DRAX MIXES UP BIOMASS PLAN WITH MOOTED £700M CO-FIRING PROJECT

UK's largest coal-fired power producer scraps dedicated biomass plan, but shifts focus to co-firing technology.
Drax's game of brinkmanship with the government over biomass subsidies has intensified, after the owner of the UK's largest coal-fired power station said it had scrapped plans to build a dedicated biomass plant, but would invest £700m in co-firing biomass-coal technology depending on the outcome of a major subsidy review.
Announcing its preliminary final year results, Drax chief executive Dorothy Thompson, yesterday revealed the company had cancelled plans for a 290MW biomass plant in Selby, North Yorkshire, blaming a lack of financial support from the government for the emerging technology. 

The decision followed a threat last summer to shelve its dedicated biomass plans if a government review of the Renewables Obligation (RO) scheme, which pays large power producers for feeding renewable energy into the grid, failed to increase support for the technology. 

Thompson said the Selby projec t- a collaboration with Siemens Project Ventures - had proved "highly challenging" because of the proposed levels of support for dedicated biomass power, as well as the site's inland location which would increase transport costs. 

But she said Drax was keen to invest up to £700m in co-firing technology at the site, because the government has proposed to increase support for co-firing, depending on the results of the latest consultation on the RO. Co-firing systems burn both coal and biomass simultaneously, delivering a significant reduction in emissions when compared to pure coal plants. 

A government review of the RO scheme, launched in October, proposes to reduce support for standalone biomass plants by seven per cent from 2016, but it also proposes creating new bands for enhanced co-firing and biomass conversion projects, which could then receive 1 ROC/MWh. 

"Given the significant financial liability that we would face were we to delay our investment decision until we have certainty over the final support level for dedicated biomass we have decided to cancel the project," Thompson said of the company's initial plans for a biomass plant at its main facility. 

The news will come as a major blow to the North Yorkshire region, which is hoping to establish itself as a renewable energy hub. 

But Thompson also maintained Drax was continuing to explore options to build a biomass-fired power plant at the Port of Immingham, North Linconshire and was still investigating plans for further renewable energy plants. 

"Drax is ready to transform itself into a predominantly renewable generator, but to do so we need appropriate regulatory support, and to that end we look forward to the timely conclusion of the Government's current review," she said. 

A spokesman for the Department of Energy and Climate Change said Drax was entitled to make the decision based on the expected subsidies. 

"It is for the company to decide their investment priorities within the support framework that has been proposed for biomass electricity," he said. 

"However, we welcome Drax's interest in stepping up co-firing with biomass - a low cost renewable source of power which will accelerate the UK's move away from coal."