Biomass Subsidies Could Save U.K. $3.2 Billion: Drax

  • Energy company urges government to rethink green policies
  • ``Hidden costs'' of wind power make biomass more competitive

Greater competition between renewable energy technologies bidding for subsidies could cut British taxpayer costs by as much as 2.2 billion pounds ($3.2 billion), according to a new report written for biomass producer Drax Group Plc.

Wind power is more expensive than biomass when “hidden costs” like the need for back-up generation are accounted for, said the report, published Tuesday by NERA Economic Consulting and London’s Imperial College. Biomass technologies already generate more than a quarter of the U.K.’s renewable electricity, or about 5 gigawatts, according to government figures.

The U.K. is planning to host three auctions offering subsidies to developers of “less-established” renewable-energy technologies including offshore wind, wave and tidal stream, geothermal and biomass plants. According to the Department of Energy and Climate Change, or DECC, the first auction will be held this year and the remaining two before 2020.

Drax won’t be able to compete in the first auction and the government hasn’t decided yet if it will be able to compete in the following two auctions, according to a DECC spokesman. Subsidies have previously been offered to convert Drax coal plants to biomass, he said.

(Government corrects auction details in fourth paragraph.)
Before it's here, it's on the Bloomberg Terminal.