The recent announcement of the introduction of the long-awaited Renewable Heat Incentive (RHI) has been welcomed by a broad range of stakeholders, especially in the renewable energy sector. “This is a very welcome development for the bioenergy sector in Ireland, one that has been stagnant for almost five years since 2013 whereby many Irish companies have subsequently gone out of business,” said Ger Devlin, CEO of the Irish Bioenergy Association (IrBEA).

“There will be new opportunities now to stimulate growth for those businesses in the biomass supply side and indeed the biomass technology providers,” he maintained.

In relation to the wood biomass aspects of the scheme, the IFA emphasised the importance of sourcing raw material from indigenous biomass. Importing biomass products defeats the purpose of the scheme as outlined by James Murphy, chair of IFA renewables project, who expressed “concern that imported biomass will benefit from the scheme”.

So, has Ireland sufficient wood biomass to supply the wood energy sector, as well as the highly successful timber processing industry?

Wood biomass for energy generation is sourced from small logs, usually from early thinnings, as well as residue (chips and sawdust) during timber processing. Wood energy has to compete with processors who manufacture panelboard products from the same raw material. These are Masonite, Carrick-on-Shannon, and two Coillte Medite Smartply plants in Clonmel and Waterford port. In addition, sawmills which maximise wood products, such as fencing and packaging, can process some of the better-quality thinning material.

Timber forecast

Total timber production is forecast to almost double over the next three decades, from 3.96m m3 at present to 7.87m m3 in 2035 (Table 1), so in theory there will be sufficient biomass for energy production.

However, volume production in small log sizes (a diameter of 7cm to 13cm) will remain static. The big increases are in medium (14cm to 19cm) and larger sawlog (20cm+).

Two questions arise from the data produced in Table 1. First, will the forecasted increases reach the marketplace and second, how much of this increased biomass will make its way into the wood energy sector?

Almost all of the volume increase is expected to come from the private forest sector and, so far, supply from private growers has failed to match forecasts. This may change as forest producer groups, buyers from sawmills and panelboard mills and now energy suppliers increasingly target private growers for logs, but will supply be sufficient to satisfy demand? If not, the sector may rely on imported biomass, like Denmark, the leader in bioenergy. The only difference is that the Danes can import low-cost biomass from Sweden, a country with over 70% of its land area under forest. Ireland will have to go much further to source biomass if indigenous supply falls short.

How much biomass will make its way into the wood energy sector is one of the great unknowns. For example, if 6.1m m3 of timber is mobilised in 2025, according to the forecast (Table 1), the energy and panelboard sectors will fight it out for 1.24m m3 of small logs and the residue from medium and large sawlog, which will be approximately 2.3m m3.

When logs are cut into sawn products (construction, fencing and pallet) approximately 46% ends up as residue – wood chips, sawdust, bark mulch – which is made available for panelboard production, energy and other uses including bedding for livestock and garden mulch. The fear among timber processors is that the RHI might become so attractive that a subsidised wood energy sector will end up outbidding timber processors for logs suitable as sawn or engineered wood products.

However, the pressure is on to reduce fossil fuels so that Ireland can meet long-term renewable energy and emission reduction targets which it has failed miserably to do so far. “At present, only 6.8% of energy consumed in the heat sector is renewable and Ireland will most likely fall short on its binding 16% EU renewable energy target for 2020,” said Ibec’s senior energy policy executive Conor Minogue.

So far, Coillte and the sawmills believe that a successful RHI won’t negatively affect their log supply. Coillte has “broadly welcome the announcement of the RHI scheme details”. Des O’Toole, the company’s biomass manager, believes that the bioenergy sector has significant potential in Ireland but has seen limited growth in the last five years.

“This is due to low fossil fuel rates and delays in the introduction of a suitable support mechanism,” he maintained. “With the announcement of the RHI details, the industry now has a stimulus to encourage new capital investment in the sector.”

Regional supply hubs

He believes the RHI will underpin the formation of regional supply hubs, which will stimulate local economic activity and support local employment through the entire supply chain while contributing to Ireland’s national renewable energy targets. “It can be expected that the growth of a renewable heat sector would help the biomass energy supply chain to stimulate regional demand for forest thinning’s, energy crops and other biomass,” he said. “In terms of the future, there is great potential to provide energy savings and carbon emissions reductions.”

One of the reasons why stakeholders like Coillte, the sawmills and panelboard manufacturers don’t fear excessive competition arising from the RHI may be due to some limitations in the scheme as pointed out by Ger Devlin. “The tiered rates are generally positive but they do not favour the larger-type installations offering a subsidy of only 0.05c/kWh, which is where the biggest opportunity exists to close the gap in the renewable heat target,” he said.

“The scheme will support the adoption of renewable heating systems by commercial, industrial, district heating and other non-domestic heat users at sites not covered by the emissions trading scheme.

‘‘There are also installation grants available – up to 30% for the installation of heat pumps. A separate budget would be favoured for such a grant scheme.”

The scheme is designed to benefit small to medium businesses such as pig and poultry farmers, nursing homes, hotels and leisure centres which will receive up to 5.66c/kWh. This will also benefit providers of wood chips such as McCauley Wood Fuels, Mohill. These will now be in a position to expand their businesses according to Kenny McCauley when the scheme finally receives EU state aid approval in 2018.