Biomass fuel supply agreements
Produced in partnership with Kate Turner of Pinsent Masons
Biomass fuel supply agreements

The following Energy guidance note Produced in partnership with Kate Turner of Pinsent Masons provides comprehensive and up to date legal information covering:

  • Biomass fuel supply agreements
  • Biomass fuel
  • What is a fuel supply agreement?
  • Key risks to consider
  • Project lenders

Biomass fuel

Biomass is a generic term for organic material derived from plants or plant derived materials used to produce heat, electricity or transport fuel. Biomass as a fuel for power/heat generation projects involves using biological material from, for example:

  1. waste and clean/recycled wood

  2. specifically grown energy crops (such as miscanthus)

  3. residues from forestry/agriculture

To be economically viable, the developer of a generation plant using biomass as its principle fuel source should have in place one or more reliable biomass fuel supply agreements.

What is a fuel supply agreement?

The fuel supply agreement is one of the key contracts a developer will enter into as part of its project procurement process. Depending on the project, a fuel supply agreement might have a term of up to ten years. It is unlikely that suppliers will offer a term longer than ten years and in practice, supply agreements more often have a shorter term than this. As a result, it is important that the parties to the agreement carefully consider how it should operate.

The parties to a fuel supply agreement generally are the:

  1. plant developer/operator and

  2. fuel supplier

Securing a reliable supply of fuel is fundamental to the success of any biomass project. A clear and detailed fuel supply agreement can help ensure that the developer's plant runs continuously