The new rules introduced in April require all generating plants with an output of 1 MW and above using solid biomass to submit an annual independent audit report which assesses compliance against strict sustainability criteria.
Stuart Campbell, director at Savills Energy, said: “The greenhouse gas lifestyle criteria ensure that biomass delivers savings against fossil fuel while the land use criteria specify that forests are managed sustainably. However, with greater emphasis on the sustainability of feedstock, the supply chain is coming under increasing scrutiny.”
He said that understanding the implications and security of the widening supply chain will be fundamental to the continued development of viable biomass projects in the UK going forward.
Last summer, research into biomass supply chain infrastructure commissioned by the UK’s Department of Energy and Climate Change found that Britain’s power sector will need 23 million tonnes of feedstock by 2020. Despite significant investment in recent years, the supply chain remains challenging, said Campbell, with costly financial implications in the case of failure.
Speaking at this week’s All-Energy Conference in Aberdeen, he said: “Despite the potential impact of a feedstock failure, traditional business interruption insurance does not cover many of the risks a biomass supply chain may face. This issue has become more acute as heat off-take and the consequential contractual obligations have become more relevant.
“Indeed, the anecdotal evidence shows that perceived feedstock supply chain risk has been holding back biomass expansion, while the development of new plant has been hindered over concerns around sustainable supply.”
He said that “to keep the biomass sector moving, an innovative approach to supply chain risk is required”, which would in turn “de-risk the market and regain the confidence of investors”.
“Ultimately, pre-empting and managing the financial implications of feedstock supply chain failure better and more proactively will act as a catalyst to unlock the potential in new and existing bioenergy projects, thus supporting the UK’s obligations under the Renewable Energy Directive and opening up opportunities for job creation and economic growth.”