Drax chief awaits biomass verdict for renewable future

Drax plc has so far invested £100m to burn organic plant-based materials alongside coal at its power generator near Selby, but is holding back on more investment as it waits for Ministers to announce details of their review of subsidies for renewables.

Chief executive Ms Thompson said: “Biomass has significant potential to deliver an attractive renewable electricity to meet the Government’s ambitious targets for 2020 and beyond. It’s low carbon, low cost and low risk.”

The Government has set out plans for 15 per cent of energy to come from renewable sources by 2020.

Different sources of renewable energy receive different levels of subsidy under the current system, with most biomass used by Drax receiving just a quarter of the support given to offshore wind power.

The Government is expected to reveal outline banding proposals in July. These will go out to consultation ahead of a final decision from ministers in December.

Ms Thompson said the case for biomass is “compelling”, particularly at facilities like Drax, which were built for coal-fired electricity generation.

“It’s a very good, complementary technology to most of the other renewable technologies under consideration,” she told the Yorkshire Post.

“The reason is that biomass can be flexible so when you have a problem with the wind not blowing you can substitute that with biomass generation.

“It is reliable so you can be sure you will have the power when you need it. A large amount of renewables don’t have either of those two features.”

Biomass can come from agricultural and forestry residues, energy crops and recovered materials. It is more expensive than gas or coal.

But it is very abundant and sustainably so, said Ms Thompson, who expects the cost of biomass to fall “as it becomes a commodity rather than a bespoke supply arrangement”.

Drax has been burning biomass for the last eight years and has been a lone voice in championing the cause, but more companies in the UK are switching on to its benefits, such as RWE npower, which plans to convert a coal plant near London to burn biomass.

The Yorkshire company decided to go for biomass after a strategic review in 2005, the year of its flotation and the appointment of Ms Thompson as chief executive.

She said: “We determined that a core element of that strategy was to identify a low carbon future for the business and we also decided that the most ambitious low-carbon future we could have would be through high use of biomass. We have really held to that strategy from that time on.

“All that is holding us back is the lack of sufficient support from the Government despite the fact that it is one of the cheapest renewable technologies available.”

Last year, Drax produced around six per cent of the UK’s renewable power, burning nearly one million tonnes of biomass compared to nine million tonnes of coal, firing annual revenues of £1.64bn and pre-tax profits of £254m.

Ms Thompson said: “Our ambition is, if the correct support is put in through the current review, then within five to seven years we will predominantly a biomass-fired power station.”

She wants Drax to “change from being one of the largest carbon emitters in western Europe in terms of a single facility to become one of the largest renewable plants in the world; we would see that as a real achievement.”

She said this would require “substantial” investment, but would not cite figures or how the money would be raised.

Ms Thompson said: “We have been really encouraged by the support of our shareholders and investors for biomass and the role it can play in a low-carbon future.”

The company maintains that biomass will be ultimately cheaper to the consumer as a source of renewable energy. It is, after all, the consumer who pays for the subsidy system through household bills.

Ms Thompson said the ongoing Government review provides “the opportunity to unlock what we think is a wonderful resource for the UK or to leave it in the situation we are in at the moment where we are way below exploiting its full potential.”

A Department of Energy and Climate Change spokesman said: “We believe biomass has an important role to play as we seek to get increasing amounts of our energy from renewable sources.”

Carbon capture as ‘part of the mix’

Drax, working with National Grid and Alstom, has submitted a funding bid to develop a carbon capture and storage project at its site near Selby.

Dorothy Thompson said she was “very enthusiastic” about the Alstom-based technology, which would complement other CCS projects in the UK.

She described CCS as “one of the solutions to how a country like the UK can secure a low-carbon future. It is not the sole solution. I’m a real believer that you need a mix of everything.”

She added: “That would include nuclear, a wide range of renewables, that would include CCS for at least the two main types of fossil fuel, coal and gas, and a whole suite of energy storage options and demand response as well.”