Drax legal challenge over biomass snub
23 Apr 2014
Drax this morning announced it was launching a legal challenge against the government’s decision to exclude one of two planned conversions of 645MW coal-fired units to biomass from its new Contract for Difference (CfD) scheme.
The North Yorkshire power plant had planned to begin work on converting a further two units from burning coal to biomass, following the success of its first unit conversion last year, which is now operating at a generating capacity of 630MW .
However, only its third unit conversion was included in this morning’s announcement by the Department of Energy and Climate Change (DECC) of eight renewables projects to be the first to receive support under the CfD mechanism.
The CFD is pretty critical to speeding up the development of biomass
Drax production manager Peter Emery
Drax has been told that it must seek support for the second conversion under the existing Renewables Obligation Certificates (ROCs) scheme, just as it did with the first conversion project.
This is, Drax said in a statement issued today, despite the government in December advising that both the second and third unit conversions were eligible for CfD investment contracts.
“Whilst we are pleased to have been offered an Investment Contract for our third unit conversion, we are disappointed by today’s decision on the ineligibility of our second unit,” said Drax chief executive Dorothy Thompson.
“Nothing has changed, as far as our plans are concerned, between being deemed eligible in December and now. We have, therefore, commenced legal proceedings to challenge the decision.”
Speaking to Process Engineering last week ahead of the announcement, Drax production manager Peter Emery said the awarding of CfD contracts would be critical for the development of a sustainable long term supply chain for biomass projects in this country.
“The benefit of a CFD is it guarantees a minimum price up to 2027 and on the back of that we can enter secure long term contracts for biomass supplies,” said Emery.
“These guarantees are important: people looking to finance construction of a [biomass] pellet plant need a long term contract to secure the necessary financing. The CFD is pretty critical to speeding up the development of biomass.”
Emery described the existing ROCs regime as “less of a guarantee” where “long term contracting is not so easy”.
DECC declined to comment on Drax’s legal challenge.
