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Drax Biomass Subsidies Rise To £729m In 2017

February 27, 2018
tags: ,

By Paul Homewood




Drax have announced an operating loss of £117m last year, although this includes a loss of £156 on foreign exchange derivative contracts.


But the most significant thing their accounts reveal is the full extent of the subsidies they have received for biomass production.


Three of its six power generation units are now upgraded to use wood pellets, with a fourth due on line this year. Generation from biomass accounted for 65% of the 20 Twh produced last year.

The first two units are still covered under the Renewable Obligation scheme, and generated an income of £481m.



The third unit qualifies under the CfD auction, which guarantees a price of £106/MWh.

The Government owned Low Carbon Contracts Company tops up the revenue received by Drax for the electricity sales themselves. Last year, this subsidy amounted to £248m:




In total therefore, Drax received subsidies worth £729m last year, all to be paid for by electricity users.

Without this, Drax would be bankrupt.

Is there any company in the UK that is more subsidised than Drax?

  1. Mack permalink
    February 27, 2018 3:31 pm

    Nice work if you can get it. Apart from the daylight robbery of bill payers to subsidise these chancers at least we can rejoice at all the extra co2 they’re pumping into the atmosphere to make the planet greener than the lower emission clean coal that they use to use exclusively. I’m not sure that was the point of the switch to biomass though, was it?

    • Hivemind permalink
      February 28, 2018 3:57 am

      There’s a reason they’re called subsidy farmers. After all, nobody is subsidising coal use.

  2. Eric Johnson permalink
    February 27, 2018 3:37 pm

    Company financial statements make my head hurt. For this simple minded retired airline pilot, can anyone succinctly lay out/list the
    1) expense of operation,
    2) income from rate payers,
    3) subsidies (from rate payers in he end),
    4) tax rate adjustments to encourage said operation, and
    5) explain “Ancillary Services” and “Other income”?
    Granted, there’s tremendous startup expenses. Varies between operation type: ignore.

  3. Graeme No.3 permalink
    February 27, 2018 3:43 pm

    £729 million in return for an INCREASE in CO2 emissions of 32%. Surely the most stupid of green policies, but please don’t tell me if it isn’t – I don’t think I ever want to hear.

    There was a T-shirt sold last year with the slogan
    Father Christmas
    Tooth Fairy
    Easter Bunny
    Climate Change
    Time for a reprint to send one to each member of parliament.

  4. Joe Public permalink
    February 27, 2018 3:47 pm

    “Drax have announced an operating loss of £117m last year, although this includes a loss of £156 on foreign exchange derivative contracts.”

    A loss three quid a week on foreign gambling? 😀😀😀

  5. Jack Broughton permalink
    February 27, 2018 3:52 pm

    In my view all of the old coal fired stations should be refurbished and used instead of the CCGTs as they provide far lower real costs electricity.

    However, what is now needed desperately is to keep the old coal fired stations as storage for security purposes, as they are the only major storage available in the UK (Dinorwig is fairly small storage). The greenies are determined that they should all be demolished asap, but we have no real back-up if gas is tight / expensive and the wind forgets to blow for a few days. Batteries may have a place, but it is not in long term storage. Wood is far less easily stored than coal and is a much bigger hazard, so Drax should be reconverted and used as our main coal fired generator. Security of supply seems to have been forgotten by the present generation of wheeler-dealers who operate the power system.

  6. February 27, 2018 3:52 pm

    I reckon that £729m is more than £10 forcibly extracted from the pockets of every man, woman and child in this country and handed over to these incompetent scam merchants.

    Never mind, Roger Harrabin loves Drax.

  7. February 27, 2018 4:02 pm

    The government should be stopped from using the word subsidy and use ‘taxpayers’ or as you correctly say ‘energy users’ money.
    And coal provides far greater thermal energy than wood per cubic meter so a far lower logistics cost using far less CO2, if that is what some ‘challenged’ people believe in!

  8. Coeur de Lion permalink
    February 27, 2018 4:05 pm

    As of right now wind is producing 10% and coal 24% of UK demand. The BBC ran ‘King penguins doomed ‘ due to warming seas this am and Great Barrier Reef doomed just now – but saveable when we ‘stabilise the climate ‘ by 2030. I try to keep calm.

    • BLACK PEARL permalink
      February 27, 2018 4:08 pm

      They live in a world of their own making

      • Steve C permalink
        February 27, 2018 5:23 pm

        Unfortunately, so do we.

      • Simon permalink
        February 27, 2018 6:39 pm

        You should add ‘profit’ to that sentence.

      • Simon permalink
        February 27, 2018 6:42 pm

        Whoops, what was I thinking?
        I meant ‘loss’ of course.

