Drax Plans Gas Conversion at U.K. Coal-Fired Plant

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Drax Group plc (LSE:DRX) (Selby, England) plans to convert at least one of three remaining coal-fired units at one of the U.K.'s largest coal-fired plants to gas in order to secure a 15-year contract from the government.

The company, which has already converted three of the six units to biomass at the Drax Power Station in Selby, Yorkshire, said the move would help secure future business for the plant as it revealed weak half-year results for 2017.

"Our Research and Innovation team is currently developing a proposal to look into the feasibility of converting one or more of our coal units to gas," said Dorothy Thompson, Drax chief executive officer. "Early indications are that this could be an attractive option for delivering critical flexible and reliable generation capacity for the U.K. and we expect to continue to develop this as an option over the coming years. Any such investment would be eligible for a 15-year capacity contract through the U.K. government's capacity auctions."

Before the company started converting some of the Drax units to biomass, the power station was the U.K.'s largest coal-fired plant, supplying about 7% of the country's power. However, moving the plant away from coal is 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.

Speaking to investors, Thompson added: "In biomass generation, we have delivered world class operational performance, with output of 7.3 terawatt hours (TWh) in H1 2017. We estimate that we produced 17% of the U.K.'s renewable electricity, enough to power over four million homes. Three of our six generating units are powered by compressed wood pellets and receive support from Renewable Obligation Certificates (for two units) and a Contract for Difference (CfD) (for one unit), which provides us with high levels of revenue visibility through to 2027. Our renewable electricity generation provides the U.K. with reliable, flexible and cost effective electricity."

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