Tag: energy policy

A solution for cheaper, cleaner power

6 October 2016

Sustainable bioenergy
Senior couple checking their bills

Britain has some big energy targets ahead of it – namely an 80% reduction in carbon emissions by 2050 compared to 1990 figures. A renewable energy future is not an optimistic target, it is a necessary one.

But for this picture to also be a practical one it needs to be affordable. A study from NERA and Imperial College London, commissioned by Drax, suggests there are ways for renewable technology to be cheaper than it currently is.

In fact, in one scenario they looked at, there could be savings to the tune of £2.2 billion.

Incentivising decarbonisation

It’s a positive and necessary support mechanism. However, some renewable technologies, like compressed wood pellets, a form of biomass, are excluded from participating in upcoming the auctions scheduled between 2017-20. Why is this?

Missing the bigger picture

Currently, CfD support is based on how much a particular type of electricity costs combined with how much it takes to build and maintain the facility used to generate it. This figure is what’s called the ‘levelised cost of energy’ (LCOE). The spanner in the works comes in that not all costs are considered in making this judgement.

Powering a country requires more than just a power source. We need ancillary services like backup power to get the country back on the rails in the event of large-scale blackouts, and voltage control to ensure electronic devices continue to work and that power can move around the network. The costs associated with these services – system integration costs (SICs) – are excluded from the CfD equation.

Sources like wind and solar, being intermittent, can’t offer most of these on-demand ancillary services but we still need them to play a part in the UK’s energy supply. Biomass facilities can provide a number of these itself, meaning it actually has a negative SIC cost.

However, in the current pricing system – ignoring these associated costs – biomass is considered more expensive than onshore wind and solar. With the high SIC costs for wind and solar included, biomass is in fact the cheapest option.

Finding the right mix

This is not to say that solar and wind are not an integral part of a more renewable future. A truly flexible low carbon, high voltage electricity grid should be a mix of elements. Current rules do not look at the full picture, and are ruling out important alternatives, but there are possible solutions. One could be unifying the markets.

There are four markets that feed into the UK’s electricity supply and there’s little transparency or cohesion between them. This leads to inefficiencies.

Jens Price Wolf, Regulations and Market Director at Drax, explains: “Solar is the cheapest renewable, diesel is the cheapest option in the capacity market and gas will be the cheapest for energy production.”

By considering each market as separate you end up buying the cheapest solution for that individual purpose rather than considering its performance across all. This misses out solutions that can benefit the whole system.

“Biomass might be the second cheapest option in each field,” says Wolf. “So supporting investment to upgrade existing coal power stations with biomass technology satisfies multiple needs and leads to it being ultimately cheaper than the old mix.”

A single market approach that treats all technologies and generation methods in the same way could lead to significant cost savings, and those savings could be passed on to bill payers in households and businesses.

While this could be a longer-term solution, there are ways short-term actions that can make a difference. If the government were to include biomass in the mix for the next round of CfD auctions it could bring about savings of over £2 billion over the next 15 years, or a £85 saving per household over the same period. And, it would do this while ensuring the grid remains adaptable without sacrificing emissions targets.

The 4 most common myths about renewables

Power generation

Renewables make up more of the world’s energy mix than ever before. And yet, misconceptions about these new or alternative technologies – such as biomass, solar and wind – are common.

Some of these concerns are – for the time being – partly justified, some completely subjective, and some are demonstrably wrong. Here’s a closer look at the most pervasive myths and what truth there is behind them.

Renewables are unpredictable

An oft-repeated misconception is that renewables aren’t a full-time solution to our power needs. It’s true that solar isn’t generated at night and wind turbines don’t operate in still weather, but the canon of renewables is bigger than its two most well-known technologies.

Tidal power still depends on environmental factors, but tides are much more predictable than wind or sunlight. For countries lucky enough to have ready access, geothermal power – which uses heat from the earth’s core to power generators – is even more reliable.

Biomass solutions, such as compressed wood pellets, are a fuel-based power source, meaning they are flexible so can be used to generate electricity on demand and operate as a base-load power option, much like coal or gas. At Drax Power Station renewable electricity is generated on demand using compressed wood pellets and delivered to the National Grid 24-hours-a-day.

