Alder Bioinsights News Review: Bioenergy Issue 155, February 2025

Foreword

Bioenergy is an important part of the UK’s energy mix, contributing around 5% of electricity generation. Current government support ends in 2027, making it challenging for biomass-based electricity generators to continue operating. The support used to be delivered mainly through ‘Contracts for Difference (CfD)’, a 15-year long revenue certainty scheme offered by Low Carbon Contracts Company (LCCC). Further, biomass generators receive Renewable Obligation Certificates (ROCs) under Renewables Obligation (RO) for the electricity they produce, which can then be sold to electricity suppliers, providing an additional revenue stream. As per advice received from the National Energy System Operator, maintaining these generators would increase electricity system resilience and support supply security. The previous administration had initiated a consultation in early 2024 to collect views on a transitional support mechanism for large-scale biomass-based generators. The current government has recently published its outcome, after receiving 103 responses. A short-term support mechanism is planned, subject to rigorous economic assessment to ensure value for consumers.

The government has chosen to update the delivery option of the support to CfD with ‘a generation collar’ citing its lower costs for consumers, generation certainty through generation floor mechanism, reduced commercial optionality, and greater support for decarbonisation compared to other possible options. Additionally, an Excess Returns Mechanism will be developed to protect billpayers from generator overcompensation. The Government’s response to consultation confirms that the eligibility criteria originally laid out in the consultation will be taken forward and used in validating support for biomass generators with a minimum electricity export threshold of 100 MW. Setting the minimum electricity export threshold at 100 MW renders small-scale generators ineligible…