Supply chain problems threaten to disrupt UK biomass plans

The new research – 'Smart Vendors: Biomass Supply Chain (UK)' – from London-based firm Verdantix, says the biomass industry will find critical supply chain issues will block planned investments because the UK biomass supply will only meet five to 10 per cent of projected demand by 2014 and that large volume imports face significant supply chain risks.

With power companies, such as the Drax Group and MGT Power, planning to bring seven large-scale biomass power generating facilities on line by 2014, with the potential to generate 2,100 megawatts (MW) of energy, demand for large amounts of reliable biomass will be high. The demand for biomass is also being driven through the Government’s Carbon Reduction Commitment (CRC), incentivising public sector organisations and businesses to invest in additional small-scale biomass boilers.

“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,” he said.

The Verdantix research, however, does identify ‘smart vendors’ who are currently seeking to solve these critical supply chain problems. Companies in this sector include EDF Trading, Energy Crop Company and Lantmännen Group, which who have created trading networks that will deliver large volumes of biomass fuels. Euroforest, the Forestry Commission and UPM Tilhill, who also are working to maximise the yield of UK biomass sources.

The Forestry Commission has just announced plans to increase the amount of woodfuel produced in England by two million tonnes by 2020. Reflecting the Verdantix report, The commission says that it will attempt to improve biomass supply chain, by increasing the demand and availability of wood chips, logs and pellets, while also creating "environmental, social and commercial benefits by improving the biodiversity of woodlands, and creating new jobs and business opportunities".

Biojoule, Land Energy and Silvigen, are also helping the supply chain, enhancing the biomass processing through buying raw materials and converting them into premium biomass pellet.

Local biomass logistics services, meanwhile, are being improved through companies such as AW Jenkinson, Balcas, Eddie Stobart and Forever Fuels, who are 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,” said Pinney.

Despite these supply chain innovations, however, Pinney warns other factors 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,” he said.