What makes Biomass Energy a great Investment?
What is Biomass Energy?
Biomass energy is when a power station produces electricity by burning plant and animal material. Examples of biomass energy include wood, straw, poultry litter and energy crops such as willow and poplar grown on short rotation coppice.
1. Government Legislation
The U.K. Government has introduced a carbon price floor (CPF) – a tax on fossil fuels used to generate electricity. It came into effect on 1 April 2013. The CPF for coal started at £0.44 ($0.75) per gigajoule, escalating rapidly to £1.63 ($1.77) by 2016, making the economics of coal power generation very challenging. This is why Coal fired stations in the UK are converting to Biomass energy to reduce their CO2 emissions and to avoid large Fines.
2. UK Demand for Electricity
The demand for electricity in the UK is set to rise by 35% in the next 10 years. This is in part due to increasing population figures, the UK population is set to reach 70million by 2020 and is on track to be the most populous country in Europe by the middle of the century. Another major driver in the demand for electricity is the shift of passenger cars from Petrol and Diesel to Electric. The number of plug in cars and vans is set to reach 9million by 2030 up from 90,000 today. Major car manufacturers like VW, BMW and Volvo have all committed to producing only electric cars from the year 2019 as reported in the Telegraph. All of this points to higher demand for energy and this extra capacity needs to come from clean energy sources like Wind, Solar, Biomass energy and Hydro if the UK is to meet its CO2 emissions targets.
3. Demand for Biomass energy
Drax Power station in Selby North Yorkshire, generates 7% of the UK’s Electricity supply and was once the largest coal fired station in Europe. It has converted 4 of its turbines to Biomass energy and in the process has become the largest Biomass energy plant in Europe. The station currently burns 70% on wood pellets to power some of its 6 turbines. Drax plans to have coal completely phased out by 2025.
4. UK Demand for Wood Pellets is set to Double
Drax power station consumes over 7 million tonnes of wood pellets to power its 3 turbines, with 1 more turbine converting 100% to biomass energy in 2018, this demand is set to increase significantly. Already in 2016 there was a 44% increase in biomass electricity generation at Drax power versus the previous year. That’s enough power to supply Leeds, Manchester, Sheffield and Liverpool.
Elsewhere, Lynemouth power station located in Northumberland, has completed its 100% conversion from Coal fired electricity generation to biomass energy and is estimated to consume 1.4 million tonnes of wood pellets per year, supplied mainly from Canada and USA.
5. Benefits of Biomass Energy
Biomass energy is a renewable energy source
Biomass energy helps climate change by reducing greenhouse gas emission
Biomass energy is widely available source of energy
Reduces the dependency on fossil fuels
Biomass energy is now traded internationally as a fuel just like Oil and Gas
In summary, with the accelerated move away from Fossil fuels to a cleaner energy source in the near future, and the demand for electricity growing year on year due to a rising populations and the shift towards electric car transport. Further UK legislation will drive the demand for cleaner energy sources like Biomass energy. This in turn will increase the demand for Wood Pellets.