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E.ON reviews plan for biomass plant

Mar. 13, 2012 - The British government recently approved a 150 megawatt (MW) biomass power plant to be developed by utility E.ON, but the company said it was reviewing the project in light of a proposed cut in state subsidies four years from now.


March 13, 2012
By Reuters

Mar. 13, 2012 – The British government recently approved a 150 megawatt (MW) biomass power plant to be
developed by utility E.ON, but the company said it
was reviewing the project in light of a proposed cut in state
subsidies four years from now.

E.ON's Climate and Renewables arm can now build a plant in
the western England port city of Bristol to power up to 160,000
homes, the Department of Energy and Climate Change said in a
statement.

But E.ON announced it would first re-examine its strategy on
renewable energy.

Developers say that government plans to reduce subsidies for
dedicated biomass plants – which burn wood pellets and farm
waste to produce power – by 7 percent from April 2016 have made
investment decisions harder.

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"We will now take some time to review the prospects for the
project in light of the UK government's current banding review
and how it fits with our portfolio of renewable energy
investments in the UK," an E.ON spokeswoman said.

Proposals to cut biomass plant subsidies have jeopardized
and already derailed some projects. But co-firing plants,
burning biomass fuel and coal together, are planned to receive
slightly higher incentives from 2013 under the banding review,
due to be finalised this spring.

Last month, UK coal-fired power plant operator Drax
scrapped plans to build a 290-MW biomass plant on its site in
North Yorkshire, saying state support levels for the renewable
source were still too low.

The power producer said it was considering options for its
two other planned biomass plants in different locations in the
UK.

The industry also suffered a setback in public perception
this month after a fire ripped through RWE npower's
new biomass plant in Tilbury, raising safety concerns and
forcing the 750-MW plant to shut at least until the end of July.

E.ON's potential new power station will burn imported wood
pellets, energy crops and locally sourced waste wood to produce
electricity.

The company declined to give a start date for the plant
given the review proceedings.

Ministers have identified bioenergy as a key fuel source in
helping achieve Britain's aim to source 15 percent of its
overall energy from renewable sources by 2020.

Biomass has potential to provide 30 percent of that target,
the government has said.


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