Drax calls for biomass clarity as profits rise

YORKSHIRE power generator Drax reported a quadrupling of pre-tax profits as it warned “regulatory uncertainty” was delaying progress on its first dedicated biomass plant.

The operator of Britain’s biggest coal-fired power station at Selby saw pre-tax profits for the first six months of 2010 rise to £132m from £34m in the same period last year.

Drax said its improved results were down to its hedging activities and an outage rate of 2.7% against its long term target of 4.5%.

The company revealed its biomass co-firing facility, commissioned in June, is “underutilised at present” because economics currently favoured coal burn and said “regulatory uncertainty” would mean the case for a dedicated biomass plant would need to continue until 2011.

Drax wants greater clarity from the Government on the level of support it would receive over the lifetime of new biomass plants.

Dorothy Thompson, chief executive of Drax, said: “We have delivered an excellent performance across the business in the first six months of the year. The decision taken last year to accelerate our hedged position for 2010 at higher average margins than for 2009 has improved our earnings. Strong operational performance and continued tight cost control have further enhanced profitability.
 
“Our record on project execution was strengthened in June with the successful commissioning of the world’s largest biomass co-firing facility on time and to budget, which provides us with the capability to produce 12.5% of our output from biomass.
 
“We believe reliable and flexible electricity generation from biomass could and should make a significant contribution to meeting the UK’s challenging renewables and climate change targets at relatively low cost. With seven years’ experience of working with biomass we are well placed to drive this, and we look forward to working with the new Government to make it a reality.”

Drax recorded an EBITDA of £184m for the first half of 2010, up 23% on last year. In October, shareholders will receive a dividend of 14.1p per share, equivalent to £51.m,