- The government will not replace Renewables Obligation support for biomass generators below 100 MW when their accreditation expires.
- Melton Renewable Energy says its five plants, which process more than 600,000 tonnes of poultry litter annually, will become uneconomic without a transitional mechanism.
- The decision exposes a wider policy challenge as 5.1 GW of renewable capacity leaves RO support by 2027 and almost 35 GW rolls off by 2037.
Five UK biomass plants face closure from April 2027 after the government ruled out successor subsidies for smaller generators reaching the end of their Renewables Obligation (RO) support.
Energy minister Michael Shanks told the Energy Security and Net Zero Committee that continued support for biomass assets below 100 MW would not offer sufficient value for money. The category includes dedicated biomass, combined heat and power, energy from waste, sewage gas, anaerobic digestion and advanced conversion technologies.
“The government does not intend to introduce successor subsidy support for these assets,” Shanks said in a letter published earlier this month.
The government concluded that the affected capacity is small in electricity system terms. The National Energy System Operator (NESO) does not expect its removal to create unmanageable security-of-supply risks under central scenarios, while anticipated closures are already reflected in Capacity Market procurement and system planning.
Shanks also argued that generators had known the length of their support periods since accreditation. RO payments will begin expiring in 2027, with later projects retaining support until 2037.
Melton Renewable Energy, the UK’s largest processor of poultry litter, says the decision will make its five power plants uneconomic. The company previously told Parliament that it expected to begin consulting on closures and redundancies in December 2026.
The plants process more than 600,000 tonnes of poultry litter a year and provide what Melton describes as the country’s only large-scale disposal route for the material. Its customers include Pilgrim’s, Moy Park and 2 Agriculture.
In written evidence to MPs, chief executive Eddie Wilkinson warned that closure could increase land spreading of untreated litter, raising risks to water quality, nutrient management and poultry sector biosecurity.
The Wood Recyclers’ Association has raised a parallel concern about waste wood plants. It argues that material currently used for energy could instead be exported, landfilled or enter illegal waste streams. The government says established environmental regulation is available and that there is no evidence alternative disposal routes cannot be found.
Cliff edge for ageing renewables
The dispute illustrates the difficulty of assessing multi-purpose energy assets through power market value alone. Poultry litter and waste wood plants may provide dispatchable generation, but they also perform waste-treatment functions whose benefits and costs sit outside the electricity system.
That does not automatically justify extending their existing subsidies. Small biomass plants have different efficiencies, emissions profiles, feedstocks and local environmental effects. A blanket successor scheme could preserve expensive or poor-performing capacity long after its original investment had been recovered.
The decision also arrives as the UK approaches a much larger renewable support transition. Renewables Obligation projects currently provide more than 30% of UK electricity. Around 5.1 GW is expected to leave support by 2027, a further 4.7 GW by 2031 and another 25 GW by 2037, according to an Energy UK analysis.
Cornwall Insight estimates that nearly 30 GW of operational capacity will begin reaching the end of subsidy arrangements from March 2027. Some plants and wind or solar farms will operate profitably on wholesale revenues or secure power purchase agreements; others will require refurbishment, repowering or a different revenue model.
The government is considering wholesale Contracts for Difference to reduce price exposure for existing generators, although the proposal is not designed as a direct replacement for expired RO certificates. Repowering can also give some onshore wind projects access to the main CfD scheme.
Small biomass requires a more targeted answer. Government should assess individual plants against the cost of replacement power, dispatchability, verified emissions and the value of the waste service they provide. Support, where justified, could then be tied to those outcomes rather than historical generation volumes.
The immediate issue is five threatened plants. The strategic issue is whether the UK has a controlled process for retaining, repowering or retiring an ageing renewable fleet.
