Drax warns it may have to take its £2bn green energy plans abroad

POWER station operator Drax has warned it could move its 2bn plans for green energy plants abroad unless the Government makes the UK friendlier for biomass energy.

Drax, which owns the North Yorkshire coal-fired plant, planned to build three new power stations run on waste matter such as wood chips and straw pellets, rather than coal.

The plants were due to be built in Yorkshire and the Humber region, providing low carbon electricity for 1.2 million homes.

But Drax said the Government’s failure to subsidise biomass fuel sufficiently to make it competitive with coal could mean building the plants abroad where subsidies are more favourable.

Drax, the single largest source of carbon emissions in Britain, has already invested 80m in a new co-firing plant to burn biomass with coal.

Last week it said it was suspending its plans to burn biomass because of the lack of Government support.

Industry figures show it costs 31 per megawatt to produce energy from coal compared with 40 per megawatt for biomass.

A Drax spokeswoman said: “When it comes to dedicated biomass plants if we cannot get a favourable regime in this country we will be forced to look overseas. Our request is for Government to rethink biomass policy.

“There seems to be no will on the part of Government to incentivise us to reduce our carbon footprint by burning biomass rather than coal.”

Exporting the 2bn project, which involved three 300MW renewable energy plants, would be a huge blow to the region. One site was expected to be built alongside the existing Drax plant, with the second earmarked for Immingham and a third site yet to be decided. The plants had been due to create about 600 jobs, not to mention the thousands of staff needed for their construction.

Meanwhile, the 400 megawatt biomass co-firing plant is due to come on stream in mid-2010 but will not be used to its full capacity because it remains significantly cheaper to burn coal on its own.

The plan had been to burn 1.5 million tonnes of biomass a year in the co-firing unit which is believed to be one of the biggest co-firing plants in the world. Drax has already bought two million tonnes of biomass crops to fuel it.

But the spokeswoman added: “If Government policy continues to stand in our way then the biomass then it may be economical to actually sell the biomass that we have bought to other markets which will be overseas.”

Drax has already invested about 5m in a straw-pelleting facility at Goole, believed to cost about 5m. The site is capable of creating about 100,000 tonnes of pellets from waste straw each year.

It aimed to source biomass from ethical and sustainable sources, such as waste straw collected from within a 70-mile radius of Yorkshire.