UK’s Biomass Ambitions Threatened By Supply Chain Flaws

• Thursday, 12 November 2009

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UK’s Biomass Ambitions Threatened By Supply Chain Flaws
London, UK. November 12, 2009. Ambitious plans to scale up the use of biomass for UK power generation will fail to materialise unless critical supply chain challenges are resolved, according to a new report from independent research firm Verdantix. The UK Government’s Department for Energy and Climate Change (DECC) has set a target for 15% of the UK’s renewable energy to be generated by biomass by 2020. But new research conducted by Verdantix with the biomass industry finds that critical supply chain issues will block planned investments.

By 2014, power companies such as Drax Group and MGT Power plan to bring seven large-scale biomass power generation facilities on line generating a total of 2,100 MW – enough to power 600,000 homes. And the UK Government’s Carbon Reduction Commitment (CRC) incentivises public sector organisations such as Aberdeen City Council to invest in additional small-scale biomass boilers. But investments in biomass equipment risk failing to meet operational targets as UK biomass supply will only meet 5% to 10% of projected demand by 2014 and large volume imports face significant supply chain risks.

“The UK government, power generators and city councils have ambitious plans to scale-up the use of biomass for renewable power generation” commented James Pinney, the Verdantix Analyst who led the research. “Our research with industry insiders shows that UK biomass supplies will only meet small-scale demand, typically within a 60-mile radius of the biomass facility. The low volume of UK supply means that every year power generators will import millions of tonnes of wood chips, elephant grass, palm kernels and olive pellets to feed their huge biomass facilities. But uncertainties surround the reliability and cost of importing biomass from countries like Canada, Malaysia, Russia and Sweden.”

The Verdantix report, Smart Vendors: Biomass Supply Chain (UK), identifies 14 smart vendors seeking to solve today’s critical supply chain problems. Innovative biomass solutions include:

Trading networks to deliver large volume imports. EDF Trading, Energy Crop Company and Lantmännen Group operate businesses that manage the cultivation, processing and/or distribution of biomass fuels. These firms will play a key role in securing reliable supplies of imported biomass for the UK market.

Maximising yield of UK biomass sources. Given the low volume of UK supplies maximising biomass yields with better harvesting techniques has a positive role to play. Smart vendors like Euroforest, the Forestry Commission and UPM Tilhill provide services to help land owners to exploit opportunities like non-harvested wood fibre.

Enhancing biomass processing. Smart vendors like Biojoule, Land Energy and Silvigen buy raw materials and convert them into premium biomass pellets. The benefits include lower transport and storage costs as well as more regular power generation per cubic metre.

Improving local biomass logistics services. The cost of delivering biomass to facilities and load loss during transport curtails biomass business cases. Dedicated biomass logistics from smart vendors like AW Jenkinson, Balcas, Eddie Stobart and Forever Fuels improve supply chain efficiency enabling end users to source supplies economically from wider areas.

“Smart vendors like Biojoule, EDF Trading and UPM Tilhill bring innovative solutions to tackle the UK’s biomass supply chain headache” continued Pinney. “Despite these supply chain innovations there are other factors that pose risks to organisations planning to rely on biomass for power generation. In April 2009, the UK government’s change of tack on subsidies for co-firing biomass pulled the plug on many planned investments and hit UK biomass suppliers. Power generation from biomass competes with other industries for scarce land-use resources. Fixing the supply chain will not eliminate security of supply or price volatility risks.”

The report “Smart Vendors: Biomass Supply Chain UK” launched today is available to buy online and Verdantix clients can download the report at www.verdantix.com.

About Verdantix
Verdantix is an independent business research firm focused on climate change, sustainable business and energy management. Visit: www.verdantix.com

Press Contact
Kate de Lima, press@verdantix.com
+44 (0)207 4010 365

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