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Power plants to burn olives, straw for cash
LONDON (Reuters) -- Britain's cash-strapped coal power stations are gearing up to burn olives, straw and woodchips to earn valuable green certificates, which they hope will provide a cushion against low power prices. The certificates, which generators can trade, are worth more than twice as much as the power they sell. "In the depressed power market, the margins from green power are very significant," Chris Moore, head of renewables trading at U.S.-based AEP, which owns two power stations in the UK, said. Fourteen coal power stations have registered to use biomass including AEP's Ferrybridge and Fiddler's Ferry plants which have been burning olive residues commercially since September. AEP says using olives, which it imports from Italy, Spain and Greece, is economic and produces low sulfur emissions. The company is looking to expand the range of biomass it burns, said Moore. "We applied five months ago for permits to burn 12 fuels. We want a wide range of fuels including energy crops, forestry and agricultural products," he said. Interest in co-firing was sparked by the launch last year of the government's Renewable Obligation scheme which created a guaranteed market for green power. Britain's electricity suppliers have to provide three percent of their power from green sources this year, a figure which rises to just over 10 percent in 2010. AEP has a target of generating five percent of its output at these two power stations, which have a combined capacity of nearly 4,000 megawatts, from biomass, said Moore. Innogy has been test-burning woodchips at its Tilbury power station and could begin commercial production within six months provided it gets environmental permits, said Derek Cheetham, director of strategic development. The company is also about to carry out trials at its larger Didcot power station, he said. "We are waiting for Environmental Agency approval for a similar sized trial (to Tilbury)...burning 70,000 tons of woodchips," said Cheetham. Green certificatesCo-firing with biomass at large power stations may flood the market with green power, driving down the value of Renewable Obligation Certificates (ROCs) and threatening small-scale renewable projects, say analysts. "Care must be taken that a successful expansion of generation from co-firing does not occur at the expense of investment in other renewables," said Liz Reason, director of consultants ILEX. ILEX has estimated that under the current rules, co-firing could increase the availability of the green certificates by up to 40 percent and decrease their value by up to 30 percent. Generators can earn about 70 pounds a megawatt hour for green power compared with between 15 and 18 pounds for wholesale electricity. This includes about 47 pounds for the ROC and around four pounds for another certificate which exempts the buyer from paying the climate change levy on the power. The rules governing co-firing become tighter in 2006 when 75 percent of the biomass used in co-fired plants has to come from energy crops for the power station to be allowed to claim ROCs. Energy crops are those such as willow grown especially for fueling power stations. In its white paper on Monday, the government said it would carry out a consultation this year on easing the rules. Generators want to reduce limit on energy crops set for 2006 and the deadline to cease co-firing in 2011 removed. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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