Client News-MGT Power Announce 295 biomass power station at the Port of Tyne

MGT POWER ANNOUNCE PLANS FOR 295MW BIOMASS POWER STATION AT THE PORT OF TYNE

Date of Issue: Monday 10th August 2009

MGT Power Ltd today announce plans to develop a second major biomass power generation project at the Port of Tyne in the North Tyneside.

The proposed 295MW Tyne Renewable Energy Plant (Tyne REP) will be located on industrial land in the Port of Tyne, North Shields and is 10 kms east of Newcastle City Centre. The site is on the north bank of the River Tyne. The scheme will generate carbon neutral electricity for around 600,000 homes in the North East of England.

Subject to planning, this major plant, generating power from sustainable sources of biomass, is targeted for commercial operation in 2014.

Chris Moore, Director of MGT Power said: “With the Government committed to more renewable electricity generation over the next decade, our Tyne biomass project along with our consented scheme at Teesport will make a significant contribution to the Government’s targets. Large scale biomass projects can operate at baseload and each scheme will produce in one year as much green electricity as the largest 1,000MW wind farm project. Each biomass project will also save 1.2 million tonnes of CO2 from being emitted every year.”

As a first stage in the Tyne REP planning process, MGT Power has outlined details of the project in a “Scoping Document” which has been circulated to a large number of local and national organisations, including North Tyneside Council, the Environment Agency and the Department of Energy & Climate Change. The Scoping Document outlines the rationale for the project, the energy and planning policy framework and the technical studies and consultations that MGT Power will undertake as part of the project’s Environmental Impact Assessment (EIA).

Chris Moore added: “Just as we did with our Tees Renewable Energy scheme, we are consulting widely from the start, both with key organisations and local people. We see the Tyne project as not only a major green power project for the UK, but one that will contribute positively to the local area and the North East economy, primarily in terms of local investment and employment. We intend to hold a public exhibition of our plans in September.”

North Tyneside Mayor, Linda Arkley, said: “Tyne REP would bring substantial benefits to the borough and the wider region, representing an investment of over £400 million, the creation of hundreds of construction jobs, future permanent on-site jobs, 300–400 indirect jobs and an annual spend of £30 million
in the local economy.

“We are committed to the regeneration of the North Bank of the Tyne and bringing jobs to the area. I welcome the fact that MGT Power Ltd have chosen North Tyneside as their preferred location and look forward to supporting them for the benefit of our residents.”

Andrew Moffat, Chief Executive of the Port of Tyne welcomed MGT Power’s plans: “Our mission is to provide a sustainable, vibrant Port of Tyne and the Tyne Renewable Energy Plant represents a major long term investment that will take full advantage of the excellent facilities, infrastructure and
capabilities offered by the Port.”

The biomass feedstock for the Tyne Renewable Energy Plant will be sourced from certified sustainable forestry projects developed by the MGT Power team and partners in North and South America and the Baltic States, and in the longer-term UK sources. The biomass is clean burning woodchip, which delivers 95% greenhouse gas savings in comparison to coal or natural gas through the life cycle and will not use high quality land suitable for food crops. The plant will use around 2.4m tonnes of woodchips per annum and will operate at baseload – 24 hours a day, all year round.

Notes to Editors:

1.Details of the Tyne Renewable Energy Plant and a copy of the Scoping Document can be obtained via a dedicated website www.mgttyne.com or by contacting MGT Power via email at info@mgttyne.com.

2.MGT Power (www.mgtpower.com) was established in December 2007 to develop biomass generation projects in the UK and Europe. The management team includes Chris Moore, Ben Elsworth, Thiago Azevedo and Noel Forrest who have backgrounds in UK power generation and the supply of renewable energy feedstocks. The company’s main shareholders include Trafalgar Asset Managers and MKM Longboat. The firm’s financial advisors are Ernst & Young and engineering consultants are Pöyry Energy and PB Power.

