Power companies plan to commission 7 large-scale biomass generation facilities by 2014, explains Verdantix in its report, Smart Vendors: Biomass Supply Chain (UK). The anticipated 2.1 GW of new capacity will be sufficient to power 600,000 homes.

The government’s Carbon Reduction Commitment incentivises public sector organisations to invest in additional small-scale biomass boilers, but investments in biomass equipment risk failing to meet operational targets as the country’s biomass supply will meet only 5-10% of projected demand by 2014 and large volume imports face significant supply chain risks, the report adds.

Among the supply chain solutions are:

• Trading networks to deliver large volume imports. Many companies operate businesses that manage the cultivation, processing and/or distribution of biomass fuels, and 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, and vendors must provide services to help land owners to exploit opportunities like non-harvested wood fibre;
• Enhancing biomass processing. Many vendors buy raw materials and convert them into premium biomass pellets, and the ensuing 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, and dedicated biomass logistics from vendors improve supply chain efficiency enabling end users to source supplies economically from wider areas.

“The UK government, power generators and city councils have ambitious plans to scale-up the use of biomass for renewable power generation,” says Verdantix analyst James Pinney. “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.”

Uncertainties also surround the reliability and cost of importing biomass from countries such as Canada, Malaysia, Russia and Sweden, and pose risks to organisations planning to rely on biomass for power generation, he explains.

In April of this year, 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,” so 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,” adds Pinney.

The report examines 14 vendors that are working to solve critical problems in the UK supply chain for biomass. Government activity is shaping UK demand through regulations such as the Renewables Obligation and the Carbon Reduction Commitment, the development of feed-in tariffs and public sector pressure for renewable energy.

Verdantix is an independent business research firm focussed on climate change, sustainable business and energy management. It selected the biomass supply chain in Britain for a report as resurgent oil prices and national renewable energy targets will see biomass become an increasingly important resource.