E.ON reviews plans to build biomass plant

City A.M. Reporter
THE government yesterday approved a 150 megawatt (MW) biomass power plant to be developed by utility E.ON, but the company said it was reviewing the project in light of a proposed cut in state subsidies four years from now.

E.ON’s climate and renewables arm can now build a plant in the western England port city of Bristol to power up to 160,000 homes, the department of energy and climate change said.

But E.ON announced it would first re-examine its strategy on renewable energy.

Developers say that government plans to reduce subsidies for dedicated biomass plants – which burn wood pellets and farm waste to produce power – by seven per cent from April 2016 have made investment decisions harder.

“We will now take some time to review the prospects for the project in light of the UK government’s current banding review and how it fits with our portfolio of renewable energy investments in the UK,” an E.ON spokeswoman said.

Last month, UK coal-fired power plant operator Drax scrapped plans to build a 290-MW biomass plant on its site in North Yorkshire, saying state support levels for the renewable source were still too low.

E.ON’s potential new power station will burn imported wood pellets, energy crops and waste wood to produce electricity. The company declined to give a start date for the plant given the review proceedings.