3.As a storable, concentrated energy form, wood biomass allows electricity generation 24 hours a day, all year round, in contrast to intermittent renewable sources such as wind or solar. MGT Power will use trees sustainably planted specifically for use as fuel, such as Short Rotation Forestry (eg. Eucalyptus, Pines) and Short Rotation Coppicing (eg. Willow, Poplar).


4.The Port of Tyne Authority, created by statute, is a trust port (www.portoftyne.co.uk). It is a deep river port, with round-the-clock access, 2.5 miles from the mouth of the river Tyne. Its main function is the improvement, maintenance and management of the Port. The Port is a commercial enterprise, but it is not funded by Government and has no shareholders. It has five main business areas: conventional and bulk cargoes; logistics;
car terminals; cruise and ferries; and estates. Any surplus is reinvested into a programme of continuous improvement to the benefit of the users, the community and the North East economy. The Port of Tyne Authority is chaired by Sir Ian Wrigglesworth.

5.MGT Power Ltd is the developer of the Tees Renewable Energy Plant, which secured planning consent from the UK Government on July 15th and is scheduled to start operating in 2012.

6.The Mayor and Cabinet have no involvement in the determination of planning matters and any application that is submitted by the developer will be dealt with in accordance with the Council's adopted planning process including if appropriate referral to the Planning Committee.

For further information:

MGT Power Ltd (www.mgtpower.com)

James Court (Taylor Keogh Communications): 020 3170 8467/07921330356

Call Jonny Mulligan (Taylor Keogh Communications): 07875019695

Industry News-EU mulls extending green criteria beyond biofuels

The European Commission has begun consultations on tackling indirect land-use change caused by agro-fuel production, floating the idea that such criteria could be applied more generally to a range of other agricultural commodities.

Background:

In December 2008, EU leaders reached agreement on a new Renewable Energy Directive, which requires each member state to satisfy 10% of their transport fuel needs from renewable sources, including biofuels, hydrogen and green electricity by 2020.

The directive also established sustainability criteria for biofuels. It obliges the bloc to ensure that biofuels offer at least 35% carbon emission savings compared to fossil fuels. The figure rises to 50% as of 2017 and 60% as of 2018.

However, concerns have been raised that increased biofuels production would result in massive deforestation and have severe implications for food security, as energy crops replace other land uses (indirect land-use change).

The Renewable Energy Directive and the Fuel Quality Directive agreed as part of the climate change and energy package in December last year require the Commission to compile a report "reviewing the impact of indirect land-use change on greenhouse gas emissions" and seek ways to minimise its impact.

The report could be accompanied by proposals on developing a concrete methodology for calculating indirect land-use changes, which could be applied to other commodities.

The EU's new Renewable Energy Directive obliges member states to ensure that 10% of their transport fuel comes from renewable sources, including biofuels,by 2020. The goal was aimed at contributing towards the bloc's climate goals, but questions have been raised about the unintended consequences of replacing large forested areas and food production with energy crops.

To address this issue, the directive requires the Commission to present a report by the end of 2010 on how such "indirect land-use changes" impact on greenhouse gases and whether they should be tackled.

But a consultation paper seen by EurActiv reveals that the EU executive is ambitiously planning to come up with a document and potentially a legislative proposal as early as next March. This is to ensure that member states can take them into account when submitting their nationalrenewable energy action plans by the end of June 2010.

The non-paper, drafted by the Commission's transport and energy (TREN) and environment DGs, lists several options to take into account the effects of land-use change. It shows that the Commission is considering addressing the general issue of land-use change instead of limiting its approach to biofuels.

The document suggests that the restrictions on land-use change applied to biofuels could be imposed on other commodities and consuming countries. This could be done by encouraging other administrations to adopt the same restrictions and by encouraging other industries to apply these on a voluntary basis, it states.

Moreover, the EU could require that goods sold on its market are tagged with labels stating compliance with the restrictions, the non-paper reads.

