Drax Power Station subsidies slashed by UK Government

A new funding arrangement between the UK government and the Drax wood biomass power station means that its subsidies will be cut by more than half.

The company currently receives nearly £1bn a year in subsidies and it predicts the new deal will see that reduce to £470m.

Energy minister Michael Shanks said the previous subsidy had enabled Drax to make “unacceptably large profits” and that the new deal would be “a step change in value for money and sustainability”.

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The new agreement will run from 2027 to 2031 and in addition to the reduced funding will see the power station only being used as a back-up to cheaper sources of renewable power. The government says that this means that when there is abundant solar and wind power, Drax won’t run at all. The power station currently generates around 5% of the UK’s electricity.

The agreement also stipulates that 100% of the wood pellets burned at the Drax plant must be “sustainably sourced” and that “material sourced from primary and old growth forests” will not be able to receive support payments.

Drax has faced strong criticism for the latter and has been the subject of BBC Panorama and BBC News reports saying that the company held logging licences in British Columbia, Canada, and used wood – including whole trees – from primary and old growth forests for its pellets.

In its response to the BBC, Drax conceded it had taken wood from old-growth forests but said that 77% of the material for its Canadian wood pellets came from sawdust and sawmill residues, with the rest coming from forestry residues and low-grade logs.

It also said it doesn’t own any forests or sawmills, no longer bids for logging licences and has stopped sourcing wood from sites where the BC government has called for a pause to further logging.

Source TTJ