While the government has said it supports biomass as a part of the UK's energy mix, its recent proposals for changing the Renewables Obligation (RO) support mechanism appear to favour co-firing and coal conversion to biomass.
Centrica, which is withdrawing its proposals for two dedicated biomass power stations at Roosecote in Barrow-in-Furness and Glanford Brigg in North Lincolnshire, is concerned about government plans to reduce Renewable Obligation Certificates (ROCs) for such plants and cap new build plants at 500 MW.
Biomass plants also now have to meet new sustainability criteria, to ensure that wood fuel comes from sustainably managed forests, and are likely to be excluded from the new capacity mechanism that the government will introduce under the forthcoming Energy Bill.
Centrica's 137 MW biomass power station at Brigg and 80 MW plant at Roosecote will now not proceed, while the existing gas-fired power station on the same site will be withdrawn from service until a decision has been made about its future.
Earlier this year, Drax announced that it was dropping plans for two new biomass plants but had been looking at a new site on Humberside.
According to reports, those plans are now on hold once again and the company is looking instead to convert half of its existing 4000 MW coal-fired power plant at Selby in North Yorkshire to biomass.
The decision to focus on conversion rather than new plants is being driven by new European legislation limiting emissions from large fossil fuel generators, as well as UK policies.
But Gaynor Hartnell, chief executive of the Renewable Energy Association (REA), warns that the UK cannot afford to allow companies like Centrica to drop out of the biomass sector.
"With a capacity crunch looming in 2015, Government should be doing its utmost to encourage such shovel-ready projects," she says. "Biomass is an economic and baseload source of renewable power. This is bad news for employment, the supply chain and energy security."
She is calling on the government to overcome its "institutional bias" against biomass and repair investor confidence in the sector.