Drax biomass plan blow as EC launches aid investigation

The hopes of securing lucrative subsidies for the biomass conservion of Drax have suffered a setback following the European Commission started the full state assistance investigation over concerns the payments may be too generous.

The Yorkshire-based power plant is in the process of changing from burning coal to biomass, and was given a £1.7bn Government subsidy contract in April 2014 for the third of its six units – matter to state aid approval.

The contract would find Drax paid a fixed price of £105 for every megawatt-hour (MWh) of biomass-fired electricity the unit generated until 2027 – well over double the present market price.
Drax shares dropped 5pc on Tuesday after the European Commission said it was concerned the rate of return in the subsidies “could be higher than the parties approximation and will lead to overcompensation”.


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