One alternative would be to conclude international agreements to protect "carbon-rich habitats" like rainforests in countries where cultivation patterns are likely to be affected, it states.

However, the Commission believes that such a general approach would require putting in place measures that stretch beyond the scope of the report required by the Renewables Directive, and would take more time to execute.

The rest of the document thus specifically concentrates on biofuels. The minimum required greenhouse gas savings already included in the directive could either be tightened or considered as an adequate "cushion", ensuring that the policy delivers an "acceptably high" greenhouse gas benefit, it says.

Finally, the document floats the idea of promoting differentiated consignments for individual biofuels.

For example, bonuses could be increased for biofuels which do not come from land, or additional sustainability criteria could be set for agro-fuels produced from crops that are likely to cause damaging land-use change. Furthermore, an indirect land-use change factor could be included when calculating greenhouse gas emissions from biofuels, once a methodology has been adopted.

Indeed, the Commission is already consulting researchers about models that could explain the effects of biofuel production on indirect land-use change, according to sources close to the process. These should be presented around September, feeding into a stakeholder consultation in October.

The Commission has already organised separate meetings with member states to chart the field, and has invited comments from stakeholders by the end of this week (31 July).

International trade implications

In addition to comments on the feasibility, uncertainty and administrative burden of the proposed measures, the Commission is seeking feedback on the international trade implications of biofuel sustainability criteria.

During internal negotiations on the directive, Brazil and many developing countries threatened to challenge it before the World Trade Organisation. Major exporting countries fear that the EU will sneak in strict provisions to limit their access to its market, favouring domestic production.

As the directive has now been published, it provides a clearer framework of what both domestic agro-fuel producers and third-country importers can expect from the EU. It sets down clear-cut figures for future greenhouse gas savings which biofuels will have to achieve compared to traditional fossil fuels, and stipulates that biofuels produced from land with "high biodiversity value" cannot be counted towards the target.

"Brazil has raised the issue [of EU sustainability criteria] in some meetings," a WTO spokesperson told EurActiv. But he added that so far no WTO member had requested the organisation to examine the directive's compatibility with its rules.

However, the legislation's potential provisions on land-use change or even the definition of the concept of "land with high biodiversity value" increase the uncertainty. Eventually, these addutions to the directive could expose it to a challenge before the WTO, experts said.

Moreover, it is far from clear whether it is possible to calculate greenhouse gas emissions resulting from land-use changes.

"We question whether it's possible to come up with any macroeconomic model that is able to explain indirect land-use changes because of the production of biofuels. We don't believe this is possible, but we need to wait and see what science is going to deliver," said Rob Vierhout, secretary-general of the European Bioethanol Fuel Association.

He argued that any model would also have to include the positive effects of biofuel production. For example, animal feed is produced as a co-product of biofuels, which reduces the need to expand soy production in third countries in order to export it to Europe, he said, adding that biofuel production is also proven to increase yield per hectare of land.

Hinting that heated debates lie ahead, campaigners against biofuels have described this as "creative accountancy".

For the full version of this article click here

Client News-MGT Power coverage in the Financial Times

Green light for £500m biomass plant

England’s biggest biomass power station, a £500m plant at Teesport, near Middlesbrough, was given the go-ahead on Wednesday .The 295-megawatt capacity renewable energy plant, capable of generating enough electricity to meet the needs of 600,000 homes, will be one of the world’s biggest biomass plants.

Announced on Wednesday to coincide with the unveiling of the government’s low-carbon strategies, the plant is expected to save 1.2m tonnes of CO2 per year and account for 5.5 per cent of the UK’s renewable electricity target.

David Kidney, the energy minister, said: “In just over 10 years’ time, 40 per cent of the country’s electricity will come from low-carbon sources, like biomass.”

The British company developing the wood-fuelled power station is MGT Power, established 18 months ago to develop biomass-generation projects in the UK and continental Europe. Main shareholders include Trafalgar Asset Managers and MKM Longboat. An as yet unnamed international group of four banks, including a UK high-street name, will provide debt finance for the project, MGT’s first.

