The company said today that it had decided to halt work on the biomass plant “whilst options on project feasibility are assessed and reviewed”.
RWE Generation chief technical officer Roger Miesen said the announcement was made “with regret” and added that “this decision has not been taken lightly”.
Tilbury opened as a coal-fired plant in 1969 and in 2008 RWE decided the power station would opt-out from the EU’s Large Combustion Plant Directive (LCPD), meaning it would shut after 20 000 hours of operation or by the end of 2015.
RWE decided to convert Tilbury to run on biomass and in 2011 started to change the plant’s units, which with a capacity of 750 MW made it the biggest biomass plant in the world.
However in February 2012 wood pellets caught alight and a fire ripped through the storage area of the plant, shutting the facility for months.
It re-opened later last year but today’s announcement ends RWE’s ambitious biomass experiment.
Miesen said that “Tilbury remains a good site for future power generation” and added that “RWE still believes that biomass has a role to play in future power generation and will continue to progress options at strategic sites”.
Tilbury will now close under the LCPD legislation on 31 October this year.
More than 200 staff at Tilbury are said to be at risk because of the decision. Local news reports state that workers have been offered redundancy packages and been told there are positions available at other plants, although it is believed not enough to take all the Tilbuiry biomass workers.
Jackie Doyle-Price, MP for Thurrock – where the plant is located on England’s east coast – told the Thurrock Gazette newspaper: “The management at Tilbury and RWE npower are working very hard to make this happen, but it has to stack up in a business sense.
"If investment in Tilbury does not pay, there is something wrong with our energy regime and we simply have to get it fixed.
“We are closing down coal-fired stations every week because of EU regulations. We are going to struggle to keep the lights on in two years’ time if projects like Tilbury do not go ahead.”
A spokesperson for the Renewable Energy Association told PEi: “It is very disappointing that the world’s largest 100 per cent biomass power station is going to close, particularly as npower themselves described it as “a success both commercially and technically”.
“However, it would be unwise to jump to conclusions and link this to any particular policy issue without further information. Biomass is a key technology for bridging the looming capacity gap with flexible, quick-to-build, low carbon plant, and has a valuable role to play balancing out intermittent generation from other renewables.”
News of the Tilbury shutdown coincides with the publication today of a report that highlights the market dangers to biomass plants.
The analysis – called ‘Opportunities in the Biomass and Biogas Power Market in Europe’ – by Frost & Sullivan, states that biomass plants will play a key role in Europe’s bid to hit its 2020 renewables targets.
However it warns that “deteriorating economic conditions in Europe have limited market expansion”.
“Countries have cut down or even stopped subsidies for power generation from biomass and biogas, jeopardising the prospects of plant owners.”
The report also highlights that a “lack of steady raw material supply in the region poses another challenge”.
It states that “high-demand customers are willing to pay more to keep their power plants running, which triggers a rise in feedstock and equipment prices, affecting profitability. The withdrawal of government incentive schemes further dampens revenues.”
Frost & Sullivan energy and environmental research analyst Ashay Abbhi said: “Biopower plants are increasingly preferred as a source for large-scale power generation owing to their low capital requirements. Their efficiency, longer operational times, and reliability further boost their popularity over other sources of renewable power generation.”
But he warned that “government support is necessary for technology development, especially as constant innovation will enable a reduction in capital expenditure”.
“For now, the conversion of coal power plants to biomass plants will be the strongest market trend as it requires far less investment than setting up a greenfield biopower plant.”
The report notes that the European biopower market is currently dominated by Germany and the UK but this will “slowly give way to opportunities in the developing Central and Eastern Europe markets”, with “Poland expected to be a hotspot”.