London: The UK government and energy producer Drax have reached a deal to reduce subsidies for the company’s biomass operations by half between 2027 and 2031, a move aimed at cutting costs for consumers while ensuring a shift to more sustainable fuel sources, both sides announced on Monday, reported Reuters.
Drax, the largest renewable power generator in Britain, has converted four former coal plants to biomass with the help of government subsidies that run until 2027. The company supplies about 6% of the country’s electricity. However, after reviewing whether to extend these subsidies, the government decided that Drax could not continue operating under the same conditions or receive the same level of financial support as before.
Energy Minister Michael Shanks stated that while biomass remains an important part of the UK’s energy system, concerns about sustainability and the subsidies biomass plants have received in the past had to be addressed. The exact subsidy figures were not disclosed.
Drax has defended its sourcing practices, stating that it only uses wood byproducts and residues from trees primarily grown for lumber. The company argues that demand for wood from sustainably managed forests helps promote forest growth. However, environmental groups have questioned whether biomass production is truly sustainable, warning that the process of turning wood into pellets for electricity can contribute to deforestation.
Under the new agreement, Drax must ensure that 100% of its woody biomass comes from sustainable sources, up from the current 70%. The use of material from primary and old-growth forests will no longer be eligible for subsidies, and Drax will face financial penalties if it does not meet these requirements.
Drax has expressed support for these measures and stated that it will continue working with the UK government to meet any future reporting requirements.
Once Britain’s largest coal-powered generator, Drax now relies on biomass to provide continuous power. Under the revised agreement, the company will operate at a maximum load factor of 27%, which is less than half of its current level, and will only supply low-carbon power when it is deemed essential.
The government estimates that the new deal will save consumers £170 million ($211 million) in subsidies each year compared to the alternative of relying on natural gas to maintain energy security.
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