Power giant Drax close to deal on creating green fuel factory

The North Yorkshire power station operator wants to build the plant in Gainsborough, Lincolnshire, following the success of a smaller plant in Goole.

The multi-million pound plant would create pellets from waste straw and miscanthus or elephant grass, for firing alongside coal at Drax power station.

According to planning documents submitted to West Lindsey District Council, the plant would produce 150,000 tonnes of pellets a year, made by shredding, grinding, drying and compressing straw and miscanthus.

The pelleting plant and storage area would be more than 8,000 square metres, and developed by Austrian engineering group Andritz, which worked on the Goole pelleting plant.

It would have six grinders capable of reducing straw and miscanthus to 6mm particles. Steam and water would be added to the resulting powder which will be compressed with six presses to create 8mm pellets. Pelleting alters the density of straw from about 200kg per cubic metre to about 650kg per cubic metre.

Its storage capacity would be about 2,300 bales, far greater than the 932-bale capacity at the Goole plant, which started production in September last year, and can make about 100,000 tonnes of pellets a year.

Drax, which supplies around seven per cent of the UK's electricity, is trying to build a supply chain to meet its ambitious aims for burning biomass – organic, plant-based material.

The straw and miscanthus for the new plant would be harvested from farms around Lincolnshire. Drax believes there are about 2m tonnes of straw available within a 50-to-70-mile radius of the power station. For some years it has been at the forefront of encouraging UK farmers and landowners to supply biomass and develop a supply chain. Last year it launched its Green Shoots plan to source energy crops from farmers.

Drax, whose chief executive Dorothy Thompson will update the City with first half results tomorrow, said the Gainsborough pelleting plant is in the final stages of planning and design but declined to comment further.

The plant has been burning biomass for seven years, but has stepped up its efforts as pressure grows to clean up Europe's coal-fired power stations.

The 4,000mw plant recently spent 80m on 400mw of new biomass co-firing capacity, to give it 500mw co-firing capability, although is not using it at full capacity because it is not economically viable.

Its co-firing capacity alone, if used to its full capacity, would save about 2.5 million tonnes of carbon dioxide each year.

It also has plans for three 290mw standalone biomass plants through a joint venture with Siemens Project Ventures, costing an estimated 2bn.

This would bring Drax's biomass-burning capacity to 1,400mw, enough to power two million homes and equivalent to 2,000 wind turbines.

Drax also recently revealed plans to convert one of its 650mw boilers from coal to solely biomass. If the scheme goes ahead, that would make it the biggest coal-to-biomass conversion demonstration in the world.

However, the latest pelleting plant will satisfy only a fraction of Drax's biomass needs. Its aim is to source up to 1.5 million to two million tonnes of biomass a year for co-firing plus around 1.3 million tonnes a year for each of standalone plants.

It says that to do this, it must import the majority of its biomass, believed to be about three quarters of its requirements. Despite needing to import vast quantities of biomass, Drax insists this is still greener than many other alternatives.

Firms including AIM-listed Viridas are trying to meet the demand for biomass.

The Leeds-based company recently agreed a development and partnership deal with a "leading UK power generator" which could see it supply 240,000 tonnes of biomass annually.

It plans to develop an operation producing oil and biomass from the jatropha plant, an inedible but highly-calorific plant which grows in Brazil.

Lobbying paved way for energy plans

Drax said plans to extend support for biomass burning are a partial victory after lobbying hard for reform to the subsidy regime.

The Government recently said support for energy production using biomass will be guaranteed under the Renewables Obligation for the next 20 years.

Drax has long called for long-term support under the renewables obligation certificate scheme - the main support scheme for green technology.

But the company said the government's 'grandfathering' scheme does not reach far enough and increases uncertainty on subsidies for biomass plants that are ready to operate before April 2013.

"We remain concerned that there will still be a period of uncertainty for dedicated biomass plants which would not be accredited, and so ready to begin generating, until after April 2013," said Drax.

"We trust that DECC (Department of Energy and Climate Change) will take the opportunity to address this issue early in the review."