The Teesport power station, to be built on the South Dock area, owned by PD Ports, won local authority planning approval last November and hasnow received final approval from the Department of Energy and Climate Change. The plant will use 2.4m tonnes of woodchips each year, sourced from North and South America and the Baltic states, and is expected to produce the same amount of renewable electricity over a year as a 1,000MW wind farm.

Chris Moore, director of MGT, said the plant had secured an early connection date to National Grid, to which it would export power from 2012.

“Other, similarly sized biomass plants are proposed in other parts of the country but our Teesport project is currently two years ahead of the pack and likely to be one of the first to be operational,” he said.

This article was published in the Financial Times and can be seen here

Political News-Summary of UK Governments Renewable Energy Low Carbon Transition Plan

Ed Miliband has today announced its strategy for meeting carbon emissions targets and to a massive increase in renewable energy.

The announcements today are to demonstrate the government is committed to fighting climate change and reducing carbon emissions.

In a wide ranging announcement Ed Miliband covered all of the main issues including the focus on the technologies needed, infrastructure, feed in tariffs and the need to have skilled work force that can fuel the ‘green economy’.

Summary of the key points

General Notes
•Regional Development Agencies will play a crucial role in partnership with the Government to promote the development of market-led technology clusters for low carbon energy developers.

•South-West will be developed into the worlds first Low Carbon Economic Area.

•The Government and the Technology Strategy Board will work to improve collaboration and knowledge sharing within and beyond the UK through the launch of the Energy Knowledge Transfer Network as a one stop shop for investors and developers in energy generation.

•The Intellectual Property Office will consider how the Government can support small- and medium-sized businesses developing low carbon technologies to license them in developing countries.

•Renewable Energy Industry will be supported with an additional £4billion from the EU Investment Bank. In the short term the government thinks it will be able to bring forward £1 billion for small and medium sized renewable projects.

Marine
•The Government is allocating up to an additional £60 million for a suite of measures which will help accelerate the development and deployment of wave and tidal energy in the UK and will cement our current position as a global leader in the sector.

•The Government will double its financial support to Wave Hub – the development of a significant demonstration and testing facility off the Cornish coast – with up to £9.5 million of investment. The Government is also proposing to invest up to £10 million at NaREC, the New and Renewable Energy Centre, in the North East to build on and utilise existing infrastructure to provide an open access facility for marine developers to test and prove designs/components onshore.

•The Government will also provide up to £10 million to support the South West’s significant potential for wave and tidal energy deployment, research, demonstration and engineering and up to an additional £8 million from the UK Environmental Transformation Fund to expand the in-sea stage testing facilities at EMEC, the European Marine Energy Centre, in the Orkneys.

•In addition the Government will launch a Marine Renewables Proving Fund which will provide up to £22 million of grant funding for the testing and demonstration of pre-commercial wave and tidal stream devices. This will accelerate wave and tidal technologies’ move towards commercial demonstration and assist the development of successful projects under the Marine Renewable Deployment Fund. Taken together, these investments will provide the UK with unparalleled testing and demonstration facilities.

Emmissions and Trading Cap
•Emissions in the traded sector, for the purposes of accounting under the Climate Change Act, are fixed at the level of the UK’s share of the declining EU Emissions Trading System cap.

This will be equal to the level of auctioning rights the UK receives plus the number of EU allowances that are freely allocated to UK installations. Combined with the emissions reductions that measures in the non-traded sector are expected to deliver shows how the UK, on central projections, will meet the first three carbon budgets.

Wind
•The Renewable Energy Strategy recommits the Government to a massive increase in renewables generation going up from 5% today to 30% by 2020. Based on the figures in last year’s draft strategy this implies 22% of all electricity will come from offshore and onshore wind and another 2% from marine technologies.

