A pioneering new facility to generate energy from waste – one of the biggest of its kind in the UK, according to its makers – may not go ahead, owing to uncertainty over government renewable energy subsidies.
Air Products announced on Wednesday it had received planning permission from Stockton-on-Tees borough council for its first advanced gasification facility in the UK that would convert household and commercial waste to gas, producing enough energy for 50,000 homes and diverting 300,000 tonnes of waste a year from landfill.
But the company said that, despite gaining planning permission, it would be unable to finance the plant unless the government resolves questions around future subsidies for renewable energy.
The plant joins a growing list of renewable energy projects that have been thrown into doubt as ministers continue to debate the value and extent of future subsidies for green energy.
Also on Wednesday, the government announced that Drax – which runs the UK's biggest coal-fired power station – had been granted planning permission for two biomass power plants of 299MW capacity each. But despite the planning green light, these too will be abandoned unless the government increases the amount of subsidy available, because otherwise they would not be economically viable, according to the company.
Ministers have not yet set a final date for when they will unveil new plans for renewable energy subsidies, which are paid for through consumers' energy bills.
Air Products' plan is for its first advanced gasification plant for the UK market, at the New Energy and Technology Business Park, near Billingham, Teesside with a generating capacity of 49MW. It would employ 500 to 700 people during construction with 50 permanent jobs thereafter. The company has proposed building five similar plants across the UK, investing about £1bn to build about 250MW of generating capacity.
Ian Williamson, European hydrogen and bioenergy director at Air Products, said: "We're really pleased to have secured Stockton council's approval for our first energy from waste project in the UK. Our facility will be using the latest and most advanced gasification technology to generate renewable power and at the same time, contribute towards Stockton council's environment, energy and economic investment objectives."
But the company said that in order to go ahead with the investment, it would need greater clarity on the plans for support for renewables. At present, each unit of energy from such a facility would receive two "renewable obligation certificates" ROCs, the currency of government energy subsidies. ROCs can be sold at around the unit price for electricity, or greater, and different forms of renewable energy attract higher and lower levels of ROCs, depending on how expensive they are to generate.
These concerns raised by Air Products are similar to those of Drax, which said last week it could not justify the investment required for two new biomass plants unless the amount of subsidy to biomass was raised from its current level of 0.5 ROCs per unit. Dorothy Thompson, chief executive, said the level must be raised to make burning biomass economic, and contrasted the technology with offshore wind, which is much more expensive and qualifies for 2 ROCs per unit. Thompson said biomass would require much less subsidy than offshore wind, and could provide baseload power and back up for intermittently generating wind farms.
Chris Huhne, secretary of state for energy and climate change, told the Guardian last week the decision would be finely balanced. "The key issue is setting the level of support – enough to deliver what is needed, but not too much or that becomes an unnecessary price for the end user to pay," he said.
Greg Barker, minister for energy and climate change, welcomed the proposals for the waste plant: "Energy from waste leads to considerable reductions in waste going into landfill, and makes an important contribution to the UK's low-carbon energy supply. This new technology will be an exciting addition to the energy from waste sector and I look forward to seeing the announcement of more of these projects."
Copyright: Fiona Harvey, www.guardian.co.uk