Now, thanks to advances in weather forecasting, the National Grid can plan ahead to balance the system with other renewable and low carbon technologies when the sun isn’t shining and the wind isn’t blowing. Just a few years ago the primary fall back was relying on coal power stations to pick up any slack.

It might not be possible to power the world entirely with one renewable source, but the right mix of technologies could provide an answer to the question of how to ensure a stable and secure low carbon energy supply.

Heavenly Scene Stormy Skies

Renewables are expensive

There is some truth in this, but it’s important to note that these costs are falling. Many of the high costs associated with renewables have been down to a lack of infrastructure investment.

A number of the components required in construction of structures like wind turbines and solar panels are expensive. And, as many renewable facilities need to be located in different areas to existing traditional facilities, extensive power grid extension is often needed. But these are problems that once set up, should bring down the costs of renewables such as solar and wind.

Setting up biomass-powered facilities is considerably cheaper. Compressed wood pellets can be used in upgraded coal power stations, so there’s no need for expensive new connections to the high-voltage electricity transmission system.

There are even ways renewables could bring about cheaper power for consumers. Research commissioned by Drax and published by NERA Economic Consulting and Imperial College London found that, if the same government support offered to some renewable technologies (i.e. wind and solar) were open to all (such as biomass), consumers could see potential savings of £2 billion on their energy bills.

Renewables are ugly

While this isn’t necessarily an opinion shared by everyone, it is one that is often cited. Onshore wind farms often draw the most ire, but they aren’t alone. Large investments are being made in offshore wind farms, which are both more discrete and better positioned to take advantage of stronger offshore currents.

And hydropower projects like dams and tidal barrages can in the long term create whole new habitats, ecosystems and leisure facilities in the form of artificial lakes and surrounding forests.

Nobody uses renewables

In 2015, 99% of Costa Rica’s electricity came from renewable sources, including hydro, geothermal, wind, biomass and solar. Closer to home, Sweden draws more than 50% of its electricity from renewable sources, including 22% from bioenergy – 90% of which comes from forestry.

In the UK, renewables use is steady and rising, accounting for 25% of all electricity generated domestically in 2015. In the first half of 2016, 20% of the UK’s renewable power was supplied by Drax. Contrast those figures against coal, which in the UK declined from supplying 30.8% of UK power needs in Q1 2015 to just 15.8% in Q1 2016, and our increasing use of renewables is even more evident.

Consumers have been buying 100% renewable electricity tariffs from companies such as Good Energy for more than a decade. Businesses are increasingly getting in on the act too. Two thirds of the power generated by Drax in the first half of 2016 was sold directly to companies via Drax Group’s business electricity supplier, Haven Power.

And with campaigns such as RE100 challenging the world’s biggest firms to commit to renewable-only power, household brands such as Ikea, M&S and Google are either already 100% renewable or only a few years away.

Misconceptions about renewables will remain as long as we’re still in the transition out of fossil fuel use. But the industry has made huge strides from where it was just 10 years ago.

Thanks to better, more affordable technology, an increasingly friendly corporate sector, and a greater awareness of environmental issues at large, these products and services will continue to improve, grow and increasingly becoming more mainstream.

An alternative way to heat your home

Sustainable bioenergy
Beautiful old village landscape nestled amongst hills in Lake District

There are things we, as a modern society, expect in our homes: running water, electricity at the touch of a button, heating for when temperatures drift south.

All are ubiquitous in the UK, serviced by large networks that deliver these resources on demand. But there are some areas in the country that exist apart. In the UK there remains a large proportion of homes off the gas grid.

Without the benefits of easy-to-access gas and gas boilers, these households rely on other forms of heating often fuelled by expensive and high-carbon fuels like oil or liquid petroleum gas (LPG).

But there are alternatives to these, and of those fuels, biomass is not only an increasingly affordable one, but a cleaner one, too.

How do you heat your home with biomass?

Biomass boilers work in much the same way that a gas powered one does. They use fuel to generate a heat source that then heats water which is passed through radiators and into your household’s hot water supplies. Whereas the majority of boilers in the UK use gas as a fuel source, biomass boilers run on natural wood products, such as compressed wood pellets.

