EC clears UK support for Drax biomass plant in UK

The European Commission on Monday approved UK state aid for the conversion of one unit of the Drax power station from coal to biomass, saying that the move will not unduly distort competition in the single market.

UK power producer Drax Group Plc (LON:DRX) is working to convert to biomass three of the six coal-fired power generators at the Drax power station in Derby. The third such unit is planned to receive a Contract for Difference (CfD), under which it will get compensations when the average wholesale price of electricity falls below a pre-determined strike price. The unit will have a capacity of 645 MW and run exclusively on wood pellets. It will use around 2.4 million tonnes of wood pellets annually, mainly sourced from the US and South America.

Following a detailed analysis of the project business case, the EC has determined that the project will not lead to overcompensation. The increased demand for wood pellets could also be fulfilled without undue negative side-effects, it noted.

The project will receive state aid until 2027 and will produce some 3.6 TWh of electricity per year.

Choose your newsletter by Renewables Now. Join for free!