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Lynemouth biomass plant given EU state approval

Plans to convert a coal fuelled plant in Lynemouth to biomass have been granted state aid approval, the EC has announced. Owners RWE now intends to press ahead with the plans for conversion.

The European Commission opened its investigation early in the year and made its ruling on December 1, 2015. It announced that the UK government support for the project was in compliance with EU state aid rules and said the conversion would help the UK to reach the environmental and energy targets set out by the European Union without “unduly distorting competition”.

Plans to convert the station were first announced in 2014, and the government is supporting the project by paying a premium in addition to the market price. The project will continue to receive aid until 2027.

Commenting on the announcement, Andree Stracke, Chief Commercial Officer of RWE Supply and Trading GmbH said:

"We welcome this confirmation of the government support for biomass power generation, which provides a reliable base load to complement other renewables such as wind and solar.”

Stracke added that the company hope to have converted the plant within the next 18 months and he said it would allow the export of 390 MW of low carbon electricity to the National Grid, thus aiding the government’s climate change aims

The government has set itself a target of reducing carbon emissions by 80% by 2050. One of the ways the government intends to reach its aim is by switching to low carbon alternatives and becoming less dependent on fossil fuels.

When the conversion goes ahead, Lynemouth power station intends to use renewable wood pellets, which will be exported from the United States, Europe and Canada. In addition, a sustainability management system will be put in place to ensure that the biomass fuel produced by the plant will meet the minimum sustainability standards that have been set out.

The plant, which is based in the Northumberland in the UK, has the capacity to make enough electricity to power more than 450,000 homes. In addition, converting the Lynemouth plant from coal power will have a positive impact on the environment and on the economy in the north east.

Moreover, it will burn 1.5 million tonnes of wood pellets annually, and produce an estimated 2.3 TWh of power.

The Lynemouth power station has been powered by coal since the early 1970s and was previously owned by Alcan. In 2012, RWE took over the running of the plant and as a result the Lynemouth Power Company was established.

Growth steady, but manufacturing still struggles

A CBI growth indicator study has shown that while growth remains steady, momentum has slowed up. 748 companies from the manufacturing, retail and service sectors responded to the survey; it shows that as with other sectors the manufacturing industry is still affected by slow growth.

The survey also revealed that expectations for the next quarter remain weak, but on a more positive note they are still above average.

CBI Director of Economics Rain Newton-Smith stated:

“Growth in the economy is steady this month, but momentum is slower than in the first half of the year.

“Business and consumer services are stoking the economic fire, but while manufacturing has seen a modest improvement, firms in the sector are still expecting to see a fall in output.

Newton-Smith added that the major risks to our economy came from beyond the UK; this is due to vulnerabilities in emerging markets and the possibility of volatile global markets.

However, the PMI report from Markit showed an increase in exports for manufacturing in November, and while the sector continues to see moderate growth, it is the larger companies that are benefiting as opposed to the small and medium sized businesses.

Rob Dobson, who is the Senior Economist at Market, said:

“UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy.”

Manufacturing Advisory Service

The manufacturing sector was handed a blow on Friday, December 4th, when the government made the surprise announcement that it is to close the Manufacturing Advisory Service and the Growth Accelerator, which are all part of the government’s Business Growth Service.

As part of the advisory service, manufacturers could get advice to help grow their business if they were based in the UK and had a turnover of less than £40 million; it helped to support manufacturers in a vast range of industries including the oil and gas, pharmaceuticals, food and chemical sectors.

The decision to close the Business Growth Service was unexpected as it wasn’t announced as part of the spending review and some MPs, including Greg Mullholland, are calling for the decision to be reconsidered.

Commenting on the decision, Baroness Lorely Burt stated:

"The Manufacturing Advisory Service was a great asset to businesses, and an important part of the Industrial Strategy set up by Vince Cable.”

Amber Rudd announces changes to UK energy policy

Energy and climate change Secretary Amber Rudd has detailed her plans for the UK’s energy policy in the coming years. The new policy is aimed at increasing competition, reducing energy bills for the consumer and securing adequate power generation for the country.

With the policy, the government reaffirmed its commitment to low carbon, low-cost energy sources, and it also announced plans for a consultation regarding the abolition of unabated coal-fired stations by 2025.

Moreover, during the speech at the Institute of Civil Engineers, Amber Rudd made the case for prioritising gas-fired stations in order to reduce emissions.

Amber Rudd stated:

“One of the greatest and most cost-effective contributions we can make to emission reductions in electricity is by replacing coal fired power stations with gas.

“I am pleased to announce that we will be launching a consultation in the spring on when to close all unabated coal-fired power stations.

“Our consultation will set out proposals to close coal by 2025 - and restrict its use from 2023. If we take this step, we will be one of the first developed countries to deliver on a commitment to take coal off the system.”

The Energy and Climate Change Secretary also detailed plans for more nuclear power stations, and she committed funding for three further auctions of offshore wind power projects, however, she made it clear that the industry would have to reduce its costs as there would be “no more blank cheques”.

Mixed response

The changes have received a mixed response. Environmental campaigners Friends of the Earth described the decision to phase out coal as “historic”. However, it also feels that the government should be focusing on renewable energy and energy efficiency as “Gas is too high-carbon for a long-term future.”

In addition, the Solar Trade Association was pleased at the decision to eliminate coal, stating:

 “Phasing out coal power electricity is of course good news and was expected – this is an essential move.”

But it added:

“However it makes little sense to replace fossil coal only with fossil gas.”

Paul Barwell, CEO of the Solar Trade Association, went on to urge the government to support solar power as there was little commitment to it during the speech, and other groups were disappointed that there wasn’t greater provision for improved energy efficiency.

Moreover, many analysts argued the reduction in funding for renewable forms of energy would have a negative impact on the government’s climate change targets and could increase costs for consumers.

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