It’s an efficient and effective way of heating homes and in Europe it’s a common one. In Sweden, 1,400,000 tonnes of pellets were used in 2014 for heating.

Compare that with the UK’s 300,000 – in a country with six times the population – and the difference is stark. Biomass covers more of Europe’s energy requirements than any other, but in the UK we’re falling behind continental averages.

A cleaner, cheaper alternative

Wood is a simple renewable fuel. A growing tree absorbs carbon dioxide out of the atmosphere, which is released when the wood is used to generate energy in the form of heat or electricity. New trees are planted to replace the old ones and the carbon dioxide is absorbed all over again. Thanks to this cyclical process, biomass fuel is sustainable.

This makes compressed wood pellets a more climate-friendly fuel source than the fossil fuels of the past such as diesel and oil. As well as being renewable, there are financial benefits too: a wood-fuelled biomass boiler offers significant savings when compared with electric heating.

Support towards a cleaner future

The Government has recognised the importance of technologies such as biomass-fuelled boilers in achieving a lower carbon future. The Renewable Heat Inventive (RHI) programme was introduced to provide incentives to homeowners, landlords and commercial customers for installing generators of renewable heat such as wood pellet boilers.

Its objective is to try to achieve the target of ensuring that 12% of the UK’s heating comes from renewable sources by 2020. Currently it makes up just 5% of the total.

But with improving technology and a more regular supply of biomass fuel – such as that offered by AMP Clean Energy [previously Billington Bioenergy] to domestic customers – domestic wood pellet heating could become something that’s not just a niche option, but a serious alternative to off grid homes.

How a new industrial revolution in green energy is transforming the North once again

Sustainable business

The North of England has long been a proving ground for the kind of engineering innovations that have transformed the world. The heartland of the First Industrial Revolution, it is now at the centre of a new revolution focused on clean energy production and sustainable power, led by organisations like Drax.

Europe’s largest decarbonisation project

Over the last decade, Drax has been carrying out a major high-tech engineering and infrastructure project to upgrade half its generating units to use sustainable biomass in place of coal.

These converted units now produce enough electricity to power Birmingham, Leeds, Sheffield, Liverpool, Manchester and Newcastle – all using compressed wood pellets, cutting carbon emissions by more than 80%.

But more than just having environmental benefits, it’s provided a huge boost to the economy.

Boosting the UK economy

In 2015, Drax contributed more than £1 billion to the UK’s GDP and supported some 14,000 jobs across the country.

“The economic benefit has reached all parts of the country,” says CEO Dorothy Thompson. “We’ve been the catalyst for rejuvenation and growth across the Northern Powerhouse, with port expansion on the coasts of East Yorkshire, the North West and North East.”

This boost was particularly significant in the North, where Drax generated over £620 million for the local economy.

Innovation driving a better future for Britain

It’s these kinds of innovative upgrades that are helping to tackle the urgent environmental challenges that our society faces as we make the transition to lower carbon and renewable power, and changing the way we think about producing energy in the UK.

Having nurtured the Industrial Revolution, today the North of England is again the focus of a major paradigm shift. Where once coal fields and smoke stacks dominated the local landscape, now Drax’s giant biomass storage domes speak of a new future for the region, for the UK, and for renewable energy production as a whole.

To find out more about how Drax has benefited the UK’s economy, please visit https://www.draximpact.co.uk/

The power industry in 2016: Where are we now?

Power generation

Britain is in the middle of a transition. While at one point it was the centre of the global coal industry, it’s now pushing further towards renewable resources. But 2016 has been a tumultuous year marked by political changes that have sent shock waves through the whole country. The energy industry is no exception – but that is not to suggest it’s on shaky ground.

Here we look at some of the year’s major events and how they’ve affected the energy landscape.

Leaving Europe

Britain’s vote to leave the EU could have a major impact on the domestic energy landscape. Europe has played a central role in setting emissions targets for power stations, promoting renewable technologies and trading carbon. The UK also benefits from being in the Single Energy Market, where energy market rules and regulations are harmonised across a number of European countries. A post-Brexit resolution to these issues is likely to remain uncertain for some time.

