Drax, the UK’s biggest power station, is to branch out into the domestic market with the acquisition of the UK’s second largest wood pellet distributor.
Billington Bioenergy (BBE), which supplies fuel for wood burning in homes and businesses, was bought for an undisclosed sum in the “low millions”.
Drax said the deal signals its intention to enter the country’s growing biomass heat sector and said BBE will complement its core business.
Wood pellets are a sustainable form of renewable heating, offering a green alternative to fossil fuels such as heating oil, LPG and solid fuels.
They are widely used throughout Europe, but their usage in the UK has only recently increased, supported by the Government’s Renewable Heat Incentive scheme. This market is expected to grow from 200,000 tonnes in 2013 to more than one million tonnes per annum by 2020.
Drax CEO Dorothy Thompson said: “This is an exciting opportunity to help transform the UK heat market in the same way we have made the UK power market so much less dependent on high carbon fossil fuels.
“Biomass is a cost-effective, low carbon and dependable source of heat which homes and businesses can rely on. BBE is a great business. It shares our customer service ethos and unswerving commitment to sustainability.”
BBE will continue to run from its Liverpool office and all the team and existing arrangements will remain unchanged.
Roger Pearson, managing director of BBE said: “This is great news for our customers and our suppliers. We have been really impressed by the Drax team, their vision and their commitment to quality, customer service and sustainability. BBE shares these core values and together we will build the UK biomass heat market to where we all believe it should be.”
Edward Billington, BBE strategy director, added: “We would not seek new partners lightly but Drax made it clear that it wants to play a key role to help develop the marketplace for sustainable wood pellet heating for the long term.
“That is a prize that anyone who cares about decarbonisation would want to see. Drax remains committed to the network of suppliers and installers, with which we have worked so closely.”
Over the past few years Drax has transformed itself into the UK’s largest renewable power generator by replacing much of its coal capacity with biomass.