Solar and Wind Cheaper Than Biomass to Reliably Power the UK

A new study concludes that there is no economic or strategic case for coal-to-biomass conversion in the United Kingdom. While the biomass industry tries to convince you otherwise, new economic modeling shows that solar and wind can reliably meet the United Kingdom’s new electricity needs—and they can do so more cheaply than new biomass. Burning biomass for electricity thus not only undermines the United Kingdom’s climate change goals and actually makes the problem worse, it does so at huge taxpayer expense while diverting resources from cleaner and smarter economic investments.

The analysis, commissioned by NRDC and executed by Vivid Economics, a London-based consultancy with expertise U.K. energy systems, demonstrates that by 2020, total economic costs of biomass will be higher than onshore wind and solar, including the costs of integrating solar and wind into the grid. In 2025, in all cases, biomass will be higher cost than all forms of wind and solar. Biomass capacity that is already installed will be running at reduced capacity in 2025. This is due to high fuel and carbon costs for these facilities. Instead, it is cheaper to build new solar and wind capacity. If new biomass conversions were to be constructed, the results of the economic modelling indicate that they would become stranded assets—meaning uneconomic to run for any purpose—within the decade.

In 2015, the United Kingdom became first country to commit to a time-bound phase-out of coal and emerged as a global leader in the fight against climate change. U.K. citizens likely assumed this meant the country’s old dirty coal plants would be shut down. Unfortunately, the U.K. government has continued to rely heavily on converting old coal-fired power stations, like Drax power station, to burn biomass primarily through subsidies meant to meet climate and renewables targets. The result is more climate pollution and hundreds of millions in scarce taxpayer resources up in smoke. 

Underpinning the U.K. government’s costly embrace of bioenergy are two myths, frequently touted by the biomass industry and its proponents: first, that bioenergy is a “carbon neutral” or zero-carbon source of electricity, on par with other renewables like solar and wind; and second, that unlike solar and wind, biomass-fueled electricity ensures the reliability of the United Kingdom’s electricity supply and is therefore a necessary investment.

The industry has perpetuated these myths and recycled the same tired arguments for years. It’s not surprising, since their subsidies depend on it. According to its 2016 Annual Report, Drax alone earned £541.43 million in subsidies for its biomass conversions, all under programs intended to promote clean, renewable energy. That’s the equivalent of £1.48 million per day!

But both have now been debunked.

Debunked Myth #1: Biomass is a low-carbon form of electricity.

Multiple peer-reviewed studies (see here, here, here, here, and here, for example) have concluded that most forms of forest-derived biomass are a high-carbon fuel, even compared to coal. This is particularly true when the biomass is from whole trees and other large-diameter wood. Burning this biomass for electricity increases, not decreases, carbon emissions for many decades—far beyond the emissions reduction timeframes that guide EU or U.K. climate policy and are critical to avoiding the worst consequences of climate change.

Faced with years of conclusive science, the biomass industry now disputes that their sources of biomass are high-carbon, claiming to use only lower-carbon “wastes” and “forest residues”. Years of on-the-ground investigations documenting industry sourcing practices show plainly that this is not true. In its recent report, the pre-eminent U.K. think tank Chatham House underscores the conclusions of previous studies, which found that about three-quarters of the wood pellets from the southern United States came from whole trees and other large diameter wood, while residues accounted for only a quarter.

Debunked Myth #2: Drax will try to scare the public.

They’ll argue that the wind doesn’t always blow and the sun doesn’t always shine, so the United Kingdom needs biomass as a “baseload” source of electricity generation or the lights will go out. And once you take into account the costs of integrating “intermittent” renewables like solar and wind into the grid, biomass is a cost-effective investment in system reliability.    

The new study directly addresses both these claims. First, it demonstrates that during cold, dark, windless periods, the U.K. electricity system can meet its needs for generation and reliability without needing to add new biomass capacity as it phases out coal. Second, the economic modeling shows that by 2025, even if already installed, biomass would be costlier to operate than building completely new solar and wind capacity, even when the costs of integrating them into the grid are fully accounted for. Biomass will be too costly to meet day-to-day electricity demand, and will also not be able to compete with least-cost options to meet the reliability requirements of the electricity system (i.e. to accommodate peak demand). In 2025, it is more cost-effective to deploy a combination of wind, solar and natural gas generation to meet the objective of reliability of supply than to deploy biomass generation, even in order to meet the United Kingdom’s legally binding carbon constraints. These results hold true even for scenarios that do not fully account for biomass carbon emissions and their associated costs.

There are a number of uncertainties that could influence the range of these outcomes - but not their overall trends and findings - most notably, biomass fuel costs and the rate at which offshore wind costs continue to fall in the United Kingdom. This week’s Contracts for Difference auction results reveal that offshore wind is now available to the United Kingdom at £57.50/MWh, significantly beating expectations. This is half the cost of similar auctions conducted only two years ago, and offshore wind prices could fall further in future. Thus, offshore wind in particular offers the United Kingdom a substantial strategic investment opportunity that could significantly reduce the overall cost of the U.K. generation mix and help achieve the country’s climate change goals. By contrast, the bulk of biomass costs (roughly 85%) remains fuel costs, which forms a floor on potential cost reductions.

To put this into pounds and pence, Vivid Economics calculated the impact on U.K. government subsidy expenditures if Drax received support via a Contract for Difference to convert its 4th coal-fired unit, a 645 MW boiler, to biomass. Vivid found that the total excess implicit subsidy [1] to Drax would be more than £360 million over five years if offshore wind prices are £60/MWh or lower, which they now are. This amount of money could buy the country roughly 1 Gigawatt (GW) of offshore wind generation.

The environmental and economic evidence is now clear. Not only is biomass a dirty form of energy, but any additional subsidies for coal-to-biomass conversions is money sunk into a dying industry, rather than invested in the smart, truly clean, and growing renewable energy sector—akin to investing in steam trains in the jet engine era.

The United Kingdom’s leadership position on climate action is now slipping because of debunked assumptions about biomass carbon neutrality, and its leadership on clean energy is at risk because of lost opportunities for investment. Continued investment in biomass would further this risk, and foreclose an opportunity for the United Kingdom to offer up a global model for efficient, strategic government spending in support of the truly clean, 21st century energy solutions we need.

In the fight against climate change, we have no time or resources to waste. Policymakers must make decisions based on facts, not tired old myths and industry fear-mongering. Today, a reliable, coal-free electricity grid dominated by truly clean wind and solar energy is not only possible, but is the smart economic choice.

[1] An approach to subsidy calculation that reflects the gap between consumer prices and economically efficient prices.



Related Blogs