As Drax CEO Dorothy Thompson told a conference in Florida in late September:

“It will take a number of years for the UK to actually exit the EU, and we think politicians on all sides will push for an orderly departure.”

Implementing the Paris Agreement

Following last year’s Paris Agreement on Climate Change, the UK Government demonstrated its commitment to being a world leader in clean energy by setting its Fifth Carbon Budget. The Budget, initially proposed by the independent advisory body the Committee on Climate Change, sets a cap on the UK’s greenhouse gas emissions for the period 2028-2032. The cap is ambitious and would require the UK to reduce its emissions to a level 57% lower than they were in 1990. The Government is working on a new Emissions Reductions Plan that will map out how it intends to meet this goal and accelerate decarbonisation in the power, heat, transport and agricultural sectors.

Political change

The reshuffle following Theresa May’s election as Conservative Leader and therefore Prime Minister also marked the end of the Department of Energy and Climate Change (DECC), previously responsible for overseeing the country’s energy policy and its transition towards greener, more renewable energy sources. While the decision raised concerns in some quarters over the Government’s commitment to decarbonisation, placing energy policy at the heart of a modern industrial strategy under the new Department for Business, Energy and Industrial Strategy could reap dividends in the long-term.

Green light for Hinkley Point

Perhaps the single most highly scrutinised energy issue of the year, and an indirect fallout of the summer’s political drama, was the Government delaying its approval of the planned Hinkley Point C nuclear power station.

The project backed by EDF and Chinese investors was, when first announced by the French government-controlled energy company in 2007, due to be generating electricity by the festive period just a decade later.

Jumping ahead to 2016 and having been approved by Theresa May two months’ later than the industry anticipated, expectations are that the development is unlikely to cook its first Christmas turkey until 25th December 2025 – at the very earliest. This raises serious questions over what will fill the gap left by aging nuclear power stations that are due to close over the next few years. This said, delays to Hinkley Point C present an opportunity for alternative energy sources such as offshore wind, solar and compressed wood pellets to make their case to work together as smart, affordable solutions that could be in place well ahead of 2025.

Whole system costs

The research and thinking around the issue of whole system costs continued to grow. A series of reports from NERA Consulting and Imperial College London showed that intermittent technologies such as wind and solar make managing the national energy grid more expensive in the absence of flexible, dispatchable technologies like biomass. It is only when these hidden costs are taken into consideration that we can truly understand the affordability of different energy technologies.

Recognising the importance of this issue to good policy making, the Government has commissioned its own research on whole system costs, which is due to be published later this year.

Coal closure

2016 saw some important landmarks in Great Britain’s history as a coal-using nation. A 12-hour stretch in May this year was the first time since 1882 – the year GB’s first coal-fired power station went online – that the country was powered for more than half a day completely by other fuels.

Plans outlined last year by then Energy Secretary Amber Rudd had aimed to ban unabated coal power stations by 2025. This year has already seen coal-fired casualties. Full or partial closures of five major coal burning power plants in Great Britain have taken place in 2016: Ferrybridge, Longannet, Rugeley, Fiddler’s Ferry (some units of SSE’s north west coal station will remain active until next year) and Eggborough (re-opened in late September for the winter 2016/17). By the end of 2016, the equivalent of between two and three Hinkley Cs (8 GW) will have come off the system.

While Rudd’s plans still stand, delays to Hinkley Point C and a lack of new flexible power stations being built in Great Britain means that the Government will need to think carefully about how to get coal off the grid in an orderly fashion to avoid a capacity crunch in the early 2020s.

Ancillary = essential; Capacity crunched

Despite the strides made by renewables over the course of the year and the recent boon to the nuclear sector’s future, GB power infrastructure badly needs flexible fuels. The ability to generate more power – or less – in mere seconds when the country demands it is becoming increasingly important with the growth of wind and solar power.

