New subsidy levels raise uncertainty for Drax biomass project

• 12 years ago (2011-11-15)
• Junior Isles

Europe 1061 Renewables 752

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Drax Group, operator of the UK’s largest power plant, may not carry out its plans to build two green energy biomass projects due to the new state aid level for biomass being too low.

Drax had already received governmental approval in August for its plans to build two 299 MW biomass-fired power plants in Yorkshire and North Lincolnshire to diversify its power generation portfolio into greener energy sources. But these projects are now in doubt as Drax is reconsidering in light of the “disappointing” proposed subsidy levels.

"[The proposed subsidy level] makes the investment case for our planned dedicated biomass developments highly challenging," Drax said in its recent interim management statement.

Last month, the UK government proposed changes for subsidies to dedicated biomass power plants, among others, suggesting only 1.5 Renewable Obligations Certificate (ROC) reward per MWh produced.

Drax is currently discussing internally which ROC level it would need to develop its biomass plants, a spokeswoman has said.

The current subsidy revision proposal is subject to a consultation period which ends on Jan. 12, 2012.

Drax has also said the revised state aid levels for co-firing biomass were high enough to encourage more coal and biomass co-firing at its power plants, though.

The power generator recently forecast full-year earnings to reach the top end of market expectations due to high power plant reliability and more stable conditions in the commodities market.