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Germany's RWE 'very positive' about UK Lynemouth coal-to-biomass conversion

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Platts Market Data – Electric Power

Germany's RWE 'very positive' about UK Lynemouth coal-to-biomass conversion

RWE's plans to convert its 400-MW Lynemouth power station in Northumberland, England from coal to biomass are unaffected by subsidiary RWE Innogy's decision to exit its biomass activities, two company spokesmen told Platts Friday.

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On Thursday, RWE Innogy's Chief Operating Officer Paul Coffey told journalists that the renewable division planned to focus on onshore and offshore wind and hydro in the period 2014-16.

"Biomass is no longer seen to be a core technology for RWE Innogy," spokesman Stephen Thomas told Platts Friday. "We will be pulling back on our biomass activities, but that is within Innogy -- Lynemouth is not part of Innogy, it is part of RWE Generation."

RWE Innogy owns 99 MWe/683 MWth of biomass cogeneration capacity in operation in Germany and 72 MWe of biomass plant under construction in the UK and Italy.


It is building a 49.9-MW biomass plant at Markinch, Scotland. It also owns a 750,000 mt/year industrial pellet production facility in Georgia, US. These are the assets no longer seen as core.

"The decision Innogy has taken on biomass has a bigger impact in Germany than in the UK," Thomas said. "Some Innogy employees involved in biomass activities in Germany have already moved to different parts of the RWE group."

The key message was that Innogy would be working with more partners on capital-intensive wind projects, Thomas said. "We've been successful with the Greencoat UK wind fund, with four projects in that fund enabling us to raise capital to reinvest while retaining majority ownership. We'll be doing more of that," he said.

In offshore wind the option was open for other partners to participate in the 504-MW Galloper wind farm off the Suffolk coast, Thomas said. "We are working closely with our 50:50 partner SSE as the project nears a final investment decision. If others are available and want to come on board, the option is there," he said.

Meanwhile, RWE npower spokesman Daniel Meredith told Platts that the German utility was "very positive about the Lynemouth conversion," which has just been shortlisted by the Department of Energy and Climate Change for funding under the Contract for Difference support mechanism.

"This is a large-scale coal conversion and it is good that the UK government has put it on its list. However, there is a lot the government needs to do before we can make an investment decision, not least on the details of the Energy Bill, the costs of CfDs, and how the capacity mechanism will work."

Lynemouth is one of nine UK projects defined as provisionally affordable by the Department of Energy and Climate Change. The projects have received draft investment contracts for 'Final Investment Decision Enabling' subsidies.

--Henry Edwardes-Evans, henry.edwardes-evans@platts.com
--Edited by Alisdair Bowles, alisdair.bowles@platts.com