Leith Biomass plan could go up in smoke if subsidy cuts approved

A multi-million pound hole may have appeared in the Forth Energy buisiness plan for their proposed Leith power plant. 

Last week, the Scottish Government announced proposals that could see large, electricity-only biomass fueled power plants, such as the one proposed by Forth Energy on Leith docks, lose their entitlement to claim renewable energy subsidies entirely. 

Whilst Forth Energy have never put a figure on the level of subsidy they expect to receive for their proposed Leith plant, we have previously calculated that the firm could have expected to earn at least £800m - £1billion in subsidies over the twenty year lifespan of the power plant. This is over and above the income they would receive for selling the electricity it would generate.

Last year, Greener Leith called on the Scottish Government to remove subsidies for large electricity-only biomass plants on the basis that their economic and environmental impacts were less than clear cut, to put it mildly.

Therefore, we are delighted that the Scottish Government appears to share our view that the best way prevent large companies proposing schemes that do little to support Scottish Government policy for biomass is to withdraw subsidy for them.

Calum Wilson, Chief Executive of the firm behind the Leith biomass plan has said in local public meetings that without the public subsidy the Leith project is far less likely to go ahead.  If the Scottish Government does decide to proceed with these proposals it could potentially bring a swift end to the Leith plant plan.

You can find details of the Scottish Government consultation here.  

If you, or an organisation you are involved in responds to this consultation, please do share it with us.  

For a limited amount of time you can view and comment on the draft version of our response to this consultation here. 

Update on October 30, 2011 by Ally

Whils the consultation process runs until January the 13th, it would seem that Energy Minister Fergus Ewing has wasted no time in highlighting the merits of the stance taken by the Scottish Government, when compared to proposals by the government south of the border, where biomass subsidies are to be retained.

In a government annoucement made this week he said: 

"I have grave concerns about the UK Government's ambition for biomass electricity. Large-scale woody biomass used for electricity generation is much less efficient than smaller scale neighbourhood plants.

"Huge electricity-only biomass plants require vast quantities of wood - far more than the UK can provide. Even if every stick of wood grown commercially in the UK went to biomass, it would supply less than a third of the fuel we will require by 2020 if the UK Government's plan for biomass goes ahead.

"Large scale electricity-only biomass will make us reliant on overseas timber markets for our energy. Both oil and gas prices have shown us the importance of a secure, local supply, and if we rely too heavily on imported timber there is a risk of energy security problems in the future.

"Extensive use of large scale biomass for electricity only is likely to push up timber prices and risk hundreds of jobs in traditional wood industries.

"That is why I am urging the UK Government to join the Scottish Government in removing subsidies from large-scale biomass electricity generation."

So, his views are pretty clear then.

And as if that weren't bad news enough for the Leith Biomass plant, it would seem that in the unlikely event that the developers do manage to find a heat customer, the additional subsidy they may have been expecting to receive for distributing the heat has just been cut by nearly two thirds by the Department of Energy and Climate Change.  

Although we hear rumours that Forth Energy staff are hopeful that the City of Edinburgh Council will delay the planning application hearing for a further six months, so far we understand that the planning committee still intend to consider their application in December. After all this subsidy news, it will be interesting to find out whether Forth Energy still have a business plan that would make it worthwhile.