Posted on 05/31/2003 5:18:49 AM PDT by alnitak
£30m power station goes bankrupt after eight days, leaving growers high and dry
After producing electricity for only eight days the government's £30m renewable energy project, a wood burning power station in Yorkshire, has gone bankrupt and been sold for £3m to an American who may dismantle it and ship it off to India.
The sale is a disaster for Britain's green energy policy, which plans to have wood burning and other biomass projects account for half of all renewable energy generated by 2010. The Department of Trade and Industry said yesterday that it had no idea who had bought the plant from the receiver.
Thirty-five farmers, who had signed 12-year contracts to provide the power station in Eggborough with coppiced willow, have been left without a market. Among them is Ben Gill, the president of the National Farmers' Union.
The plant was intended to be the first of many in Britain using forest residues and fast-growing willow crops.
The Arbre project, which turned wood and wood residues into gas before burning them as fuel, began in 1998. The £30m cost of the project was partly funded by grants of £10m from the EU and £3m from the DTI. Design problems prevented it from operating effectively.
One of the two main shareholders, Kelda, part of Yorkshire Water, had doubts over the economic viability of the project last year. It sold its interests to Energy Power Resources for £1. That company, which operates several power plants in Britain fuelled by straw and chicken manure, and the other main shareholder, TPS, a Swedish technology and project management firm, put Arbre into liquidation in August. The plant was expected to be sold again to a British buyer to be restarted, but PricewaterhouseCoopers, the receiver, sold the assets to Anthony DiNapoli, an American. He set up an "off the shelf" private firm, DAS GreenEnergy UK, to buy the plant.
Neil Bryson, a British developer who was bidding for the plant, said: "I believe, with continued support from the DTI and the EU, the plant could have been fixed. It was certainly my intention to follow this path and try to honour the wood-fuel contracts."
John Strawson is a farmer who represents the Yorkshire-based Renewable Energy Growers, a 35-strong cooperative supported by the Department for Environment. The group is growing more than 1,500 hectares (3,706 acres) of willow to fuel the plant and was due to harvest the first crop this year. "We thought, with government and EU backing, plus a big company like Yorkshire Water, our contracts would be safe," he said. "But we have been left high and dry. We have heard nothing from the DTI or Mr DiNapoli."
He is particularly disappointed with the attitude of the DTI which, he said, appeared to have washed its hands of the project. "Not a single contact has been made from the DTI with us in a year, even though they could be helping us secure alternative markets with coal-fired generators who are looking to co-fire biomass with coal."
John Grogan, the Labour MP for Selby, has been urging the DTI to support the plant and maintain a wood-fuel market for farmers in his constituency. "There doesn't appear to be any sign that the DTI have any guarantees over the future of this critical power plant or that they can pull the rabbit out of the hat at this late stage," he said.
Mr Grogan has met Mr DiNapoli and an associate, Tony Amhurst. He said he believed that if the terms were right Mr DiNapoli would make the plant work. It is understood that Mr DiNapoli would like to get an extension to the lucrative contract that goes with the plant - worth up to 12p per kilowatt-hour when capital grants are included - so that 20%-30% more electricity could be generated at the same high price. This is four times as much as traditional power plants get for their electricity.
Alan Silverstein, a director of DAS GreenEnergy UK, said the company was assessing whether the plant was viable. The company would prefer to restart the plant but shipping it overseas was a fall-back position; a decision is to be made at the end of June.
With the uncertainty still remaining the implications for the embryonic British biomass power market and government targets are serious.
The other large-scale biomass technology backed by the DTI, pyrolysis, is also in trouble. This is a system for turning wood and other plant matter into oil for burning. The company planning to build several pyrolysis power plants, Border Biofuels, has also gone into liquidation.
So far, straw and chicken manure plants are the only successful biomass projects.
Mr Grogan has also said that if Arbre did not go ahead it would "lead to a collapse in confidence among farmers and would put back put the case for growing energy crops in the UK by 20 to 30 years".
Dominic Maclaine, the editor of Platts Power UK, said: "The government should think long and hard about the ramifications that the Arbre saga could have for the development of a sustainable bio-fuel industry in the UK. Its hands-off attitude contrasts radically to its intervention to save the nuclear generator, British Energy, last year."
Mr Bryson said: "One of the lessons of this whole debacle is that the DTI really needs to retain some control over the assets of a project where public grants are used. Otherwise the plant may simply be taken out of the country, leaving the UK floundering in the global biomass power market."
A DTI spokesman said the government was interested in negotiations to save the plant, and that biomass remained a key element of its renewables policy.
Pyrolysis sounds like thermal depolymerization which was posted here on FR recently.
Sounds like a chickensh*t project to me.
Nope--they are completely different processes. About the only thing they have in common is that they are both thermal processes.
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