Drax Stalls Biomass Facility at U.K.'s Largest Coal Plant

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K's largest coal-fired power station will not contain a biomass plant on the site, following a decision by Drax Group plc (LSE:DRX) (Selby, England) to stall the project.

The company has already invested £80 million ($124 million) to build a biomass plant at the 4,000-megawatt power plant in North Yorkshire, which generates enough electricity for more than six million homes. However, the company has decided not to implement the station fully in protest against poor support from the government for biomass projects. In addition, the company also has threatened that it may not proceed with a planned £2 billion ($3.1 billion) investment in three more biomass projects. For additional information, see related November 4, 2008, news article - Drax Investing $3.3 Billion in Three Biomass-Fed Power Stations.

The biomass facility at what is the country's largest polluter would have allowed Drax to reduce its CO2 emissions by up to 3.5 million tonnes, or 17.5%, a year. If Drax does not fully implement the biomass facility, it will jeopardise the U.K.'s ability to reach its European Union obligations for reducing emissions.

Drax has claimed that under the current government scheme, it is cheaper for the plant to burn coal and buy extra carbon credits from the European Trading Scheme (ETS) than to burn biomass.

"We are not confident that the [subsidy] regime for what is one of the cheapest forms of renewable energy will support operating the biomass unit at full load, said Dorothy Thompson, Drax's chief executive, speaking to The Times. "The U.K. is missing out massively on the potential for renewable energy from biomass. We want to run in a low-carbon way, but policy is against us. I think they simply have not put enough expertise into biomass. Wind is not a silver bullet; its benefits have been overstated."

According to Drax, the cost of generating a megawatt-hour of electricity from coal is £31 ($48), compared to £40 ($62) from biomass. The company has already purchased two million tonnes of biomass for the plant but said it is now considering selling the material abroad.

The U.K. government has come under fire in recent weeks over its poor support for biomass projects, with the Renewable Energy Association (London) stating that several biomass projects have been put on hold because of the government's lack of support. Biomass plant developers receive fixed subsidies for only four years, compared to 20 years for windfarm developers.

The Department of Energy and Climate change (DECC) has pledged to review its support mechanism by the end of March.

"I am aware that our current policy not to grandfather the support given for biomass electricity under the Renewables Obligation has caused significant investment concerns within the industry," said Secretary of State for Energy and Climate Change Ed Miliband. "Given the risk that investment will not come forward, DECC will review the policy on grandfathering and prepare a statement before the end of March."

The REA has welcomed the statement. Gaynor Hartnell, director of policy for the REA, said: "We welcome Government's clear desire to resolve the hiatus in financing of biomass and bioenergy projects as swiftly as it can. We recognise that the process for changing the Renewables Obligation legislation is very restrictive, precisely in order to give investors confidence. One consequence of this is that when a change needs to be made swiftly (in this case for the benefit of investors' confidence) it cannot be done immediately. We therefore look forward to the planned statement before the end of March."

IIR's Renewable Energy Database provides extensive coverage on the Wind Energy, Geothermal, Hydroelectric, Landfill Gas-to-Energy and Utility-Scale Solar power plants throughout North America, and is now expanding coverage across the world.

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