Drax in legal challenge to Government

DRAX today announced it has launched a legal challenge against the Government after it backed out of supporting one of its key projects.

The power station operator said it has initiated proceedings against the Government after it changed its mind over funding for the conversion of one of Drax’s generating units from coal to sustainable biomass.

The Government told Drax in December that two generating units at the power station, known as the ‘second’ and ‘third’ units, were eligible for Investment Contracts under the early contracts for difference (CfDs) mechanism to support the conversion from coal to sustainable biomass. Both units were also provisionally ranked equal first of all the qualifying projects and deemed affordable. 
 
However the Government has now advised that Drax will be only offered an Investment Contract for the third unit conversion.
 
The Government has told the power station that support for conversion is available under the existing Renewables Obligation regime, where eligibility has been confirmed. Support may also be available under the enduring CfD mechanism. 
 
However, after taking legal advice, Drax chief executive Dorothy Thompson said it has a “good foundation to challenge this decision by the Government”.

She said today: “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.  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.
 
“Sustainable biomass provides a very reliable, flexible and cost effective renewable power source for the UK consumer.  The performance of our first converted unit, which was converted last year to burn sustainable biomass in place of coal, continues to be strong. 
 
“I am proud of what we have achieved to date and we remain fully committed to our strategy of transforming Drax into a predominantly biomass fuelled generator, initially through the conversion of three of our six generating units, with a fourth unit conversion under evaluation.”