Biomass Is The Way Ahead Insists Drax

Thursday 30 July 2015

Dorothy Thompson the chief executive, said that burning coal would remain a viable business over the next four years but could not predict how long that would persist after 2019.
She said that the conversion of the remainder of the station, which is Britain's largest, to burning wood pellets would depend on a study being conducted for the Department of Energy and Climate Change on the total cost of different forms of low-carbon energy, including the cost of accommodating unreliable output from wind and solar.

Draxs increasing vulnerability to changes in government policy was demonstrated this month when its shares plunged by 28 per cent to their lowest level after George Osborne announced that renewable generators would lose their exemption from the climate change levy.

Ms Thompson used the company's half-year results to attack wind farms, quoting a study that claimed their combined output fell below 1 per cent of total capacity with "reasonable regularity". Drax also claimed that, in terms of total "system costs", including the need to upgrade the grid, it would be £3 billion cheaper for billpayers to subsidise converting three of its six units to bio- mass than to support an equivalent amount of electricity from offshore wind farms. Ms Thompson said that the government had previously failed to take into account the full costs of switching generating capacity from fossil fuels to wind, and she believed that the DECC study would demon- strate the benefits ofbiomass, which required no extra grid connections or back-up.
She said: "If your concern is affordability you need to understand what is the total cost impact, not just the direct support the government has provided. I think it is very encouraging that [DECC] has commissioned this work from external experts at the beginning of this year.
"It should have a bearing [on Drax's decision on whether to convert more of the power station to biomass]. We have said to the government we stand ready to launch a project to convert one or more of the three units".

She said that Drax's overall generation, from biomass and coal, had been at "one of the highest levels we have had" over the six months. The increase in production helped Drax to report an 18 per cent rise in first-half core earnings to £l20 million.
She added, however, that there had been an increase in "cycling", whereby units reduced output when there was plenty of wind and solar power.
"Already this summer there are periods when we have shut our coal units down for long periods when there has been a healthy supply and then brought them back up when demand has increased. We do expect that there will be more change in the output of our coal units to reflect the supply and demand dynamics in the UK."
Drax reported a £53million profit before tax, compared with an £11mil- lion loss a year earlier, allowing it to offer a half-year dividend payment of 5.lp a share. Shares in Drax rose 25p, or nearly 10 per cent, to close at 277.5p.

This article appeared in The Times

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