HomeRenewablesBiomassDrax offers to end coal burning in return for green subsidies

Drax offers to end coal burning in return for green subsidies

The head of Drax Group, Dorothy Thompson, says they are willing to accelerate the closure of its coal-fired power units in return for green energy subsidies to help develop its biomass power facilities.

Ms Thompson told the Financial Times, the company would be unable to transform the rest of the plant from coal to biomass without the subsidies, but could if offered the incentives, be in a position to close its coal capability inside three years.
Dorothy Thompson of Drax
“We have project plans that we could execute within three years, so you could take our coal units off the system by 2020 if not before,” Ms Thompson said in an interview ahead of Drax’s annual shareholder meeting on Wednesday.

The company has already turned its 42-year-old Selby power station into one of the world’s biggest renewable generators over the past four years, by upgrading nearly half its six coal-fired boilers to burn wood pellets, mostly imported from the US.

But it has only done this after receiving subsidies and other support worth à‚£451.8m in 2015, or 17 per cent of revenues at the power plant, which supplies about 8 per cent of the UK’s electricity.

The company has suffered from government policy as it bids to move away from coal. When a climate change tax was applied to renewable generators, Ms Thompson likened it to “putting an alcohol tax on apple juice”.

Ms Thompson says switching Drax’s remaining three coal boilers to wood would be impossible unless the company receives more of a newer type of subsidy structured as a contract for difference, or CFD, that guarantees long-term power prices for renewable power companies.

Drax was awarded one CFD contract for its third boiler conversion two years ago but is still awaiting state aid approval for it, a delay Ms Thompson says is “shocking”.

Approval is widely expected because Brussels waved through support in December for a coal-to-wood pellet conversion at the smaller Lynemouth power station.