Drax to challenge UK's decision to exclude from a new green funding scheme the coal-to-biomass conversion of Unit 3 at its power station in North Yorkshire, England; company received funding for conversion of Unit 1

Allison Oesterle

LOS ANGELES , April 24, 2014 (Industry Intelligence Inc.) – Drax Group Plc. is planning to file a legal challenge against the U.K. for excluding Unit 3 at the Drax power station in North Yorkshire, England, from a new contracts-for-difference (CFD) green funding scheme, The Telegraph reported on April 23.

Both Unit 1, for which the company did receive a CFD contract, and Unit 3 were shortlisted for the green funding scheme by the Dept. of Energy and Climate Change in December.

Drax is currently in the midst of a coal-to-biomass conversion project involving three of the six units at its power station in Derby, England, according to the Industry Intelligence archives. The first of these units has been running on biomass since April 2013, with the other two units planned to begin operations in 2014 and 2016, respectively.

Under the CFD contract for the conversion of Drax’s Unit 1, the company will receive a guaranteed power price of £105 (US$176.28) per megawatt-hour (MWh) of electricity beginning in April 2015, when the scheme is scheduled to start.

The UK indicated that Drax’s Unit 3 did not fit all of the criteria for the CFD program and instead urged the company to continue converting the unit under the existing direct subsidy, The Telegraph noted.

Drax Chief Executive Officer Dorothy Thompson said that the company had made no changes to its plans for Unit 3 between December and the release of the Department of Energy and Climate Change’s final decision.

Deutsche Bank sent a note to its investors advising that it expected a finalized contract for Drax’s Unit 3 by next month, followed by an approval for state aid sometime in the summer.

The primary source of this article is The Telegraph, London, England, on April 23, 2014. Click here to see the original article.

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