Biomass Energy

Background to biomass energy

Biomass is energy created from the burning of biological materials such as wood chips.

When it is burned, the chemical energy in biomass is released as heat. This means biomass energy generation plants can be eligible to receive the Renewable Heat Incentive (RHI), which has been in place for non-domestic schemes since 2011 and operates on a system similar to the Feed-in Tariffs (FIT) for wind and solar energy. Installations eligible for the RHI receive quarterly payments over 20 years, based on the amount of heat generated. At the same time as producing heat, power is produced by the biomass energy generation plant and this may receive financial support via the Government backed FIT or the Renewables Obligation Certificates (ROCs).

Biomass is considered an important part of the energy mix that is supporting the UK in meeting its energy and climate change objectives, including the 2020 renewables targets and 2050 carbon reductions targets. In order to produce heat and power, different technologies are available according to the type of material that is used. For example, biomass is the conversion of wood and straw into heat and power through ‘gasification’ or ‘pyrolysis’. This is not to be confused with anaerobic digestion, a different approach which involves the conversion of sewage or wet waste to produce heat and power.

Participating in biomass energy

Elm Trading’s Biomass division is developing a Combined Heat and Power (CHP) facility at Acharn Forest in Perthshire, Scotland. The Acharn project will use locally sourced wood as fuel to generate heat and power through gasification. While some sites import wood pellets from 1,000s of miles away, the Acharn facility uses domestic timber offcuts from a catchment of 0-60 miles away, making for a lower overall carbon output and more efficient process from start to finish. Once operational and connected to the grid, the project is expected to benefit from RHI and ROCs.

Why biomass is an attractive trading opportunity

  • Both the facility itself and the land represent tangible assets with a related value
  • RHI and ROC subsidies provide a secure 20 year income stream, the level of which is known up front for the project
  • Locally sourced timber offcuts create a low carbon output and efficient process

“Bioenergy is the dominant renewables sector in the UK, representing 32% of renewables’ power generation in Q3 2016”