RES Halts Work at $500 Million U.K. Biomass Project

Renewable Energy Systems Holdings Ltd., a U.K. power plant developer, halted work at a 300 million-pound ($500 million) biomass power project in northern England because government support for the technology wavered.

RES will stop planning for the project that would have been built at Port of Blyth in Northumberland, creating 300 jobs in construction and a further 50 full-time slots, according to a statement released by the company today.

The U.K. government last year said only 400 megawatts of new biomass plants would be eligible to receive subsidies under its Renewable Obligation program, which requires utilities to take a portion of their electricity from renewables. The government has extended incentives for converting coal-fired plants to biomass, as Drax Group Plc (DRX) has done, instead of dedicated facilities like RES’s plant.

“Recent government actions have eroded investor confidence in biomass,” Nina Skorupska, chief executive officer of the Renewable Energy Association, said in a statement. “The result is project cancellations totaling hundreds of megawatts and millions of pounds of investment. This row-back on biomass leaves a huge hole in the government’s plans to keep the lights on with low carbon technology.”

RWE Innogy GmbH in January said it plans to exit its biomass operations in the U.K. within the next two years, and EON SE in October said it won’t proceed with its Portbury Dock biomass project due to the regulatory and policy framework in Britain. Eggborough Power Ltd. said it may shut its coal-fired power plant that provides nearly 4 percent of U.K. electricity unless it receives subsidies to pay for a biomass conversion.

“This is a reminder to the government that without a consistent approach to energy policy, investors and developers will be deterred from delivering the billions of pounds needed to ensure the nation’s infrastructure is able to keep the lights on,” Gordon MacDougall, chief operating officer of RES, said in the statement.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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