Drawing upon the barrier analyses undertaken for the demand and supply markets (Sections 8 and 10 respectively) a number of barriers were identified that an ESCO could potentially assist in
overcoming. Table 16.1 summarises these barriers and how a regional ESCO may be able to assist in overcoming each of these issues.
Table 16.1 The role of an ESCO in overcoming barriers to biomass market development
Barriers How might an ESCO help?
Higher capital cost of installing biomass systems and heat networks
Developing long term finance packages to allow heat networks to be installed is likely to be a key role of an ESCO. Finance could also be made available for the boilers themselves.
Possible drawbacks of this approach include the tendency of large scale ESCOs to focus on big projects and neglect small installations. An area-wide ESCO may not, therefore, solve the problem of high capital cost for smaller clients such as schools.
Increased operational burden of biomass systems
It is likely that an ESCO would hold responsibility for maintaining large infrastructure. This role may be performed ‘in house’ or it could be contracted out. Either way, it would be a relatively small extension of the ESCOs responsibility to take on extra contracts for biomass system operation – though it may not be seen as a core role. It is more likely that this would occur as part of a wider service: financing, installing & operating
As well as overcoming the particular barriers identified, some particular opportunities that might be suited to development by a PUSH area ESCO include:
• Install heat networks to utilise the heat from the two ERFs in the PUSH area and from other facilities generating waste heat in the PUSH area
• Install energy (and possibly other) services at the Strategic Development Areas or other new developments, to allow the development of centralised heating (such as biomass or CHP). For more discussion surrounding the opportunities presented by the SDAs see Section 11.
If a utility or other large company is chosen to partner with PUSH in running an ESCO then they will bring expertise with them in large scale energy projects and offer confidence to clients but the resulting body may not be as inclined to service smaller scale projects. This could be because of the mindset of ‘thinking big’ or if the projects are not deemed to be sufficiently profitable.
An alternative structure to a straight forward privately financed ESCO with local authority steering group, might be to let groups of individuals finance particular projects developed by the ESCO. This could work particularly well where a project will benefit a local area - for example through reduced energy costs resulting from a heat network or improved insulation. A so-called BenCom – Benefit to Community company, would sell shares (perhaps just to a certain catchment area) in a company established to deliver a single or cluster of projects. Another instance when this could work is where new development is taking place. As an alternative to repaying loans with money from developers directly, the developers could sell properties with a ‘share’ attached to the property, giving each home-owner a share of ownership of the local energy infrastructure and voting rights at the ESCO AGM. This structure could encourage resident engagement with the energy usage and could work well with an energy performance contract. There may be, however, a loss of incentive to the central ESCO management to ensure such careful operation, maintenance and financial management of the infrastructure, as they themselves would not be the owners. A 2007 report for the Renewables Advisory Board24 recommends as a structure to allow community ownership: “Investment by individuals into a community organisation owning share capital in a joint venture company which owns the project”. The report found that the most likely legal structure to be an Industrial and
Provident Society (Co-operative).
To benefit from the experience of a large utility / project developer and from the local involvement of the community, there may be two possible approaches:
1. Firstly, when the ESCO is established PUSH specify to the delivery partner that for certain projects a target minimum percentage of project capex is to be raised through an open share issue. Either PUSH or the private partner would have to undertake the role of generating this community interest ‘in house’ – this may be a difficult role for a utility company to play. 2. The ESCO could be a joint venture between the PUSH authorities, a private partner and a
community finance raising body. This option requires a slightly more complicated structure but may be more effective by letting each party ‘do what they do best’.
24 ‘Bankable Models which Enable Local Community Wind Farm Ownership’ - available for download from
Key Findings
The establishment of a regionally focussed ESCO could enable some significant energy projects to go ahead by providing a vehicle for their development. Local Authorities would need to be fully involved in steering the ESCO while relying upon an experienced (possibly utility) company of sufficient size to give customer confidence. At the same time, community involvement should be explored to take advantage of local buy-in to projects and to provide an additional source of project funding. The community aspect may be particularly relevant to new developments where share-holders live in proximity to and directly benefit from the project.