As more offshore wind arrays are constructed and solar farms and roofs proliferate, there are an increasing number of gaps in our electricity supply being filled by power sources that can be dialled up and down when the wind doesn’t blow and the sun doesn’t shine. While Drax and two planned power projects in the North East of England (Lynemouth and MGT Teeside) are turning to a coal-to-biomass conversion and a new build biomass combined heat and power plant to meet these needs, the Government continues to look for ways to encourage companies to build new gas power stations as well as emerging battery storage technologies. A critical route to incentivising these technologies is the not-very-aptly-named ancillary services market. It involves the high voltage electricity system operator in Great Britain, the National Grid, buying services to ensure the lights stay on, the increasingly electric transport sector keeps running and our high-tech world of work stays online.

Energy future

So far there have been some very big changes over the course of the year. However the energy ecosystem in Great Britain should be robust and flexible enough that the transition from coal to low carbon and renewable technologies in the future should be a secure and affordable one. This will require a mix of smart solutions. A key enabling technology will be coal-to-biomass upgrades that can run as both baseload and flexible generators.

How does Europe use biomass?

Sustainable bioenergy
Family on summer Senja coast (Norway, polar day)

At the heart of Norse folklore is a figure called Yggdrasil that connects its nine worlds and gods. It’s an immensely important and holy icon, but it is not a god itself – it is an ash tree.

That the central figure of mythical Scandinavian cosmology should be something as humble as a tree is no surprise, Scandinavia is a heavily forested region. Sweden, the largest country in the area, is more than 68% forest. Wood is an inherent part of life there. For thousands of years it’s been used as a resource and a fuel, and today is no different.

Throughout much of Europe the same is true. But, while historically wood was used only for cooking, heating and light, today its use as a form of energy also includes generating electricity and heat when formed into compressed wood pellets.

Europe and wood pellets

Nearly 22 million tonnes (Mt) of wood pellets were used in the European Union in 2015, making the region the leading wood pellet consumer in the world. It is also the world’s leading producer, creating roughly half of the world’s global output – largely from European trees.

A report from the Standing Forestry Committee, set up to represent the forestry industries in EU countries, found that just 4% of the woody biomass used in the EU was imported.

Of the 22Mt used across Europe, 10.5Mt was used for heating, while 11.5Mt was used for industrial uses like fueling power plants. But in the UK, the level of wood used for fuel falls some way behind EU averages. Thanks in large part to Drax and its transition from coal to renewable wood pellet-powered electricity generation, that’s changing, but the UK still has a way to go to catch the continental average.

Where is the UK falling behind and how is wood being used to power the rest of the continent? Here, we look at some of the largest consumers and producers of biomass in Europe and how it’s being used.

Sweden

Sweden is the third highest consumer of wood as a source of energy in Europe, trailing only Finland and Latvia in its use. A key use of biomass in Sweden is powering district heating systems. In a district heating system, rather than each building or home having its own boiler, whole areas of cities are heated through a single central plant distributing heat to buildings. These plants can be powered by a variety of fuels, but many run on wood pellets or distribute the waste heat captured at power plants.

rax_europe_biomass_sweden

Germany

In 1713, an accountant and mining administrator, Hans Carl von Carlowitz, published what is considered the first ever book to look in depth at forestry management, effectively kickstarting the modern idea of sustainable forestry. In the 300 years that have passed, Germany has embraced the cultivation of wood and has made wood and biomass a fixed part of its energy makeup.

More recently, the Renewable Energy Heating Act and Market Incentive Programme was passed in 2009, which requires new building owners to provide a percentage of their heat from renewable sources, including wood-fired boilers. The aim is to increase the country’s share of renewable heat to 14% by 2020.

Europe, Biomass, Germany

Finland

Nearly three quarters of Finland is forestland, making it one of the most forested countries in the world, let alone Europe. As a result, wood plays a large part in Finnish culture. Stora Enso, one of the world’s leading paper and packaging manufacturers is Finnish and more than 20% of the country’s exports are from wood and wood products. Coupled with a strong focus generating much of its energy from renewables, energy derived from wood and products made from wood is high.

drax_europe_biomass_finland

United Kingdom

In 2013, less than 10% of all energy used in the UK was generated from wood and wood products. This places it some way behind countries like Germany and Sweden, in part owing to a lack of infrastructure for providing heating derived from wood and wood biomass.

