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February 19, 2016

Drax proposes biomass subsidies for £2 billion savings for UK consumers

Drax Group Plc. suggested that the British consumers might save up to £2 billion if the Government approves the change from coal to wood pellets to create greener energy. According to a report released by the company, a wider mix of technologies should be added to the Government’s planned renewable energy auctions as to reach the mentioned savings.
Drax implies that the renewables reliant on the sun and wind have hidden costs, which are billed for every consumer. This means that other forms of power generation need to kick in, and flex up and down to meet electricity demand, as the report, published Tuesday by NERA Economic Consulting and London’s Imperial College, states.

“Intermittent renewables like wind and solar are vital as we continue to clean up energy generation, but they need to be backed up by a constant supply of electricity that can be flexed up and down to make sure the UK’s businesses and households always have power on demand,” said Dorothy Thompson, Drax Group CEO.

Technologies based on biomass generate more than a quarter of UK’s renewable electricity, which reaches up to 5Gwatt.
Currently, UK’s Government is planning three auctions for new renewable energy contracts – Contracts for Difference (CfDs) - planned over the next four years, and all are focused on offshore wind. The new research shows significant differences in the true costs of renewables once these additional costs are recognised. Offshore wind could require a CfD of £127 per MWh, onshore wind £92-97 per MWh, solar £96 per MWh, and biomass £84 per MWh.
According to the Department of Energy and Climate Change (DECC), Drax won’t participate in the first auction and the government hasn’t decided yet if the company would be able to compete in the following two auctions.
 
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