UK biomass-fired generation hits 10-month high

Market: Biomass, Electricity
03/10/23

UK biomass-fired power generation yesterday evening rose to its highest for any settlement period since December 2022, as units with contracts for difference (CfDs) started up for the first time in several months and the long-delayed 299MW MGT Teesside plant began operating under its CfD.

UK biomass-fired output rose to 2.37GW yesterday evening, the highest since December 2022 — when the day-ahead hourly price spiked to over £1,500/MWh and brought forward most generation capacity.

Biomass-fired units with CfDs have started up again as the base-load market reference price for the scheme will be around £128.75/MWh for winter 2023-24, Argus estimates, down from £207.07/MWh for summer 2023. Units had been paying back to the scheme when generating over the summer, making them unprofitable as delivery prices fell well below the reference price — with the N2EX day-ahead market delivering at £83.65/MWh over the season.

The 660MW unit 1 at UK utility Drax's biomass-fired plant started up on Sunday for the first time since July and generated throughout Monday, reaching capacity in the evening before reducing its output again today, BMRS data show. The unit has a strike price of £132.47/MWh for April 2023-March 2024, meaning that it will receive around £3.70/MWh from its CfD when it generates this winter.

The 405MW Lynemouth biomass-fired plant also started to ramp up yesterday afternoon for the first time since May, with generation as high as 130MW this morning from the 133MW unit 1 at the plant. The other two units at Lynemouth are expected to be available from 10-11 October, Remit notifications published today show, pushed back by one week from previous schedules.

Utility MGT Teesside's biomass-fired plant has generated consistently since Saturday, BMRS data show, with output as high as 230MW today — following its long-delayed commissioning runs restarting last month. The unit took up its CfD on 30 September, according to scheme operator LCCC, over five years after its initial target start date.

Lynemouth has a CfD strike price of £139.08/MWh for 2023-24 and will receive £10.30/MWh from the CfD scheme this winter, while the Teesside plant has a higher strike price of £165.97/MWh.

High wind squeezes biomass generation again

High wind output largely pushed biomass out of the mix again today and could continue to do so over much of the next week.

The N2EX day ahead cleared at £63.10/MWh for 3 October delivery and at £63.15/MWh for 4 October delivery — down from £75.27-94.01/MWh for the first two days of the month. Wind output is forecast to remain high for much of the next week, with combined metered and embedded generation expected at 13.6GW over 4-10 October, system operator National Grid ESO data show.

Continued low demand could make prompt power prices even more volatile with changes in wind forecasts and output this month — temperatures are expected to be above seasonal norms until at least 11 October, and significantly above this weekend.

But high UK renewable energy guarantees of origin (Rego) prices will support biomass-fired output, allowing plants to dispatch at lower power prices. Biomass Regos for compliance period 22 — April 2023-March 2024 generation — were assessed at £16.10/MWh on 28 September, up from £10/MWh just over a month earlier.

Biomass-fired availability will also increase next month once the 660MW unit 4 at Drax returns from an extended outage on 29 October. It is the second unit to undergo a major overhaul at the plant this year, with unit 2 off line in April-July. Drax's units 2-4 operate under the renewable obligation (RO) scheme rather than with CfDs, so have continued to generate over the last year.

By Josh Evans

Average CfD top-up for Drax unit 1 and Lynemouth £/MWh

Forecast UK wind generation GW

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19/12/25

Australia needs electricity carbon policy: Commission

Sydney, 19 December (Argus) — The Australian government should introduce a national market-based policy to drive electricity sector decarbonisation, potentially modelled on the existing safeguard mechanism, economic research and advisory body the Productivity Commission (PC) said in a final report today. The PC had previously recommended applying the safeguard mechanism to electricity generators at the facility level, but it may be better to consider this issue separately, it noted in a final inquiry report into "investing in cheaper, cleaner energy and the net zero transformation". "Multiple policy options will need to be considered for the electricity sector, and even if a baseline-and-credit scheme is preferred, it may be better to keep this separate from the safeguard mechanism, at least at first, to avoid risks of uncertainty and disruption in the carbon credit markets that support that policy," the PC said. Currently there is little relationship between the emissions intensity of Australia's remaining coal-fired power plants and their announced retirement dates, according to the commission. Recognising the value of emissions reduction would pave the way for more emissions-intensive plants to retire earlier, it argued. Electricity excluded from safeguard mechanism Under the safeguard mechanism, facilities emitting more than 100,000t of CO2 equivalent (CO2e) in a compliance year across several sectors earn safeguard mechanism credits (SMCs) if they report scope 1 emissions below their baselines, and must surrender SMCs or Australian Carbon Credit Units (ACCUs) if their emissions are above the threshold. The electricity sector, Australia's largest emitter, is effectively excluded from the mechanism because the emissions reduction policy for the segment has been focused on renewable electricity targets. The mechanism applies a single sectoral baseline of 198mn t CO2e/yr across all electricity generators connected to Australia's main electricity grids, which is way above recent data — emissions from the electricity generation sector reached a combined 138.9mn t CO2e in the 2023-24 compliance year. A decision on whether to expand the mechanism to electricity may be considered in the upcoming safeguard mechanism review in 2026-27 . NEM review But any new policy will need to complement reforms arising from the National Electricity Market (NEM) review, which also received a final report this week . The decision will also need to be consistent with several policies and agreements already in place to support new investment or manage the exit of coal plants across Australia, the PC noted. While the existing Capacity Investment Scheme (CIS) and the proposed Electricity Services Entry Mechanism (ESEM) scheme mainly target renewable output or capacity, a least-cost emissions-reduction policy would help companies deciding when to retire coal and gas plants, according to the commission. This will be even more important if the Australian government prioritises firming auctions, which may support new gas-fired plants. Emissions policy uncertainty has been a major barrier to investment in gas-powered generation, the PC said. "Firming auctions will be more effective if project proponents know in advance how their emissions will be treated," it noted. Apart from a policy to drive electricity sector decarbonisation, the PC's final report urges the government to expand the safeguard mechanism , phase out fuel tax credits for on-road heavy vehicle operators, and reduce barriers to adopting low-emissions technology for heavy vehicles. And it also calls the government to phase out the fringe benefits tax exemption for electric vehicles (EVs), a recommendation that was criticised by industry body EV Council . By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: Vietnamese pellet supply to remain volatile

19/12/25

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19/12/25

Viewpoint: Vietnamese pellet supply to remain volatile

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18/12/25

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18/12/25

US House passes bill to expedite permitting

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17/12/25

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17/12/25

Viewpoint: French power in slump

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EU to amend CBAM rules for power

16/12/25

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16/12/25

EU to amend CBAM rules for power

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UK biomass-fired generation hits 10-month high

High wind squeezes biomass generation again

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