Drax shares tumble as Energy Secretary omits biomass in keynote energy speech

POWER PRODUCER Drax said it was disappointed that the Energy Secretary failed to highlight the role that biomass can play in generating affordable electricity in her keynote speech setting out a new direction for UK energy policy.

Speaking in London today, Amber Rudd said she wants to develop an energy system that that puts consumers first, delivers more competition, reduces the burden on bill-payers and ensures enough electricity generation to power the nation.

She announced plans to close all coal-fired power stations by 2025 and replace them with gas-fired plants. Ms Rudd added that nuclear power would have a central part in the UK’s energy future. She also committed Government support for offshore wind on the condition that it comes down in cost.

Ms Rudd said clean technologies would only be sustainable at the scale needed if they are cheap enough.

“Subsidy should be temporary, not part of a permanent business model,” she said.

Drax shares fell five per cent in trading. They have lost nearly half their value since the Conservatives came to power in May and reversed many of the coalition’s pledges to support renewable energy.

The company has invested between £650m and £700m in converting three of six units to biomass at its Yorkshire plant. The investment includes £300m on developing the supply chain for the organic, plant-based material in the United States.

Andy Koss, chief executive of Drax Power Ltd, said the lack of emphasis on biomass in Ms Rudd’s announcement and the role it can play in the future transition was disappointing.

He told The Yorkshire Post: “If you are looking for reliable, flexible and low carbon generation, biomass is the answer.”

Mr Koss said there is growing recognition that intermittent generation like wind and solar imposes additional costs on the energy system. “That plays very well to biomass,” he added.

Mr Koss said: “We are using existing kit, it is proven technology and there are no hidden costs from conversion from coal to biomass.”

He added: “All the reversals on renewables have been disappointing. But our investors remain strong backers of us and our strategy in the UK and particularly over this winter and next winter where reserve margins look very tight I think we have a very key role to play.”

Mr Koss said Drax would invest in converting a fourth unit from coal to biomass “if the right investment signals are there” and it would like to compete in forthcoming auctions for Government support.

Yesterday’s announcement to close all polluting coal-fired power stations by 2025 should see the UK becoming the first major country to end use of the fossil fuel.

Former US vice president Al Gore, a leading climate campaigner who previously said he was “confused” by the Government’s cuts to clean technology support, welcomed the announcement ahead of the UN talks in Paris which aim to secure a new deal on tackling climate change.

He said: “The UK is demonstrating the type of leadership that nations around the world must take in order to craft a successful agreement in Paris and solve the climate crisis.

“The UK has become the first major economy to set a clear date to phase out coal, and I am hopeful that others will follow suit as we repower the global economy with the clean energy we need for a sustainable future,”

But Green MP Caroline Lucas said: “This switch from coal to gas is like trying to go dry by switching from vodka to super-strength cider - it entirely fails to seriously address the real challenge at hand.

“In the run-up to the crucial Paris climate talks in December ministers are showing their true colours. Support for nuclear and gas is growing, while help for renewable energy firms, and the thousands of jobs they create, is being slashed.

“Investing in renewables and energy conservation would be far more effective economically, environmentally and in terms of energy security. We must begin weaning ourselves off gas as quickly as possible.”