Drax abandons its plans for a gas-fired plant

Power firm’s U-turn costs it £13m

YORKSHIRE POWER generator Drax has abandoned plans for new gas-fired power plants to replace its existing coal units in a move which will cost the business £13m.

The plan for the gas-fired plant was only signed of in October 2019 and was the subject of fierce criticism from environmental groups who brought an unsuccessful High Court challenge on the matter.

Gas generation is considerably cleaner than coal power but it is still a fossil fuel which emits carbon and contributes to global warming.

At the time Drax said the development of new gas power offering would support the UK’s decarbonising energy system, subject to the project securing a Capacity Market agreement to underpin the investment needed. It now seems that capacity market requirement has not been met, leading to the U-turn.

Speaking to The Yorkshire Post, Drax group’s chief financial officer Andy Skelton said the change of plan was taken for financial, environmental and strategic reasons.

“We always said that to develop it you would need the support of a strong capacity market and clearly that has not been there in the last couple of years,” he said.

“Environmentally, we have disposed of our gas assets and that completed at the end of January. And we are coming off commercial coal generation in March.

If you think about our strategy to be a carbon negative company this fits very well with it. It is good environmentally and financially as well.”

The move comes as the power station prepares to produce electricity purely from wood pellet burning in four biomass units, previously used for coal burning, by the middle of the year.

Earlier this month it announced the purchase of a Canadian supplier of sustainable biomass which will allow it double capacity in this area.

Mr Skelton added that the business was now more focused on pursuing the Bioenergy with Carbon Capture and Storage (BECCS) process as it strives to be a negative emissions company by 2030.

He said: “Over the last couple of years our ambitions to be a carbon negative company and the progression of the strategy towards BECCS has definitely moved on.

“You have seen that in the change in our portfolio with the disposal of our gas assets and the announcement in February last year that we are closing coal regeneration. This decision is consistent with the movement.”

The announcement was made as Drax reported a £235m loss before tax, a significant increase on the £16m loss it reported the year prior.

The loss includes a £60m hit due to the coronavirus. The power producer said the pandemicrelated loss came mainly from its customer business, which sells power, gas and energy services to small to medium-sized companies.

Revenues were £4.2bn, a reduction of five per cent. Drax sold around 7 per cent less gas and electricity last year due to the impact of Covid-19.

Will Gardiner, CEO of Drax Group, said: “Our focus is on renewable power. Our carbon intensity is one of the lowest of all European power generators.”

He added: “The future of gas power generation fuel is getting shorter all the time.”