Biomass, Renewables

UK’s Drax poised to invest £2bn in biomass units in Siemens partnership

24 October 2008 – Drax, the owner of western Europe’s largest coal fired power station, has unveiled a £2bn ($3.2bn) renewable energy investment plan in an effort to diversify its business and cash in on government subsidies, reports the Financial Times.

Drax said it planned to build three 300 MW power plants that would burn biomass, including energy crops and agricultural or forestry waste. The plants will be built in partnership with Siemens of Germany, with Drax owning 60 per cent of the project and operating the plants and Siemens owning 40 per cent and supplying the technology.

Dorothy Thompson, Drax chief executive, said the investment would take advantage of a need for more power generation capacity in the UK as old nuclear and coal-fired plants close down. It would also help the country meet its targets for cutting carbon emissions.

She said a biomass-fired power plant was a more reliable source of energy than a wind farm, which only operates if weather allows. Drax’s 900 MW of biomass-fired plants would produce three times as much power as a 1000 MW wind farm.

Drax is planning to build its first plant near the port at Immingham on the north Lincolnshire coast, with construction scheduled to start in 2010 and power generation starting in 2014.

The location was chosen because a significant amount of the biomass burnt at the plant would be imported. Ms Thompson declined to say where the biomass would come from, as this was “commercially sensitive”, but that it would only come from sustainable sources.

The company is the UK’s biggest single emitter of carbon dioxide and has been the focus of environmental protests. But if the biomass plants are built as planned, Drax could become one of the country’s biggest generators of renewable energy.

Tony Quinlan, finance director, said that thanks to subsidies for renewable energy the plants would produce a return of about 15 per cent and pay for themselves within six years. About 60 per cent of the £2bn budget would be funded with project finance loans, and the rest from equity.