MGT Power moves forward on 295 MW biomass plant

UK-based MGT Power received the green light today from the UK government to build a £500 million ($821.4 million), 295-megawatt biomass plant.

The power station is expected to be built at Teesport, a large sea port in the borough of Redcar and Cleveland and North Yorkshire county, in northeast England. MGT Power is an independent British company that develops biomass power generation projects.

The plant is planned to generate enough electricity to power around 600,000 homes and would be one of the largest biomass plants in the world, MGT Power spokesman Paul Taylor told the Cleantech Group. He cited another similar biomass plant in South Wales from London developer Prenergy Power (see UK approves world's biggest biomass plant).

The Tees Renewable Energy Plant is anticipated to start commercial operation in late 2012, benefiting from suitable dockside acreage in one of the UK's three largest ports. Taylor cited other benefits including proximity to the national grid and being on industrial-zoned land. The company has been working on the project for the past two to three years, with its principals coming from UK power sector backgrounds.

See a rendering of the plant here »

The project is expected to provide 600 jobs during its three-year construction and 150 permanent jobs during the station’s lifetime. Once operational, it will contribute about £30 million per year to northeast England’s economy, supporting 300 to 400 additional jobs indirectly.

Taylor said MGT has retained Ernst & Young as its financial advisor, and is talking to banks and looking at commercial options to secure funding for the project. Taylor claimed the project has received strong investment interest, despite the lending climate.

However, not all biomass projects have had an easy time securing funding. In 2008, Scottish-Scandanavian developer Forscot Limited ditched plans for a £1 billion ($1.57 billion) biomass plant in Scotland because it wasn’t able to secure funding. Forscot, formed to develop and operate a forestry site incorporating a saw mill, and pulp and paper complex, was expected to dissolve as a result (see Forscot scraps £1B biomass plan).

MGT’s announcement ties into the UK government’s renewable energy strategy, which was also published today, providing measures to encourage a low-carbon economy and the adoption of renewables across a variety of sectors (see the plan here).

The UK government has indicated a goal that 30 percent of its electricity would come from renewables by 2030. Biomass is a clear way to make up a significant chunk of that, Taylor said.

“We need to replace aging power plants, and we need to increase the scale of renewables if we are going to meet those targets,” he said.

The new plant is expected to save 1.2 million tons of carbon dioxide per year and account for 5.5 percent of the UK’s renewable electricity target, according to MGT.

In contrast to the new strategy, a recent report from the British Wind Energy Association indicates regions across England are likely to miss their targets of generating electricity from renewables. The UK has a target to generate 10 percent of its electricity from renewables by 2010, in addition to individual targets set by its eight English regions.

The new study, “England’s Regional Renewable Energy Targets: Progress Report,” states that on average across England 50 percent of renewable electricity generation will be met, with some regions, such as the southwest, failing to reach a third.

London is the only part of England which has met its 2010 targets, according to the report. But London's overall contribution is around 2 percent of total nationwide renewable electricity. The report also indicates there is enough renewable generating capacity approved, predicting that the 10 percent figure is likely to be met, but with a delay.

In November 2008, MGT received endorsement for its power plant from local authorities Redcar and Cleveland Council, but final clearance rested with the secretary of the state. The UK government’s planning process requires any power station capable of generating more than 50 megawatts to have central government approval, so today’s announcement was a significant milestone for MGT, Taylor said.

The Tees Renewable Energy Plant’s biomass feedstock is expected to be sourced from certified sustainable forestry projects developed by the MGT team, partners in North and South America and the Baltic states. The clean burning woodchips deliver 95 percent greenhouse gas savings compared to coal or natural gas, according to MGT.

The plant is expected to use around 2.4 million tons of woodchips a year and operate at baseload, 24 hours a day, on a year-round basis. The plant is anticipated to be able to produce the same amount of renewable electricity over a year as a 1,000-megawatt wind farm, the company said.

Taylor added that MGT thinks there is an opportunity to develop further biomass projects in the UK and Europe, although he could not provide specifics.

In 2008, North Yorkshire, England's Drax Group and Munich-based Siemens announced plans to build three 300-megawatt biomass plants powered by energy crops and agriculture waste in the UK. Construction of the first plant was expected to begin in late 2010 at Immingham in North Lincolnshire, opening in 2014 (see Drax, Siemens plan £2B biomass venture and Drax hires Alstom to build biomass plant).

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