SECTION D: RECOMMENDATIONS
17 Recommendations
In light of the research undertaken within this project – the resource assessment, financial and barrier analysis and investigation into numerous individual opportunities, six strategic
recommendations have been formulated for developing biomass supply chains in the PUSH area.
4. Enable demand by establishing a PUSH ESCO with the primary remit of delivering large
scale infrastructure such as heat networks.
• This should increase the financial viability of biomass boilers by creating larger base loads of heat requirement.
• Continuing to explore opportunities to use the heat from the two ERFs in the PUSH region must be a priority for the ESCO
• GIS mapping of sources of waste heat and proximity to future developments, could be used
3. Encourage demand through policy framework by:
• Ensuring each PUSH planning authority has implemented strong, clear policy on the
expectations of new developments to deliver sustainable energy on site or link into available heat networks. A hierarchy of policy options could be created for developments to encourage the use of heat waste heat, biomass CHP and biomass heating. For an example of the policy hierarchy approached found within the London Plan, see the case study box in Section 11.1 • This hierarchy could be applied within major development’s Area Action Plans to ensure the
prospects for waste heat, biomass CHP and biomass heating are fully considered during master planning and development of the energy strategy
2. Create demand by increasing the uptake of biomass systems with the PUSH authorities own
buildings stock:
• The first step is to undertake biomass feasibility assessments of key buildings (for example Hampshire County Council recently undertook an assessment of 40 of their highest carbon emitting sites for biomass and other renewable energy and energy efficiency measures). One tool for assisting initial investigations is CEN’s Financial Viability Tool available here.
• Make use of available grant money such as the newly recommissioned Low Carbon Building Programme which now funds biomass boilers up to 300kW in community buildings
1. Form strategic links between the supply and demand sides of the biomass market:
• An individual within PUSH or one of its members should be appointed the ‘biomass coordinator’ for the PUSH area
• The biomass coordinator should create and chair a ‘PUSH Biomass Group’ made up of key parties from both the supply and demand sides of the market
• Up to date GIS data should be used to track points of potential biomass (or other heat) demand and overlaid with points of ‘waste’ heat supply. One method would be to create an online tool that each local authority can log into to update. It is envisaged that the ‘Biomass Coordinator’ would oversee the system, interpreting the data and ensuring it is updated and used effectively.
6. Support supply by supporting the development of a medium scale wood pellet plant in the
western end of the sub region – offering political support to the idea, letters of support to funders and coordination with the PUSH biomass group
5. Create supply of wood chip from tree surgery sources:
• PUSH authorities should consider amending their contracts with tree surgeons when it is next renewed to be more prescriptive about the use of the resulting material. In particular councils may wish to specify that material is taken to a particular site for storage and processing
• PUSH authorities with low levels of council tree arisings or without suitable plots of land, could partner with neighbouring authorities. Twin authority tree surgery contracts could be established to tie greater amounts of material into processing at a single site
• Processing sites should only be implemented in full coordination with the PUSH Biomass Coordinator to ensure a relevant quality and quantity of demand exists
APPENDICES
18 Appendix A – Glossary
ALC Agricultural Land Classification AQMA Air Quality Management Area
ESCO Energy Services Company / Contract
GWh Gigawatthours (1GWh = 1,000MWh (megawatthour) = 1,000,000kWh (kilowatthour))
MC Moisture Content
ODT Oven Dry Tonnes
SHSR South Hampshire Sub Region WID Waste Incineration Directive Arboricultural
Of or to do with tree surgery. Arboricultural material is the woody by-product created during tree surgery operations. This material is often split into branch wood and stem wood.
Branch wood
The wood from the branches and twigs of a tree. The term can also refer to any material that is not part of the ‘stem’ or trunk of a tree. That is to say, it may include leaf material.
De-ashing
The process of a solid fuel boiler, removing ash from underneath the grate to the ash bin. This is normally an automated process in modern biomass boilers, though the ash bin will need manual emptying periodically.
