“Open Letter Of Concern” to OFGEM

We have still not received a proper explanation from the energy regulator Ofgem as to why this incinerator (awarded planning permission in 2015) should be allowed to use the subsidy accreditation given to the different ‘2010’ plant that was never built. Below is the letter we have sent directly to Ofgem.

The Docks Incinerator Action Group
c//o “The Court” Mount Pleasant
Barry Vale of Glamorgan
CF63 4HE
19th April 2018

Amy Humphrey
The Office of Gas and Electricity Markets
9 Millbank

Dear Sirs,

We are writing to offer a view on and to request an investigation into the application by Biomass UK No2 Ltd seeking accreditation for Renewable Obligation Certificates (ROCs) in respect of the wood gasification plant recently constructed at David Davies Road/Woodham Road, Barry.

We have had a close look at the history related to this development including considering the notice of intent and supporting documents. We would therefore like to draw Ofgem’s attention to the fact that we believe the notice of intent on which the application is based is for a generator that is different from the one now built. The overall history of this matter is such that we would question whether the company is entitled to receive public money for ROCs.

In coming to this conclusion, we have considered first of all the original notice of intent and then the later application claiming that commissioning is complete.

The differences between the circumstances that existed at the time of the notice of intent submitted in September 2014 and the actual development that took place are stark. We believe that the notice of intent cannot be treated as applying to the construction of the plant which Biomass UK No2 Ltd claims to have commissioned in March 2018. If OFGEM were to accredit that plant for ROCs, it would be failing to apply the regulations fully/accurately. We list those matters relevant to distinguishing the 2014 proposal with the actual development, to show that they cannot be one and the same or even a variation on a theme.

Further we note the explanation given in the House by The Minister of State, Department of Energy and Climate Change (Michael Fallon) when he explained that:

The Government have consulted on grace periods for developers able to demonstrate substantial financial decisions and investments by the end of July

2014, in relation to renewable electricity projects that are expected to commission before the end of March 2017. (our emphasis)

This, we would submit, gives a very big clue as to the rationale behind the grace periods and that lack of investment is a point against preliminary accreditation as would abandoning of a project previously in place and on which a notice of intent might be based. A new project after the window for serving a notice of intent was never intended to be rewarded with ROCs.

The first plant that was proposed:

  • Was designed to have a 9 MWe capacity whereas the generator constructed has a capacity of 10 MWe . This is an increase and the regulations required current generators that wished to increase their capacity to make application. This would be, at the very least, a pointer towards the regulations not allowing increased capacity between registration and commissioning. It is just one of many significant differences to demonstrate the two are different projects and not variations on the same theme;
  • Relied upon a Grid Connection Offer for 9 MWe capacity whereas the present generator is designed for 10 MWe capacity. For reasons we will expand on below, the offer to connect may not have been an offer the applicant ever intended to accept, it may have been more in the nature of a sham as it was not expected at the relevant time that the 9MWe generator would proceed;
  • Relied upon a planning permission that no longer exists and has no relevance to the existing generator. On 9th September 2014, the applicant submitted an application to vary the planning permission, thereby demonstrating that the plant that was eventually built was not in contemplation at that time. The applicant seems to have accepted that a new planning permission was needed for a different project during the window for submitting a notice of intent (or earlier) and either should not have relied on the old permission when submitting its supporting papers or should have updated OFGEM during the period which would or should have resulted in a failed application;
  • It is unlikely that at the time of the application the applicant had in place an offer such that it could properly declare that following receipt of the confirmation referred to in paragraph (9)(b) of the Regulation the person submitting the notice will have access to sufficient resources to commission the station. Our reason for asserting this is that it seems quite clear that the applicant was unable to obtain funding for the plant subject of the planning permission relied upon hence the application for a new planning permission for a different project submitted quite soon after;
  • Could, in truth, have no expectation that it could be commissioned on or before 31st March 2017. The plant was not going to be built. Any alternative plant would not have a chance of being commissioned by that date;
  • The original design/planning permission allowed the incinerator to burn 72K tonnes of waste wood per annum for fuel whereas the present unit permits 86K tonnes of waste wood as fuel. These figures tend to be obfuscated by the applicant but the planning variation dated 9th September 2014 included a request to increase the amount of fuel to 86k tonnes. The application was withdrawn and the increase never authorised. An increase of 20% assists to demonstrate the fact of a new project as the increase is more than a mere variation;
  • The plant that was built has a stack that was over twice the height of the first one proposed, used a different technology for combustion of syngas, had larger buildings and footprint, used 20% more fuel, increased emissions to air, has the capacity to produce more electricity and appears to be less efficient. It is little wonder that the new plant meant a new planning application needed to be submitted as it was so clearly not a variation on the 2010 permission. This is considered to be significant evidence in support of the contention that this is in fact a different project albeit it happens to be sited

For all the above reasons, we ask that the application made in September 2014 is reviewed with the intention of checking whether it did satisfy all of the qualifying conditions so as to be granted preliminary accreditation.

The planning permission from 2010 contained pre-conditions that were never satisfied and simply expired through effluxion of time. Work did not begin on that application.

