Drax to pay £25m penalty following regulator’s investigation
North Yorkshire-based power station operator, Drax, has agreed to pay £25m into regulator Ofgem’s voluntary redress fund.
It follows the conclusion of a probe by Ofgem into the sustainability of the biomass Drax uses at its wood-burning power plant.
Ofgem investigated whether the power plant – which generates about 6% of the UK’s electricity – had breached reporting rules required for its renewable energy subsidy scheme.
It analysed the accuracy of the energy company’s sustainability reports concerning the sourcing of its wood pellets – 80% of which come from forests in the US and Canada.
Drax has received billions in renewable energy subsidies for its biomass electricity. But it has been criticised over its “carbon neutral” claims, amidst scepticism over how sustainable it is to burn imported wood to create electricity.
Ofgem confirmed that it did not find any evidence that the group’s biomass is not sustainable or that Drax has been issued with Renewable Obligation Certificates (ROCs) incorrectly.
But the investigation found Drax had “process gaps” in relation to two aspects of its profiling data for Canada in the period April 2021 to March 2022. (CP20)
Ofgem notes this was technical in nature and would not have impacted the level of ROCs earned by Drax under the Renewable Obligation scheme.
“Drax has accepted that it had weak procedures, controls and governance which resulted in inaccurate reporting of data,” said Jonathan Brearley, Ofgem’s chief executive.
Drax Group CEO, Will Gardiner, responded: “It is welcome that Ofgem has found no evidence that our biomass failed to meet the sustainability criteria of the Renewables Obligation (RO) scheme, nor that the ROCs we received for the renewable power we produced had been provided incorrectly.
“Although Ofgem has noted there is no evidence to suggest Drax deliberately misreported its profiling data, we recognise the importance of maintaining a strong evidence base and are continuing to invest to improve confidence in our future reporting.”
As well as paying the £25m into Ofgem’s voluntary redress fund, Drax will also resubmit its CP20 profiling data for Canada and produce an independent audit of its biomass profiling data for the most recent reporting period, April 2023 to March 2024 (CP22).
