Drax confident ahead of Government appeal

DRAX will learn the outcome of its legal dispute with the UK Government over a renewable energy subsidy following an Appeal Court hearing on Friday.

The dispute centres on the Government’s decision to withhold a subsidy to convert one of its coal-fired units to burn biomass, having already approved one for another of its units.

The Yorkshire group, which operates Britain’s largest coal-fired power plant, launched and won a High Court challenge against the ruling by the Department of Energy and Climate Change (DECC).

The DECC has since agreed to award Drax an investment contract but launched an appeal against the court decision which will be heard in London on Friday.

Peter Emery, production director at Drax, said that the court decision would not affect the group’s long-term plans to convert to producing 50% renewable energy by 2016.

“The worst case for us is we will convert that unit. But the Government’s contracts for difference de-risks the project.”

Mr Emery played down the significance of the court case and said it has not affected Drax’s relationship with government.

“The UK Government is trying to encourage renewables. But it is clear that since the economic crash of 2008 things have changed. If you had a green project [pre-2008] people would throw money at you, including the government.”

Mr Emery said he understood that the Government had a duty to try to minimise the cost of energy to the consumer.

“We are keen to work with Government, in the cut and thrust of business, the odd fall out and visit to court happens along the way,” he said.

“If we hadn’t converted any units from coal then we would be in a worse way,” said Mr Emery, who added that Drax now produces 20% renewable energy.

“UK renewable penetration is on average 11% to 14%,” and we are very proud of what we have achieved.

Yesterday Drax said increasing carbon tax costs hit earnings which fell to £102m in the six months to June 30 from £120m a year ago.