Drax could pull plug on biomass
28 Feb 2010
Change in regulatory regime required before plans for £2 billion investment can go ahead
Drax chief executive Dorothy Thompson has threatened to move its proposed £2-billion biomass-fired power project out of the UK if the existing regulatory regime is not changed.
Biomass-based generation is not viable without heavy subsidy, but the Department of Energy and Climate Change ruled recently that state aid could be cut after four years. By comparison, offshore wind, which appears to be the government’s favoured low-carbon technology, has a 20-year subsidy guarantee.
Without the certainty of longer-term subsidy, Thompson said the investment in the UK could not be justified and the company would be forced to move to where there would be a more favourable regulatory regime.
Drax expects to prove the long-term investment case for developing a dedicated biomass-fired business towards the end of this year. It will comprise three plants, each rated at 290MW, and current estimates, says Thompson, put the total cost at £2 billion, to include the necessary investment in ancillary biomass logistics and processing facilities.
Thompson said: “We believe that the long-term investment case for this business remains strong, particularly in the light of the UK’s need for reliable renewable generation capacity by 2020.”
Planning applications for two of the plants, at Drax Power Station’s site in Selby, Yorkshire and at the Port of Immingham, were submitted last year. Preliminary engineering and design work has been completed and the engineering, procurement and construction contract tendering process started.
The plants would use turbine technology from Siemens, which would have a 40% stake in the business. They would be fuelled by straw and wood, much of which would need to be imported.
“Our new-build plans for dedicated biomass plants are proceeding well,” Thompson confirmed. “We remain positive that regulatory arrangements will be put in place to support the growth of this form of renewable power.”
Currently Drax has 100MW of biomass co-firing capacity at its existing coal-fired station and is investing some £80m to develop a 400MW direct-injection, co-firing biomass facility. Phase one is underway and full capacity is expected mid-year.
Drax has built a pellet-from-straw plant in Goole to source biomass and this has proved its 100,000t/yr capability. Plans for additional pelleting facilities are under review.
