European Green Light for Drax Biomass Conversion

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Drax Group plc (LSE:DRX) (Selby, England) has been given the green light by the European Commission (EC) to convert another coal-fired unit to biomass at the U.K.'s largest coal-fired plant.

The EC has approved the company's plans to convert its third of six coal-fired units to biomass, following an investigation into whether the U.K. government's plans to support the conversion were in line with European Union (EU) state-aid rules.

"In April 2015, the U.K. notified to the Commission its plans to grant state aid for the conversion of one unit of the Drax coal-fired power plant to biomass. The unit will have 645 megawatts (MW) of electrical power capacity running exclusively on wood pellets. The U.K. Government intends to support the project with a premium paid on top of the market price of the electricity generated (a so-called "Contract for Difference"). On the basis of this analysis, the Commission has now concluded that the planned premium will not result in overcompensation."

It added: "Moreover, the Commission's investigation into the wood pellet and wood fibre markets found that the increased demand for wood pellets to fuel the power plant could be fulfilled by the market without undue negative side-effects."

Drax Power Station in Yorkshire was the country's largest coal-fired plant, with six units producing roughly 7% of the country's total electricity. The power station has historically burned up to 10 million tons of coal per annum, making the plant the U.K.'s largest CO2 emitter. By converting three of the units to burning biomass instead, carbon emissions will be cut by 80% per unit. Drax has already converted two units to burning wood pellets. Drax welcomed the news.

"Drax now leads the world in biomass technology-- three million households are powered with renewable energy generated by Drax and we're the largest carbon saving project in Europe," said Andy Koss, Drax Power's chief executive officer. "We have demonstrated how to re-invent a coal-fired power station using an existing asset, so there are no hidden costs to the Grid and it is quick to achieve. The energy challenge facing the U.K. is how to replace the contribution currently made by coal. Biomass technology is proven, ready to go and ideally placed to help the country transform to a low-carbon future with reliable, secure and affordable renewable power."

The biomass conversions are vital for the continuing operation of the Drax plant into the future as the U.K. government has committed to shutting all coal-fired power plants within a decade. For additional information, see November 23, 2015, article - U.K. Calls Time on Coal-Fired Power.

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