Carbon Capture and Storage

•The Department of Energy and Climate Change will also establish an Office of Carbon Capture and Storage to support the delivery of this work. Full details will be announced in the autumn of 2009.

•In 2007 the Government launched a competition to build one of the first commercial scale projects in the world. In April 2009 the Government announced that new fossil fuel power stations would have to be designed and built so that they could fit CCS in the future.

•In a consultation launched in June 2009, the Government proposed a new financial and regulatory framework to drive the development of CCS. These proposals included plans to fund up to four CCS demonstrations in the UK and a requirement for any new coal power station to demonstrate CCS.

•The Government is considering how to encourage clusters of CCS infrastructure and expertise, in key areas, such as Yorkshire and Humber, the Thames Estuary, the Firth of Forth, Tyne/ Tees and Merseyside, bringing major employment and regeneration benefits.

Local Generation and Feed in Tariffs
•The Government working with the energy Saving Trust, energy companies, Local Authorities, the Distribution Network Operators (DNOs) and others to test the uptake in the interest of the ‘whole house’ approach. The government are going to put up to £4m to support these initiatives.

•The Government is putting in place financial rewards for small-scale low carbon electricity generation, with Feed-in Tariffs from April 2010. Payment for the electricity produced by small-scale generators, will be provided through the electricity supply companies and encourage the uptake of renewables by schools, homeowners, hospitals, businesses and communities.

Job Creation and Training
•Renewable energy also requires specialist skills. The Office for Renewable Energy Deployment is working with industry on a strategy for skills in wind, wave and tidal energy and is also establishing the National Skills Academy for Power. Full plans will be published towards the end of 2009.

Planning and enabling timely investment:
•The government is committed to delivering sufficient financial investment, and ensuring the attractiveness of the UK as a place to invest.

•Ensuring planning policies support the development and installation of low carbon technologies. The focus here is around the IPC and the statutory legislation related to planning matters.

•Taking advantage of the replacement/ refurbishment schedules of existing plants and infrastructure

Delivering the engineering challenges of building a low carbon energy system of this scale:

The government understands that meeting the physical and supply chain challenges of building new, reliable electrical generating capacity and other energy infrastructure at this scale, particularly in the face of likely international competition for these capabilities will be challenging.

The focus going forward will need to be on developing or upgrading infrastructure as it becomes necessary. As well as the electricity grid (transmission and distribution networks), this could include networks for transporting and storing captured carbon, systems for managing nuclear waste, hydrogen or electric vehicle fuelling/charging networks and community heat systems.

The Energy Mix
The government understands that the transition in matching evolving sources of demand for energy with new sources of supply in an efficient and practical mannerDeveloping technologies that will be needed to close the energy gap and meet the government commitments to reducing carbon emissions.

Future Consultations
• Government will develop a strategic roadmap to 2050 by spring 2010, working closely with industry and wider stakeholders.

•In autumn, the Committee on Climate Change will provide further analysis of the pathway through 2030 to 2050 The Government will work with the Committee, taking its analysis and recommendations into account when developing the roadmap to 2050.

•The Government is consulting on the detailed design and proposed tariff levels for ‘Feedin Tariffs’ alongside this Transition Plan.10 A household with a well-sited photovoltaic installation could receive over £800 plus bill savings of around £140 a year.


Click here to review and see all of the four documents released by the government today

Client News - MGT Power Director, Ben Elsworth examines the challenges for biomass developers in the UK

The Case for Biomass

The UK is facing a challenging renewables target. By 2020, 15% of its energy must come from renewable sources – this equates to roughly 35-40% of electricity produced.

As New Power readers will know, onshore and offshore wind projects are likely to provide the bulk of thatenergy however in the last few months a rash of new biomass projects have emerged.

In the following article, Ben Elsworth* examines the issues facing biomass developers in UK.