    • dave permalink
      February 27, 2018 6:28 pm

      SKY has same idiots’ story about penguins. All these propaganda squibs are ready for launch, on a regular schedule.

      MEANWHILE, in the real world, Trump has announced his run for re-election. I thought he was supposed to have been impeached by now, or gone away boo-hoo’ing? I sense a genuine, rising tide of panic, among the shysters. Just one year gone, out of eight!

      • roger permalink
        February 27, 2018 10:41 pm

        And thus MGBGA!

      • February 28, 2018 12:34 pm

        In his speech to CPAC, President Trump recounted a conversation with the “head” of Vietnam where we have one of our numerous trade imbalances. Trump suggested that they buy our coal. The Vietnamese leader then launched into how great our coal was and especially the coal from West Virginia which is prized as metallurgical coal.

        BTW, under Trump our trade agreements are being renegotiated one by one. Our pockets are no longer being picked at will and we are getting out of these multi-national agreements such as TPP. NAFTA is being renegotiated much to the chagrin of little Trodeau.

      • dave permalink
        February 28, 2018 1:09 pm

        “…little Trodeau…”

        Why DO humans surrender their political rights to “dynasties” for no better reason than that the name is familiar?

      • DaveR permalink
        March 3, 2018 6:33 am

        Re penguins via beeb:

        ‘Largest population of penguins found in Antarctic Peninsula

        Over 1.5m penguins, the largest population on the Antarctic Peninsula, has been found on the Danger Islands.

        Scientists say the presence of heavy sea ice around the islands and the difficulty of landing boats there has meant that the territory has been left untouched, allowing the population of penguins to thrive.’

        Cue follow up futured reported population crash…

  9. BLACK PEARL permalink
    February 27, 2018 4:07 pm

    No worries, its all sorted, the Govt is going to cap the prices charged by the main energy company’s as its all their fault its so expensive

  10. Robert Fairless permalink
    February 27, 2018 4:24 pm

    If ever you wanted proof that the Government and its Energy Secretaries are mental defectives, here it is.
    Drax is nationalised in all but name. Every commercial rule for competent management has been broken and to put it simply, the company is bust.
    To convert to burning wood pellets thereby reducing capacity by a third is, in itself an act of stupidity. Taking into account the building of three factories in the USA, the destruction of millions of acres of pristine forest, building transport infrastructure, transport across the Atlantic in huge ships, nothing, absolutely nothing, is saved in carbon usage. The fraudulent and pseudo science used to support this madness must be ignored because it is all false but nevertheless embraced with enthusiasm by the Government Ministers.
    We have turned into a Socialist dominated autocracy and like the Soviet Union doomed to failure but not before the poorest in society have been impoverished by their mad government.

    • February 27, 2018 4:46 pm

      I think you have made a fair summary of every Government and every Energy Secretary (and minister) we have had to endure in the last 20+years.

      Unfortunately writing to your MP and telling them this won’t make any difference. I’m sure Christopheer Booker will write about this, but that too won’t make any difference as long as the lunatics remain in charge of the asylum.

  11. Simon permalink
    February 27, 2018 6:06 pm

    Based on a population figure of approximately 65 million, that subsidy equates to about £11 per person. All that for one company in one year.

    Never in the field of human power generation has so much been given to so few by so many.
    I’d like to see the subsidy total for Drax since, say, 2010.

  12. John permalink
    February 27, 2018 7:24 pm

    Mostly idiotic comments above on how much Drax is getting in subsidies. And what about wind or solar subidies? Total green subsidies in 2016 were 4.8bn so Drax’s 729m is just 15%

    Are you all against green subsidies or against Drax?

  13. Green Sand permalink
    February 27, 2018 10:40 pm

    Do not forget the direct cost to the tax payer of admistering the myriad of differing ‘subsidies’ that now exist in the energy sector. Absolute bureaucrats empire building dream along with the ‘authorities’ required to ‘police’ the schemes.

    Market forces work, all our lives have improved through their simplicity of delivering value. Always, but always when legislation is used to pick winners the tax payer loses out and government grows.

  14. February 27, 2018 10:44 pm

    Is there any company in the UK that is more subsidised than Drax?

    Network Rail used to get nearly £4bn until they gave the money to the operators instead…

  15. Bitter@twisted permalink
    February 27, 2018 10:53 pm

    Sheer madness.
    Complete and utter stupidity.
    And we are paying for it.
    I’m going to write to my MP.
    Oh wait he’s MP for Cambridge, where the “intelligentsia” actually believe in catastrophic climate change.

