Drax announces "strong performance" in first quarter as Ofgem investigation continues

Selby power station operator Drax has announced a “strong” performance for the first quarter of the year, as the firm awaits the results of an Ofgem investigation into its reporting on the sustainability of the biomass used at its Yorkshire site.
Michael Crossland
By Michael Crossland
Published 25th Apr 2024, 16:45 BST

The firm announced yesterday that it expects full year EBITDA to fall in line with analysts consensus estimates, subject to “continued good operational performance”.

Drax also said it had seen “strong” system support and generation performance during the first three months of 2024.

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The announcement comes as the UK’s energy regulator, Ofgem, continues its investigation into whether Drax’s reporting had complied with the Renewables Obligation Scheme. Ofgem first launched a probe into Drax’s reporting in 2022, before escalating this into an investigation in last year.

Selby power station operator Drax has announced a “strong” performance for the first quarter of the year, as the firm awaits the results of an Ofgem investigation into its reporting on the sustainability of the biomass used at its Yorkshire site. Picture by Simon Hulme.Selby power station operator Drax has announced a “strong” performance for the first quarter of the year, as the firm awaits the results of an Ofgem investigation into its reporting on the sustainability of the biomass used at its Yorkshire site. Picture by Simon Hulme.
Selby power station operator Drax has announced a “strong” performance for the first quarter of the year, as the firm awaits the results of an Ofgem investigation into its reporting on the sustainability of the biomass used at its Yorkshire site. Picture by Simon Hulme.

In its latest trading update, Drax noted that it was awaiting the conclusion of this investigation, but that Ofgem had confirmed that it had not established any non-compliance that would affect the issuance of Renewables Obligation Certificates.

Drax has also previously said that it is “confident in the compliance of its biomass with the Renewables Obligation criteria”.

The process of energy production used by Drax involves the burning of woody biomass pellets, which are used in place of coal.

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Drax, which also creates these pellets in mills based in the US, says the wood used to create them is taken from waste wood from other industries.

Speaking on pellet production in its latest announcement, the firm said: The group’s pellet production business has started the year well. The market remains challenging but, as a vertically integrated producer, user, buyer, and seller of biomass, Drax operates a differentiated model from its peers and sees the current global biomass market as representing a favourable balance of risks and opportunities for the Group.”

Drax Group CEO, Will Gardiner, said: “We continue to deliver a strong system support and generation performance, providing dispatchable, renewable power for millions of homes and businesses.”

Mr Gardiner added that the firm is “continuing to develop options” for projects in North America.

Related topics:OfgemYorkshire

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