Energy Minister Michael Shanks has confirmed the UK government will withdraw financial support for small-scale biomass generators once their current Renewable Obligation (RO) period ends, drawing criticism from industry groups over what they argue is a dismissal of circular economy benefits.
The decision applies to all installations under 100 MW capacity, including anaerobic digestion, sewage gas, and energy-from-waste facilities. Existing RO support will phase out gradually between next year and 2037, with no successor scheme planned.
The Department for Energy Security and Net Zero argued that continued backing does not represent value for money for billpayers relative to the power system contributions these assets provide. The National Energy System Operator (NESO) had advised government that the capacity reductions expected post-RO expiry are small and manageable within current market frameworks.
The decision has prompted strong pushback from trade bodies. The Renewable Energy Association (REA) called the withdrawal short-sighted, arguing it overlooks the wider circular economy and waste management benefits of regional biomass infrastructure.
The Wood Recyclers' Association also weighed in, noting previous concerns that losing these outlets could disrupt UK waste wood processing. The loss of secured revenue streams could render smaller installations uneconomic, forcing closures even where viable feedstock remains available.
For operators, the timeline is tight. With RO expiry dates beginning next year and stretching to 2037, installation owners must now reassess viability under market-only economics. Some facilities may continue operating profitably on wholesale rates; others—particularly those with higher operating costs or geographic disadvantages—face difficult decisions about investment and retention.
The decision reflects government's broader pivot away from subsidy-dependent renewable models toward market-based mechanisms, though critics argue small-scale biomass and waste energy assets operate in market conditions fundamentally different from utility-scale renewables.
More detail on the specific RO expiry timeline and alternative support frameworks under consideration will emerge as DEFRA clarifies implementation.
