Drax reverses Government decision on subsidy
DRAX has over-turned a Government decision to withhold a subsidy for its biomass conversion plans.
Its High Court challenge against the ruling by the Department of Energy and Climate Change (DECC) succeeded last week and while the DECC has agreed to award Drax an investment contract it will now appeal against the court decision.
The Yorkshire business operates Britain’s largest coal-fired power plant which it is in the process of converting to burn biomass, which is heavily subsidised.
In December, its plans to convert two of its units were provisionally allocated funding by the Government for the first tranche of new subsidy contracts.
However, in April ministers unexpectedly disqualified one of the units, claiming it was ineligible.
Drax, which saw its share price tumbled on the news, launched the High Court challenge.
In an announcement after markets closed last night, Drax said it had been informed that DECC had completed its reconsideration and “intends to award Drax an investment contract for this unit”.
“However, DECC has now appealed against the High Court judgment to the Court of Appeal,” it said.
Industry analysts said they expect Drax to eventually receive the award for the second unit but the move is likely to put pressure on the Government’s budget for renewable energy subsidies.