  16. avro607 permalink
    February 27, 2018 10:54 pm

    Forgotten the numbers,but I recall that the comrades in our govt. sent some millions of £s to Canadian/USA seaports to upgrade facilities enabling shipping of wood pellets.Also Grimsby/UK I think.
    Does anyone recall the numbers £/$.s.

    • John F. Hultquist permalink
      February 28, 2018 12:04 am

      This pro-wood article from 2013 mentions those upgrades and more.
      Note: the pro-wood aspect.

  17. John F. Hultquist permalink
    February 28, 2018 12:18 am

    Not since the destruction of the Cedar forests of Lebanon has Earth been subjected to such atrocious acts as the global warming scare has brought about.

  18. Athelstan permalink
    February 28, 2018 1:22 am

    Coal, gas and nuclear providing ± 72% supply at the minute.

    Feck knows what will happen when theresa the green mentalist closes our remaining coal fired plant.

    Biomass = lunacy of an order I am not able to imbibe.

  19. It doesn't add up... permalink
    February 28, 2018 3:08 am

    Some quick back of envelope calculations: if 20TWh had been produced from coal at a low 33.3% efficiency, that would have required 60TWh of coal at a GCV of 7MWh/tonne, so 8.57 million tonnes of coal. A visual scan suggests that API2 coal CIF Rotterdam averaged about 80$/tonne in 2017 for a fuel cost of ~$686m, or under £527.7m at $1.30=£1. The annual report shows £1,356.8m in fuel costs. Subtract the £729m of subsidies, and the cost of fuel is reduced to £627.8m – still £100m more than all coal would have been, with no subsidy required. Of course, it is the £18/tonne CO2 Carbon Floor Price that stops the sensible choice being made. If we allow 15% ash, then the CFP would cost £8.57×0.85x18x44/12m, or £480m. Even with that cost, it works out cheaper than wood pellets.

    • It doesn't add up... permalink
      February 28, 2018 1:02 pm

      I should have pointed out that wood pellets should incur a charge of £640m for Carbon Floor Price, so really that should be added to the £729m subsidies they get in cash if we use normal green accounting standards.

  20. February 28, 2018 6:30 am


    a quick look at Gridwatch looks like it’s “topping out” – coal is pegged.

    What I was wondering is how do we know if STOR diesel lottery win generators have been fired up?

    • February 28, 2018 8:21 am

      Interconnectors are supplying little and have not done so for the last couple of days. Cold snap in continental Europe means power off to the UK

      • Athelstan permalink
        February 28, 2018 10:56 am

        last time I looked we were sending ‘juice’ in the opposite direction.

    • It doesn't add up... permalink
      February 28, 2018 11:30 am

      I checked what I could here:

      Certainly 250MW of OCGT operated yesterday, and I’m told that large consumers were invited to fire up their own stand-by generators (which they would do anyway to reduce triad exposure – a large chunk of their bill depends on how much power they consume during the 3 heaviest demand half hours over the winter when they can find themselves paying nearly £80 per kilowatt hour). Meanwhile today the balancing price has soared to £211.75/MWh this morning – and the interconnector is supplying France. We are in a bidding war for the available supply. It will be interesting to see where we get to this evening.

  21. Messenger permalink
    February 28, 2018 10:16 am

    While some biomass plants admit to importing wood from N. America, most seem to claim their pellets come from wood within a 50 mile or 100 mile radius. And just how long is that going to last for before they have destroyed all their local woods and forests?

    • Gerry, England permalink
      February 28, 2018 2:01 pm

      I saw in South East Farmer a piece on the need for more foresters to manage our woods in the south east to supply a new plant in Ramsgate I think. Yes, woods need managing but i can’t see how they can sustainably supply a power plant without felling too many trees and then replanting as stale industrial woodland.

  22. peter howard permalink
    February 28, 2018 11:23 am

    So right, Rach! I have just done John H, and it was fun, but not much! Home now, but Sam collected the girls and the are stuck on the to of AG Hill!!

    Sent from my iPad


  23. Gerry, England permalink
    February 28, 2018 1:58 pm

    I see a mistake there. ‘…upgraded..’ to burn wood is surely an oxymoron if not just plain moronic.

    I presume the currency hedging is because to US charges top dollar for its chipped trees.

    Anyone know how much energy is required to make the wood pellets as the sawdust has to be heated before compression?

  24. Gerry, England permalink
    February 28, 2018 2:03 pm

    The surge in gas demand has sent the wholesale price up and one of the new energy suppliers, Bulb is the first to raise prices. Bulb has 300,000 customers that it supplies with 100% renewable energy. Anyone spot an anomaly here?

    Why are they charging in relation to the wholesale gas market if they are 100% renewable?

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