House of Lords raises concerns over 'value for money' with Drax government subsidy deal
The House of Lords has expressed concern about the Government’s subsidy agreement with Drax, claiming it is poor value for money and has compliance concerns.
Under the agreement, Drax’s subsidies would be cut from around £950m a year to £470m.
The power station, which is classed as renewable, produces around 5 per cent of the UK’s electricity by burning wood pellets.
Analysing the subsidy regulations, the cross-party House of Lords Secondary Legislation Scrutiny Committee has raised concerns about value for money for taxpayers and sustainability.
Baroness Lea said: “We welcome that the Department for Energy Security and Net Zero (DESNZ) and Ofgem has committed to strengthening the sustainability criteria and compliance and assurance regime for the new arrangements.
“However, given that there are serious concerns about the sustainability and value for money of large-scale biomass electricity generation in the UK and about Drax’s compliance record, we are concerned whether the new arrangements will be robust enough to enable Ofgem and the Department to hold Drax to account.”
A DESNZ spokesperson said: “Investing in clean power is the route to ending the UK’s energy insecurity and tackling the climate crisis.
“We are halving the amount of support for Drax, saving households around £6 on their bills annually, and contributing to our energy security.
“Drax will operate for less of the time under a clean power system and will need to use 100% sustainably sourced biomass, with not a penny of subsidy paid for anything less.”