Drax biomass conversion probed by the EU

THE European Commission will be undertaking an “in-depth” investigation into power station Drax’s conversion to biomass.

The EC will determine whether the conversion is in line with EU state aid rules, to “make sure that the cost of such support for consumers is limited and does not give certain operators an unfair advantage over competitors.”

It said it was concerned that economic performance estimates as a result of the conversion of a third coal-to-biomass unit at the North Yorkshire plant were too conservative, which could lead to overcompensation, as well as the distortion of competition in the biomass industry due to the volume of wood pellets that would be consumed by the completed biomass plant.

Shares in Drax fell more than 4% yesterday as a result of the uncertainty over whether the EC would approve the conversion plans.

Last month the EX approved plans from German group RWE to convert its Lynemouth station in a similar project, and it has also approved the construction of a Teeside combined heat and biomass plant this month.

A spokesperson for Drax said: “This is the next step in the process for obtaining State aid approval and is in line with expectations.

“Drax welcomes the opportunity to work with the UK Government and the EC to complete the State aid clearance process.”

Last October Drax took a major shipment of wood pellets from the £100m Port of Liverpool terminal.