Pellet supply boost eases Drax's pressures as earnings dip
Drax Power Station.
By Grimsby Telegraph | Posted: 16 Feb 2017
IMPROVING pellet supply profitability for power station Drax helped mitigate a 17 per cent reduction in earnings for 2016, a year in which it tipped the balance from coal to renewables.
The regional energy giant, fed by the world’s largest biomass handling facilities at Port of Immingham, went from 43 per cent renewable feedstock in 2015, to 65 per cent last year, as the £700 million transformation plan passed a significant phase.
The investment to switch three of the six huge units from coal to biomass has been completed on budget, it reported.
The £130 million ABP development, with the eight skyline changing silos is at the heart of it, together with smaller scale facilities in Hull, feed the North Yorkshire plant direct.
Immingham Renewable Fuels Terminal
Drax, which returned earnings of £140 million, down from £169 million, said the transformation was in line with the original guidance, and welcomed the Contracts for Difference approval received in December, albeit a year later than envisaged.
Challenging commodity markets were blamed, together with Levy Exemption Certificates, previously issued to renewable energy providers until 2015.
Dorothy Thompson, chief executive of Drax Group Plc, said: “We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.
“With the right conditions, we can do even more, converting further units to run on compressed wood pellets. This is the fastest and most reliable way to support the UK’s decarbonisation targets, while minimising the cost to households and businesses.
“In a challenging commodity environment Drax has delivered a good operational performance with 65 per cent renewable power generation.”
Dividends were more than halved, from 5.7p a share to 2.5p a share, with net debt down from £187 million to £93 million.
The company has deferred a major maintenance outage to 2018 and has said it expects an end to coal generation by 2025.