If you would like to read more of this article please click here for the full pdf

This article appears in the latest issue of New Power UK

http://newpoweruk.com/

Client News - MGT Power Outlines need for biomass in Utility Week

Biomass is ready to play its part in fighting climate change

Written by: Ben Elsworth | 12 June 2009

Forty years is a long time, half a lifetime even. But over 40 per cent of the UK's current generation capacity was running, in construction or in advanced planning, 40 years ago, and almost no capacity of that vintage or younger has yet been decommissioned. Thus, as the power generation industry contemplates its role in the UK's legally binding commitment to reduce greenhouse gas emissions by 80 per cent by 2050, decisions taken now will play a massive role in deciding whether or not this important target will be met.

The realistic candidates for near-zero carbon generation on a national scale are wind, nuclear, coal fitted with carbon capture and storage (coalCCS), biomass and tidal. There is little doubt that some mix involving at least the first four of these technologies will be required to meet a power demand which may well rise significantly to accommodate new forms of electric transport.

What concerns me about official predictions of the future is that few seem to take account of the requirements for load matching. Generation must be dispatched on and off to meet variable demand and this creates a merit order of plant with different utilisation rates. Of the five technologies, three (nuclear, wind and tidal) are completely non-despatchable, by which I mean that, if anything, it costs more to turn them off or down than to keep them running, and these must run when available. CoalCCS is more flexible but still has high capex costs, so that the power it produces will be expensive unless it operates at a good load factor.

That probably leaves biomass alone to fill the role of lower-mid-merit generation, although demand-side flexibility and additional interconnection to Europe may also help with system balancing. The vast number of wind turbines planned for both the UK and the continent will only increase the need for flexible generation.

I believe that large-scale biomass generation can meet this challenge at an acceptable cost, but I am worried by the lack of early engagement from the major players - there is a development curve to go through, on the technology and fuel side. The big six UK energy utilities have deployed massive resources to develop plans for wind, nuclear and coalCCS, but so far their involvement in dedicated biomass has been small scale. The total amount of dedicated biomass constructed or being actively developed by the big six is about 300MW, not much bigger in thermal terms than the single biomass boiler at Alhomens Kraft in Finland, which has run with excellent reliability since 2001. It would be almost unthinkable to build a new import-based coal boiler at half the scale or less of the most efficient proven reference plant, yet that is the most that any of the big six plan to do for biomass.

The utilities cannot use economics as an excuse. Capex per MW for the biggest biomass boilers is far lower than for nuclear, wind or coalCCS. What is more, the cost of the biomass fuel is entirely offset by Renewables Obligation Certificates and Levy Exemption Certificate income (under the new Renewables Obligation banding legislation) for 15 years, although only for the most efficient plant sited at the best locations. With the right approach, sustainable biomass fuel can be procured on secure, long-term, fixed price contracts, in stark contrast to gas, the future price of which is anyone's guess. Today's power grid is long on flexible gas and coal plant and short on low-carbon generation, therefore it makes sense for biomass plants to run baseload for now and then switch to mid-merit running later when new nuclear and wind plant start to dominate the system.

People often complain that big plants will rely on imported biomass. I don't deny it, but there is no reason why, in the long term, the UK cannot produce its own biomass. There has never been a market attractive or stable or large enough to encourage efficient industrial scale fuel development. It is chicken and egg, but with farmers having had their fingers burnt in the past, demand will have to precede supply. Imported sources are able to bridge the gap, but UK-produced fuel, transported by rail, barge or coaster, could compete strongly on price, especially with energy crop status.

The UK could eventually produce enough sustainable biomass to fuel 10GW of mid-merit plant without affecting food supply. Such a target would require the Forestry Commission to start meeting its targets for new forest plantations, for a large but realistic proportion of previously set-aside or disused land to be converted to short rotation forestry or other perennial energy crop, and for much greater extraction of biomass from waste streams. All of those things would take time, but are achievable. The prize is a flexible, secure, sustainable and competitive source of energy and tens of thousands of new jobs.

Ben Elsworth, director MGT Power

http://www.mgtpower.com/