The UK government will not introduce a successor support scheme for small-scale biomass generators after their existing Renewable Obligation (RO) support expires, affecting renewable electricity facilities below 100 MW, including anaerobic digestion, sewage gas and energy-from-waste plants.
Energy Minister Michael Shanks confirmed the decision as the government prepares for RO support to phase out between 2027 and 2037, prompting criticism from the Renewable Energy Association (REA) over the treatment of biomass facilities that also provide waste-management and circular-economy services.
Government sees limited impact on generation capacity
The decision follows advice from the National Energy System Operator (NESO) on the expected impact of RO support ending.
NESO concluded that the reduction in generation capacity resulting from the expiry of support would be relatively small and could be managed through existing market mechanisms.
The government has therefore ruled out establishing a replacement financial support mechanism for the affected biomass generators.
The decision applies across a range of small-scale renewable and waste-derived generation technologies, rather than being limited to conventional biomass combustion.
Biomass sector faces support gap after RO
The Renewable Obligation has provided support for eligible renewable electricity generation, but its remaining support periods are already scheduled to expire over the 2027–2037 period.
The latest decision means operators of affected biomass facilities will have to operate without a dedicated successor mechanism once their individual RO support ends.
For plants with established feedstock supply chains and existing infrastructure, the change creates a transition towards relying more heavily on electricity-market revenues rather than a replacement renewable support framework.
REA warns of wider role of biomass plants
The Renewable Energy Association said it was disappointed that the government had decided against a successor scheme.
The organisation argued that some biomass facilities deliver benefits that extend beyond electricity generation, particularly where plants process materials that would otherwise require alternative waste-disposal routes.
The REA stated, “While we recognise that Government has considered some of the wider benefits of these plants, we are concerned that the decision does not adequately reflect the role many play in the circular economy and in providing essential waste-management capacity.”
Waste-derived feedstocks add to the policy debate
A significant part of the industry’s argument centres on the feedstocks used by some biomass facilities.
According to the REA, plants process waste wood and agricultural residues such as poultry litter, providing electricity while managing materials for which alternative disposal can be expensive for farmers, businesses and local authorities.
This creates a policy question beyond the amount of renewable electricity that could be lost when RO support expires. Facilities processing waste and agricultural residues can simultaneously provide energy generation and waste-management services.
The REA said that, “Many biomass plants use waste wood and agricultural residues such as poultry litter, providing low-carbon, reliable energy while dealing with materials for which alternative disposal routes can be costly for farmers, businesses and local authorities.”
Small-scale biomass enters a new market environment
The government’s position places greater emphasis on the ability of affected generators to operate within the electricity market after their RO support expires.
For anaerobic digestion, sewage gas and energy-from-waste facilities, the commercial outlook can also depend on factors beyond power generation, including access to feedstocks and the economics of waste treatment.
The absence of a successor scheme therefore shifts the policy debate towards whether market revenues adequately recognise the multiple services provided by certain biomass facilities.
Bioenergy Business Analysis
The UK’s decision marks a significant change in the support landscape for small-scale biomass power, particularly for facilities whose economics have historically combined renewable electricity generation with waste management. While NESO considers the overall generation impact of RO expiry manageable, that assessment does not necessarily capture the economic value of individual plants or the cost of alternative waste-disposal routes.
For the bioenergy sector, the key issue will be whether existing market revenues can sustain facilities once their RO support expires. The outcome could be particularly important for plants using waste wood, agricultural residues and other difficult-to-dispose feedstocks, where the value of the facility extends beyond electricity production.
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