This could change if the government continues to back technologies equally in initiatives like the Renewable Heat Incentive (RHI). Available to homeowners, landlords and commercial customers, RHI provides incentives for installing generators of renewable heat such as wood pellet boilers.

To reach climate goals, the then Department of Energy and Climate Change noted that both biomass-driven electricity generation and heating should continue to increase in the UK. And with the upgrade of Drax and Lynemouth power stations from coal to compressed wood pellets, there are positive signs the UK can catch up to the European biomass average. In doing so, renewable biomass electricity generation can also help increase wind and solar power generation in the UK, and help create a more sustainable energy future.

drax_europe_biomass_united_kingdom

Mind the gap

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

28 July 2016

Opinion

Later today the EDF Board is expected to give the go-ahead for a new nuclear power station at Hinkley. This will provide some long overdue clarity for Britain’s energy sector, but we now need to quickly move on and make the right decisions to secure the best mix of power generation.  The drawn out debate around Hinkley Point C has diverted attention away from the sector’s biggest challenge.

The Government has made it clear that coal must come off the system by 2025.  But coal still provides up to one fifth of the UK’s electricity, and plugging that gap will be far from easy.  Nor will doing so in a way that allows the country to meet its carbon targets while supporting the technologies that will deliver a modern energy system fit for the 21st century. The Government’s intention is absolutely right, but how does it intend to meet its target?

Let’s be clear, a positive Hinkley Point C decision will play an important role in the necessary energy mix but will provide no silver bullet. By most estimates, when finally complete, the nuclear plant will provide seven percent of the UK’s electricity needs.  However, this isn’t expected to come ‘on grid’ much before 2030, and let’s remember that in 2030 all but one of the UK’s current operating nuclear reactors are scheduled to be closed. Hinkley will therefore be replacing only some of the lost nuclear capacity, not providing ‘new’ energy to replace coal.

The last few years have seen a huge and welcome expansion in renewable sources of generation like wind and solar in the UK, but they are intermittent and cannot fill the gap alone. They still need to be supported by a constant supply of electricity that can be flexed up and down when the wind does not blow and the sun does not shine – a regular scenario on these shores.

As a form of low-carbon baseload generation, nuclear will undoubtedly be part of the answer. However, as we’ve already seen with Hinkley Point C, planning, funding and building new power stations can be a long and costly process. It has taken over a decade to reach today’s decision. In the past year alone, more than 5 gigawatts (GW) of coal power generation– Hinkley Point C is set to provide 3.2 GW – has come off grid well before the Government’s target of 2025. We don’t have the luxury of time: every day lost adds to the cost of addressing this challenge.

Gas will play a role but many, including the Institution of Mechanical Engineers (IMechE) have pointed out the huge number of gas-fired power stations we’ll need to plug the gap that ending coal creates. IMechE estimates 30 will be required which is clearly unrealistic, since the UK has built just four in the last 10 years.

At Drax, we have developed a solution to these challenges. We have used state of the art technology to upgrade some of our coal facilities to generate electricity from biomass in place of coal.  These facilities are already providing a reliable and flexible flow of electricity that also helps the UK meet its carbon targets.  The biomass we use is compressed wood pellets which perform in much the same way as coal and deliver an 80% CO2 saving.

Our biomass facilities are already powering three million homes and with the right support we can double this, helping to plug the energy gap that old plant coming off and delays to new build will leave us with.

Using biomass is more cost-effective than other renewables. This was illustrated by a recent study from Imperial College and economic consultancy NERA when they analysed the hidden costs of the back-up needed to meet demand created by intermittent renewables. Our biomass facilities can provide all of the electricity services required to keep the UK electricity system stable. Providing these services is set to become increasingly important in the years ahead as a greater need to back-up and balance the system will be required.

Finding the right mix of power generation will not be easy, but it is important we make every effort to get it right. Like Hinkley Point C, biomass is not a silver bullet, but it can and must play its part in helping the country transform to a low-carbon future.

The true cost of replacing coal-fired electricity generation

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

17 February 2016

Opinion

To make up for these closures, the Government is already planning to bring on new capacity. A new gas-fired power station will open at Carrington this summer, and we’re expecting to hear any day now that another nuclear power station will be created at Hinkley Point. And of course more electricity from renewables must be added over the years ahead as we look to meet our ‘go green’ targets.

