Drax’s transformation “well underway”

BRITAIN’S largest coal-fired power station’s transformation to a predominantly renewable power provider is “well underway”, it has said today.

North Yorkshire-based Drax, which became one of Europe’s biggest renewable electricity generators in December when it opened its coal-to-biomass conversion plant, said in 2016, it expects half of Drax to be fuelled by sustainable biomass.

The business reported a drop in earnings, with EBITDA for 2013 down 23% at £230m compared to £298m in the previous year, but ahead of previous expectations. However, the business, which announced its results for the year ended December 31 2013 today, says the fall was expected. Pre-tax profits plunged to £32m, compared to £190m in 2012.
 
Chief executive, Dorothy Thompson, said: “As expected, the increasing cost of carbon drove earnings down year on year. Recognising this, we have been investing significant capital to transform Drax into one of the world’s largest renewable generators, burning sustainable biomass. At the same time we have delivered strong operating performance across the business, including notably, good output, efficiency and reliability from our first converted unit.
 
“We are well placed to secure CfD Investment Contracts for our second and third unit conversions. We look forward to the conclusion of the government’s contract award process this spring. These contracts will underpin the investment required to secure the sustainable biomass supply chain for our second and third unit conversions. We are targeting April 2015, when these contracts become effective, for our next unit conversion and quarter four of 2015 at the earliest, for the third.
 
“In 2016, we expect half of Drax to be fuelled by sustainable biomass, some 4% of the UK’s electricity. In delivering this transformation, we will provide cost-effective, reliable renewable power to consumers, secure jobs at Drax and across the UK supply chain and deliver attractive returns for our investors.”
 
Selby-based Drax reported total capital investment for 2013 of £290m and said this year’s will be around £200m.

Drax said: “Our commitment to becoming a leading provider of sustainable power is stronger than ever. As a group we made significant progress in this respect during 2013, from starting the construction of wood pellet plant and port facilities in the US, through the conversion of our first generating unit at Drax Power Station to burn sustainable biomass in place of coal, to increasing sales of renewable power to business customers in the UK.

“The energy sector faces many challenges. Whether concerns centre on security of supply, affordability or decarbonisation, as a group we are pleased to say that we are working hard to provide power which is secure and reliable, cost-effective and low carbon. The regulatory framework which shapes the UK energy industry fully recognises the valuable and strategic role that sustainable biomass has to play in the energy mix. Importantly, establishing that framework will unlock the potential of this new and vibrant biomass industry and promote growth through investment and job creation.

“Our achievements in 2013 position us well to secure an attractive future for our business and our shareholders.

“We are firmly on track to deliver the many benefits that biomass has to offer as an energy source.”