Weak power prices keeping the pressure on Drax Group

​Power station Drax Group said trading remains challenging​ following further weakness in power prices, ​al​though its expectations for 2015 are unchanged.​

​The ​North Yorkshire company said trading conditions have been tough in the second half of 2015, but it is benefiting from a good operational performance.

It said that since July it has strengthened its 2015 and 2016 hedges for power sales at prices significantly above the current market.

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​CEO Dorothy Thompson said ​these factors underpin the group’s expectations for the full year, which remain unchanged.

​She said that ​the group’s biomass operations at Drax continue in line with expectations.

“Our first major planned biomass unit outage was completed over the summer, with no biomass related issues identified,” she said.

“The unit is now back in full operation.”

​I​n addition to the existing UK east coast port facilities, ​the group has added further import capability with new facilities at Liverpool.

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​Drax will announce full year results for year to December 31 on February 23.

The​ group’s shares​ 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.

​Last week Drax said it was disappointed that the Energy Secretary failed to highlight the role that biomass can play in generating affordable electricity. Amber Rudd ​has announced plans to close all coal-fired power stations by 2025 and replace them with gas-fired plants. She said clean technologies would only be sustainable at the scale needed if they are cheap enough.

​Drax​ 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 US.

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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.

“If you are looking for reliable, flexible and low carbon generation, biomass is the answer​,” he said.

Drax said intermittent generation like wind and solar imposes additional costs on the energy system.

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