In fact, the Government already has a plan in place to award contracts for new green energy off the back of three auctions over the next four years. The first of them is due later this year.

Drax understands that every one of those auctions is focused on offshore wind.

However, new independent research published by NERA Economic Consulting and Imperial College London questions that ‘single technology’ approach. 

Commissioned by Drax Group plc from leading economists, the research reveals the ‘true’ cost of the main forms of renewable energy – wind, solar and biomass.

And the evidence shows that opening up these auctions to include other renewables could result in significant savings that could be passed on to consumers. 

Where could these savings come from?

Renewables like wind and solar are vital, but they are by their very nature intermittent. That means other forms of power generation need to be available on standby at very short notice to meet the gap between supply and demand.

The costs of providing this standby electricity are passed on to consumers in their energy bills.

But crucially, they are not reflected in how the Government ranks the support that each type of renewable energy requires. Essentially the costs are hidden.

The NERA/ICL research shows that if these ‘hidden costs’ are added in, the true picture is very different.

When the true costs are taken into account, the Government’s preferred option – offshore wind – turns out to be the most expensive. In fact, the cheapest option is deploying new technology to existing power stations, enabling them to use biomass – essentially replacing coal with compressed wood pellets.

All in all, getting cheaper renewables into the mix could save consumers up to £2.2bn. How? Support for renewables is already funded through a portion of your energy bill, and bringing in a more cost-effective mix reduces the support needed.

That is why we at Drax are urging the Government to look at the true costs of new renewable capacity and include us in the mix for new power contracts.

To do so would not only lead to a potential £2bn saving for consumers, but replacing more coal with biomass gives the UK that reliable standby power we know we will need when other renewables can’t deliver it.

Using the latest technology we’ve already upgraded half of our Power Station to run on compressed wood pellets. The job’s not done. With the right support we want to carry on with the work we’re doing and help the Government to achieve its target of getting coal off the system by 2025.

Rethinking the UK’s future energy mix

Andy Koss, CEO Generation until April 2020

13 January 2016

Opinion

Since the Climate Change Summit in Paris, there’s been a lot of talk about how we can remove coal from the energy mix in the UK and limit further climate change.

One way would be to close down all the coal-fired power stations. But coal still provides more than 20 per cent of the UK’s electricity. And the Department for Energy and Climate Change (DECC) predicts we will need almost 20% more electricity by 2035, not less (chart, below). What’s more, building new capacity to replace those power stations would take years, while buying in extra supplies of energy at short notice can mean extra costs being passed on to customers.

The good news is that at Drax, we’ve already developed a solution to the challenge, as I told the Yorkshire Post recently.

We’re doing it by converting our coal-fired generating units to use compressed wood pellets. And we’re using world-beating technology developed by our own engineers here in the UK.

In fact, we’re now producing more electricity from wood pellets than from coal at Drax. And we’re doing it day in day out. In all, around four per cent of the UK’s entire electricity needs every single day of the year are now being met thanks to our unique biomass technology at Drax.

This enables us to take low-grade wood and compress it into small high-density pellets to use in our specially adapted generating units. Even including a minimal quantity of carbon emissions in the supply chain, conversions still cut greenhouse gases by over 80% compared to coal.

If we can get the support to convert the other three generating units at the power station then we’ll cease using coal at Drax. This would help the government’s proposed target date of ending unabated coal electricity generation in the UK by 2025.

I think at a very high level that support is there.

We all know that wind and solar energy have the potential to take a bigger role in Britain’s energy mix. But, to do so, they need to be accompanied by another technology that can be turned up to fill gaps when the weather means they produce less energy than required.

Our high-density wood pellets are the only non-fossil fuel that can do this. Looking to the future, as wind and solar grow and Britain becomes more dependent on them, it will be ever more important to have this reliable, renewable support on hand.

We’re well behind our European neighbours in using wood pellets for energy, and a long way behind countries like Germany and Sweden. Taking steps to catch up with the European average is the fastest, most affordable and most reliable way to move away from coal to the renewable fuels of the future. To take those steps, energy companies like Drax and the Government need more dialogue.