ESCO
An ESCO is a company that assumes responsibility for one or more parts of the energy services at a site. Commonly a wood fuel ESCO is put in place to reduce or remove the involvement of the client in the wood fuel heating system and to allow specialist companies to take care of all aspects including installation, fuel supply, operation, maintenance and billing. The ESCO may even provide the initial capital for the boiler and recoup their investment through the sale of heat.
Fresh / Green Tonnes
The mass of a quantity of wood as soon as it has been cut before any drying has taken place. For simplicity, an average value of 50% moisture (wet basis) is normally assumed. This is the case in this report. Fresh tonnes and oven dry tonnes are the two most common units used to discuss quantities of wood from forestry. A fresh tonnes of wood is equal to half an oven dry tonne. Moisture Content (MC)
There are two common measures of moisture content – wet basis and dry basis. Wet basis is the difference amount of water in a sample divided by the total weight of the sample (including water). Dry basis is the amount of water in a sample divided by just the dry weight of the wood (i.e. after oven drying). In this report, all moisture contents referred to are wet basis. Moisture content is usually expressed as a percentage rather than a fraction – e.g. 30% moisture content or simply as MC30 or sometimes W30 where W stands for water.
Oven Dry Tonnes (ODT)
This term refers to the mass of wood remaining once all water has been removed from the timber by oven drying. In reality, it is often a theoretical unit used for comparison. For example, which contains more actual wood – 3 tonnes of 30% moisture timber or 4 tonnes of 50% moisture timber? By converting to oven dry tonnes, a clear comparison can be made.
19 Appendix B – Potential sites for chip production & storage
Identifying potential sites for chip production / storage
Response to CEN from Planning & Development (Hampshire County Council) May 2009
1. Policy support for development of biomass fuel supply in South Hampshire
As explained in the adopted Minerals & Waste Core Strategy (2007)25, sites and locations will be
required in Hampshire for specialist facilities to handle specific waste streams (including waste wood). It is probable, if the targets within this Strategy are to be met, that biowaste collection and processing will be necessary towards the end of the plan period (2020). This includes options to recover and treat, in the same process, uncontaminated wood.
Segregated wood waste, from commercial, industrial and municipal sources is typically shredded to form a consistent feedstock for energy generation plants located outside Hampshire. If wood waste is to be successfully diverted from landfill there will need to be substantial increases in both capture rates and handling capacity. The Core Strategy includes policy S7 - Specialist Facilities (see extract):
Provision will be made for the following specialist waste operations:
a. Biological processing, capable of handling 385,000 tonnes a year of biowaste, and
b. Soil Hospitals (for remediation of contaminated soils) capable of treating 35,000 tonnes a year, and
c. Recycling (or Treatment) of Air Pollution Control Residues capable of handling at least 20,000 tonnes a year, and
d. Energy Recovery from Waste Biomass (inc. Wood) capable of handling a minimum of 50,000 tonnes a year of contaminated waste wood, and
e. If needed, disassembly plants capable of handling 35,000 tonnes a year of waste electrical equipment, and
f. Facilities on farms for the storage/processing and recycling of farm waste, and
g. If needed, expansion of existing sites or new sites for the treatment of sewage and trade effluent. 2. Major New Developments
There is currently policy support for locating new waste management facilities (including energy recovery from waste biomass) in areas of major new development. Policy S16 - Location of
Waste Management states:
All areas of major new development, including those on greenfield and brownfield land, and especially those containing new or redeveloping employment land, should accommodate an appropriate proportion of the waste management capacity for recycling, composting or recovery and
treatment set out in Policy S526.
Strategic facilities, shall be located within the North East Hampshire or South Hampshire areas shown on the Key Diagram.
Policy S16 indicates that there is likely to be strong policy support for facilities for the reception, storage and treatment (including specialist facilities where appropriate) in rural areas and areas of major new development therefore.
It is important that these policies are taken into consideration during the masterplanning stages of major new developments planned for the PUSH area (it is currently policy to locate strategic facilities in South Hampshire (policy S16)).
A Renewable Energy Study for Winchester District Development Framework has been published which may be of interest27. Hampshire’s Waste & Resource Management section have been
involved in the Whitehill / Bordon opportunity with regards to planning for new waste facilities at that location (although this is not in the PUSH area). A topic paper has recently been prepared for the North of Fareham SDA, and the Borough Council is currently responding to a recent consultation on this28.