The outline planning consent for the present (built) plant was granted on the 31st July 2015 – some 10 months after the application for preliminary accreditation. This application for outline planning permission was originally dated 9th December 2014 but registered by the Council on the 5 February 2015 with outline planning permission granted on the 31st July 2015.

The outline permission granted on the 31st July 2015 also contains pre-conditions that have not been satisfied. There is still outstanding an application for full planning permission that is linked to the pre-conditions and which extends the site of the plant. There are unsatisfied pre-conditions that prevent occupation by the applicant.

We have noted the firm warning given by OFGEM that no material supplied after the window of opportunity will be accepted. The point was made by OFGEM that it has no power to entertain material after the cut-off date. However, it would appear that OFGEM is considering an application on behalf of Biomass UK No 2 Ltd to accredit this second development for ROCs. We would appreciate it if you could kindly confirm how this has come about bearing in mind that our reading of the regulations suggests this is not possible in the circumstances that exist as we understand them.

On the basis that further representations might need to be made in respect of the plant that is built we offer the following:

  • It is clear that the Grid Connection Offer lodged with OFGEM has no relevance to the plant that is built as the connection could not have been made by 31st March 2017. The letter for a grid connection lodged with OFGEM made it clear that instructions were needed by the 30th September 2015 in order to comply with the 31st March 2017 deadline and the history of this project makes it clear that the dates could not be met. The Grid Connection letters ought therefore be rejected leaving the application incomplete;
  • As of 31st March 2018, the planning permission for the plant was incomplete. An application is still pending with the Vale of Glamorgan Council and the plant cannot legally operate unless and until further permission is granted. The planning permission lodged with OFGEM ought therefore be rejected leaving the application incomplete;
  • Commissioning in relation to a generating station means the completion of such procedures and tests in relation to that station as constitute, at the time they are undertaken, the usual industry standards and practices for commissioning that type of generating station in order to demonstrate that that generating station is capable of commercial operation. In order to demonstrate this, it is necessary that the plant makes use of the fuel that it will rely upon to demonstrate commercial operation. Any other fuel fails to demonstrate this. It is understood that to demonstrate commissioning the applicant made use of temporary diesel generators and completely failed to demonstrate any form of ability to operate on waste wood. The plant has not therefore demonstrated that it is capable of commercial operation. The Renewable Obligation Order 2009, Part I, Section 11 defines “accreditation”, in relation to a generating station as “one which is capable of generating electricity from renewable sources.” The use of diesel only to support accreditation is not permissible to claim the plant is capable of generating electricity from renewable sources;
  • Natural Resources Wales describes the work carried out recently in its update1 on the 16th March 2018 as “After this testing is completed, we understand there   will be a long period of plant preparation and testing ahead of first waste wood firing. Further details of what to expect will be provided ahead of this     final commissioning phase.” – The document also confirms that testing involved the use of diesel. This adds to the concern that commissioning as defined in the relevant legislation has not occurred and is not expected to take place for ‘a long period’. Natural Resources Wales makes it clear that the commissioning is being phased and that the final and, some would say crucial phase, is not going to occur for ‘a long period’. If OFGEM accepts the plant as built is capable of commercial operation then we would suggest the rules would appear to have been broken to achieve this. Where significant amounts of public money is at stake actual compliance with the Regulations is essential.

We understand that once the window for applications closed in 2014, there was no power in OFGEM to receive further material in respect of any application. It would seem to follow that there was therefore no power to substitute a different project. We say substitute rather than vary as the planning consent on which the construction of the plant was based was granted after the deadline for submitting a notice of intent under the Renewables Closure Order 2014 had passed. The differences between the two plants are not insignificant. Indeed, the applicant appears to have accepted that the original planning consent could not be varied to allow the second plant to be built, a completely new application was needed for what has to be a new project.

We hope that you will carefully examine all of the matters we have raised including looking into the way in which OFGEM appears to be considering an application for ROCs that either lapsed through failure to develop or somehow was submitted/varied (if indeed it qualifies as an application submitted) well outside the period allowed by the Renewables Closure Order 2014.

The planning consent on which the construction of the plant was based and the environmental permit granted by Natural Resources Wales were granted AFTER the deadline for submitting a notice of intent under the Renewables Closure Order 2014 had passed. On its own this appears to raise significant issues in relation to whether there was a preliminary accreditation actually in place.

If you need copies of any documents to support or check matters raised above or any matters on which OFGEM believes more assistance may be given then please let us know as we will do all we can to assist OFGEM to ensure that public money is only spent in circumstances permitted by legislation.

In summary we believe that the notice of intent submitted in 2014 should not be considered as meeting the requirements for ROCs accreditation either in 2014 or in 2018 under the Renewables Obligation Closure Order 2014.

We look forward to hearing from you.

Docks Incinerator Action Group

Dermot Nolan, chief executive officer, OFGEM Jane Hutt AM
Alun Cairns MP Secretary of State for Wales
Andrew RT Davies AM
Simon Thomas AM

ref: 1 https://naturalresources.wales/media/684423/barry-biomass-commissioning-faq-english.pdf