Small biomass power plants in the UK are facing an uncertain future after the government confirmed that it will not provide replacement subsidies when existing Renewable Obligation support expires from 2027.
The decision could put pressure on facilities that generate electricity from biomass while also processing millions of tonnes of waste wood each year. Industry representatives have warned that the loss of financial support could make some plants uneconomic and create additional challenges for the UK’s waste-wood management system.
The Department for Energy Security & Net Zero (DESNZ) has said the government considers the decision appropriate because small-scale biomass generation is relatively expensive compared with other electricity generation technologies.
The Renewable Obligation scheme, which has been closed to new entrants for almost a decade, is scheduled to begin reaching the end of its subsidy commitments from April 2027. The expiry dates will vary between facilities, with different plants losing support at different points over the following decade.
In a letter to the energy committee, energy minister Michael Shanks confirmed that the government does not intend to establish a successor subsidy mechanism for the affected biomass assets.
Shanks said he was “confident that this is the right approach for UK billpayers”, citing the comparatively high cost of small-scale biomass electricity generation.
The government’s position effectively leaves operators to determine whether their facilities can remain commercially viable without the existing Renewable Obligation payments.
The decision has prompted criticism from parts of the biomass and waste-management sector.
Richard Coulson, biomass lead at the Wood Recyclers’ Association board, described the government’s position as “baffling” and argued that biomass plants provide an important domestic outlet for waste wood.
Millions of tonnes of waste wood are processed by facilities across the UK each year, and Coulson warned that removing support could affect how this material is managed.
“Without support for these facilities, material will have to be exported or sent to landfill or worse — could end up being dumped or sent to illegal waste sites,” he said.
Coulson also argued that the role of biomass facilities should not be assessed solely according to their electricity output.
“Our fundamental concern is that Government is looking at biomass primarily through an energy-policy lens rather than considering its interconnected role across energy, waste and resources. The contribution of these plants cannot simply be measured in Megawatts.”
The comments highlight the link between biomass electricity generation and the UK’s waste-management infrastructure. Facilities using waste wood can provide an outlet for material that would otherwise require alternative forms of treatment or disposal.
DESNZ has defended the decision on the grounds of consumer costs.
A department spokeswoman said the Renewable Obligation was designed as a time-limited scheme and that the industry had been aware from the outset that support would last for 20 to 25 years.
“Any potential subsidy must demonstrate it provides value for money to billpayers, and keeping bills down for consumers is essential to every decision we make,” she said.
The government’s argument therefore centres on the cost of continued support, while industry criticism focuses on the wider services provided by biomass facilities beyond electricity generation. The difference in perspective could become increasingly important as individual plants approach the end of their existing subsidy periods.
The withdrawal of successor support creates a commercial challenge for plants that have operated under a subsidy framework for much of their working lives.
For operators, the issue is no longer simply whether a facility can generate electricity, but whether it can continue doing so while maintaining its role in waste-wood management without the existing Renewable Obligation income.
The source material does not specify how many facilities could close, nor does it provide details of individual plants’ operating costs or revenues. The eventual impact will therefore vary between facilities.
With Renewable Obligation payments beginning to expire from April 2027 and individual facilities reaching the end of support at different times, the UK biomass sector is entering a period of transition.
The government has ruled out a successor subsidy scheme for these plants, while industry representatives continue to warn about potential closures and consequences for waste-wood management. The coming years will show how many facilities can remain operational without the existing support framework.
Bioenergy Business Analysis
The UK’s decision illustrates a broader tension in biomass policy: electricity generation is only one part of the value provided by some biomass facilities. Where plants use waste wood, their economics are connected to the waste and resource-management sectors as well as the power market.
The absence of a successor subsidy also puts greater emphasis on the commercial resilience of individual facilities. Plants approaching the end of Renewable Obligation support will need to operate under market conditions without a replacement mechanism specifically confirmed for these assets.
For policymakers, the key issue is whether the cost of supporting biomass electricity should be assessed independently from the waste-management services associated with certain facilities. For the industry, the outcome could depend on whether those wider services are recognised elsewhere in the policy and commercial framework.
Read also: UK ends successor support for small-scale biomass
