British independent renewable energy developer RES has today announced it is ceasing work on its biomass power station project at the Port of Blyth in Northumberland.
RES’ decision follows the withdrawal of a key project partner in late 2013 due to ongoing uncertainty in UK energy policy. The Government’s inconsistent support for dedicated biomass energy over the last two years – as well as increased uncertainty over the UK’s energy policy under the Government’s Electricity Market Reform process – has critically undermined the investment case for the North Blyth Biomass Power Station.
The decision to end the biomass power station project means the loss of hundreds of millions of pounds of investment into the Blyth estuary and wider Northumberland economy. The 300 construction job opportunities and 50 full time, long-term operational jobs at the plant and annual Community Benefit Fund will also be lost.
The project would have brought a long-term partnership with the Port of Blyth in terms of fuel transport, handling and occupancy, helping to secure further growth of this important employer and economic engine of the region. It would also have provided a magnet for economic growth in Northumberland and the North East region.
RES’ Chief Operating Officer for the UK Gordon MacDougall stated:
“Despite the support the project enjoys locally due to the significant benefits it would bring to the local and regional economy, the North Blyth Biomass Power Station currently faces insurmountable investment barriers due to uncertain Government energy policy.
“It’s bitterly disappointing for RES that we are unable to bring this exciting project forward, and deliver the significant boost it would have represented for the Blyth and Northumberland economy. However, the gradual erosion of support for dedicated biomass leaves us with no other option.”
Although there is great potential for dedicated biomass to provide significant low carbon, base load power, the technology has been increasingly marginalised by the UK Government in a series of policy developments over the last two years, including the introduction of a cap on dedicated biomass under the Renewables Obligation (RO). The cap represents a radical downsizing in Government ambition for the technology from a target of 4,000 megawatts (MW) in 2011 to a cap of 400MW in 2013, long after the industry had invested significant sums in developing projects on the back of DECC ambitions.
RES’ announcement also places sharp focus on the Government’s commitment to renewable energy and independent generators, at a time when the cost of fossil fuels and nuclear energy, and the unknown potential of shale gas, present long term uncertainties for consumers. In addition, the Government’s preference for the conversion of existing coal fired power stations to biomass over dedicated biomass generating capacity is at odds with the urgent need to bridge the looming capacity crunch in the UK energy system.
RES calls upon the Government to clarify its support for renewable energy as a vital part of the UK energy mix, reducing our dependency on costly fossil fuel imports and insulating consumers against price hikes. This is essential in order to ensure that independent generators and major investors alike have the certainty needed to continue investing in UK energy infrastructure.
Gordon MacDougall concluded:
“RES is grateful for the support we have received from stakeholders including the local community, Northumberland County Council, Environment Agency and project partners such as the Port of Blyth. However as the UK’s energy policy currently stands, we cannot make an investment case to take this project forward.
“This is a reminder to Government that, without a consistent approach to energy policy, investors and developers will be deterred from delivering the billions of pounds needed to ensure the nation’s energy infrastructure is able to keep the lights on and secure cost effective electricity for British homes and businesses.”