Finally PUSH have developed Sustainable Development SPD Guidance 2009 which includes policy guidance on biomass CHP29.
3. Applications for waste management developments
As part of the Hampshire Minerals & Waste Framework, plans are being developed to include specific sites allocations for waste management. This is likely to focus on ‘strategic’ sites and therefore the Core Strategy includes a development control policy to evaluate those proposals that will not be included within the plan (see DC13 below).
This policy emphasises a preference towards the reuse of redundant agricultural and forestry buildings, and locating developments within areas of planned large-scale development. Sites should also have good access to the minerals and waste lorry route (normally defined as one within two kilometres of that network).
DC13 - Waste Management and Recycling (including Aggregate Recycling Facilities) Waste management developments (excluding landfill) will be permitted provided that the site:
a. Is identified as a site, or within an area suitable for waste management uses, in the Hampshire Waste Management Plan or Minerals Plans, or
b. Re-uses/redevelops previously developed land and/or redundant agricultural and forestry buildings (including their curtilages), or
c. Is within a planned area of large-scale development, or
d. Is on employment land, preferably co-located with complementary activities, and
e. Has good access to, the minerals and waste lorry route as shown on the Key Diagram, and where possible, the site enables the use of water-borne and rail freight, and
f. In the case of recovery and treatment sites, incoming waste shall be subject to pre-treatment, either on or off site to maximise the potential for recycling, and where technically possible, energy will be generated and used and the by-products, including heat, will be reused or recycled, and g. In the case of sites providing public access, the site shall be accessible for use by disabled people.
As part of the Hampshire Minerals and Waste Development Framework, a substantial amount of work was undertaken during 2006/07 to appraise potential sites, which we published for comment as "Issues & Options" Sites Discussion Papers (September 2006, with a revised version May 2007). These sites were drawn from various sources but primarily nominations from landowners and the minerals and waste industries.
Whilst we are continuing to explore opportunities across the county, please find below a table showing sites in or around the PUSH area30 which may fit the site requirements. Full details of
these sites by district (including locate maps) are online at:
http://www3.hants.gov.uk/planning/mineralsandwaste/planning-policy/documents-2/minerals- plan/previous-min-plan-work/reg25-mineral.htm#sitesbydistrict
Also on this website (see ‘Schedule of Problematic sites’ for each authority) is a list of sites that will not be considered further at this stage (these ‘problematic waste sites’ may have been deemed too small). However it may be worth revisiting these sites for this technology. Also, there are sites which have been ruled out at earlier stages where they were withdrawn by the promoter which may be of interest.
Site
Site Area (ha) Issues
Botley Road Site, West End :
Eastleigh Borough Council 1.2 Site is within a Strategic Gap. Within 100m of SSSI. 120m from residential. Access may be difficult. Charity Farm, 127 Wickham
Road, Fareham : Fareham
Borough Council 1.2
Rural landscape (but located within proposed SDA). Site overlies a major aquifer. A32 access - high risk route.
Quay Lane : Gosport
Borough Council 1.4
Adj SSSI/SPA/Ramsar.Adj to CA. Adj to river and part of site is FRZ2. Adj to residential. Difficult access. Totton Yard, Totton : New
Forest District Council 1.3 Visible from adj residential. 350m from SAC/SPA/Ramsar/SSSI. Site is located within an AQMA. Most of site is within FRZ2 and FRZ3 runs along the boundary.
Fratton Freight Site,
Portsmouth : Portsmouth City
Council 0.9
Located near AQMA. 50m from residential. 800m from suitable connecting road. EXISTING RAIL DEPOT. Naval Dockyard, Portsmouth
1.34 Site is adjacent to a AQMA. Residential 190m. Water access. Whites Wharf, Hazel Road,
Woolston, Southampton:
Southampton City Council 0.4
Adj to SSSI/SPA/Ramsar and 60m from SINC (site is exceptionally sensitive). Adj to river. Whole site is in