The UK government has ordered the use of 100% sustainable wood after halving subsidies for the Drax power plant and receiving criticism for its business model.
Large North Yorkshire power plants will play a “more limited role” in the future, the government said.
The plant is an important generator for the UK, but has been criticized for burning pellets of wood sourced from forests in the US and Canada.
The government has agreed to a new contract with electricity producers that will cut subsidies by halving between 2027 and 2031, saying Drax will only provide electricity when it is “really” necessary. This estimates consumers will save £170 million a year.
However, the company said its stock is up almost 5%, with its shares rising by about 5%, with its targeting basic profits of £100 million to £200 million per year over that period. Greenpeace said continuing to import biomass is a “dirty compromise due to past obstacles.”
Minister of Energy Michael Shanks statement: “We believe in them [subsidies] It simply didn't do enough trading with Bill Payer, allowing Drax to make unacceptable profits. ”
He added: “This government will do whatever it takes to provide energy security and protect bill payers now and in the future.”
Drax, the UK's largest renewable generator by power, converts four coal power units to use biomass and is also running hydroelectric projects. The company closed its final coal plant in 2023 after 50 years of coal-fired power generation at a site near Selby.
Under the new agreement, we will need to switch from 70% of our current levels to 100% wood biomass use from sustainable sources. The government threatened “substantial penalties” if Drax fails to comply.
Green campaigners feared that ministers would award unlimited grants to the Athletics Bureau despite concerns that burning wood to burn electricity would be bad for the environment.
The government's statement stated: “Our central forecast is, in good condition, a much more limited role than today, biomass production at Drax, including when compared to gas-fired power plants, is the case for bill payers. This indicates that it is the lowest cost option, including this period.
Drax CEO Will Gardiner said: If there's too much power on the UK grid, Drax refuses and balances the system. ”
“We are pleased to announce that we are committed to providing a range of policy opportunities for people to work with,” said Doug Parr, director of policy at Greenpeace UK. The wood is left to grow and should not be burned on a bonfire fueled by major subsidies.
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“The UK's commitment to Drax has become an assumed asset that appears to be increasingly marginalized as the energy market develops.
“The new standards hopefully need to limit their operations and limit the damages caused by reforming the supply chain, but the government still has the big contaminants seeking large subsidies for degreasing bodies. It's too reliable. There are cheap, clean power sources available and you shouldn't gamble on a scheme like this.”
Last year, Drax agreed to pay £25 million after discovering that OFGEM's energy industry regulator had submitted inaccurate data on the procurement of wood pellets.
The government hopes to decarbonize the power grid by 2030. To achieve this goal, there will be a significant increase in renewable energy, such as the wind and the sun, and projects to preserve energy when the wind and sun are insufficient.
The government is also relying on more nuclear power to achieve its carbon target. Last week, Keir's Starmer vowed to “break down the rules” of the nuclear industry by allowing the UK to build a new kind of mini reactor for the first time.
With the move to encourage fresh investments in small-scale modular reactors, new nuclear projects can emerge not only in the country's eight designated nuclear sites, but across England and Wales.
