators will import millions of tonnes of wood chips, elephant grass, palm kernels and olive pellets to feed their huge biomass facilities. But uncertainties surround the reliability and cost of importing biomass from countries like Canada, Malaysia, Russia and Sweden."
Large-scale generation
The report noted that by 2014, power companies such as Drax Group and MGT Power planned to bring seven large-scale biomass power generation facilities on line, generating a total of 2,100 MW - enough to power 600,000 homes.
However, it also claimed that projects would be hindered by the size of required capital expenditure, fragile local supply chains and the size of plots required to build and operate biomass units and fuel storage facilities.
Mr Pinney added: "In April 2009, the UK government's change of tack on subsidies for co-firing biomass pulled the plug on many planned investments and hit UK biomass suppliers. Power generation from biomass competes with other industries for scarce land-use resources. Fixing the supply chain will not eliminate security of supply or price volatility risks."
The research also found that two different supply chains currently existed in the UK; large-scale power producers' source their biomass oversees, while low output power generation facilities, corporate, public sector and domestic markets are met by local supply chains.
Forestry Commission
The Verdantix research follows an announcement by the Forestry Commission (FCE) last week that it aimed to increase the amount of woodfuel produced in the South West of England in an attempt to improve the supply chain (See this NewEnergyFocus.com story).
To obtain a copy of the report, contact Verdantix.
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